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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.9pt 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>NOTE
1 – ORGANIZATION AND DESCRIPTION OF BUSINESS</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Dogness <font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.05pt">(International)
Corporation (“Dogness”</font> <font style="font: 10pt Times New Roman, Times, Serif">or <font style="letter-spacing: -0.05pt">the
“Company”),</font> is a <font style="letter-spacing: -0.05pt">limited liability company established under the laws
of the British Virgin Islands (“BVI”) on July 11, 2016 as a holding company. The Company, through its subsidiaries,
is primarily engaged in the design, manufacturing and sales of various types of pet leashes, pet collars, pet harnesses and retractable
leashes with products being sold all over the world mainly through distributions by large retailers. Mr. Silong Chen, the Chairman
of the Board and Chief Executive Officer (“CEO”)</font> of the <font style="letter-spacing: -0.05pt">Company</font>
is the <font style="letter-spacing: -0.05pt">controlling shareholder (the</font> <font style="letter-spacing: 0.85pt">“</font><font style="letter-spacing: -0.05pt">Controlling
Shareholder”)</font> of <font style="letter-spacing: -0.05pt">the Company by virtue of his ownership of 9,069,000 Class
B common shares, which carry three votes per share and, in the aggregate have more than half of the voting power of all common
shares.</font></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Reorganization</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">A
<font style="letter-spacing: -0.05pt">Reorganization</font> <font style="letter-spacing: -0.1pt">of</font> <font style="letter-spacing: -0.05pt">the
legal structure was completed</font> on <font style="letter-spacing: -0.05pt">January</font> 9, <font style="letter-spacing: -0.05pt">2017.
</font>The <font style="letter-spacing: -0.05pt">Reorganization involved</font> the <font style="letter-spacing: -0.05pt">incorporation
</font>of <font style="letter-spacing: -0.05pt">Dogness, a BVI holding company; and Dogness Intelligence Technology (Dongguan)
Co., Ltd. (“Dongguan Dogness”), a holding company established under the laws of the People’s Republic of China
(“PRC”); and the transfer of Dogness (Hong Kong) Pet Products Co., Ltd. (“HK Dogness”), Jiasheng Enterprise
(Hong Kong) Co., Limited (“HK Jiasheng”), and Dongguan Jiasheng Enterprise Co., Ltd. (“Dongguan Jiasheng”;
collectively, the “Transferred Entities”) from the Controlling Shareholder to Dogness and Dongguan Dogness.
Prior to the reorganization, the Transferred Entities’ equity interests were 100% controlled by the Controlling Shareholder.
On</font> <font style="letter-spacing: -0.1pt">November</font> 24, <font style="letter-spacing: -0.05pt">2016, the Controlling
Shareholder transferred his 100% ownership interest in Dongguan</font> Jiasheng to <font style="letter-spacing: -0.05pt">Dongguan
Dogness, which</font> is 100% <font style="letter-spacing: -0.05pt">owned</font> by <font style="letter-spacing: -0.05pt">HK Dogness
</font>and <font style="letter-spacing: -0.05pt">considered</font> a wholly <font style="letter-spacing: -0.05pt">foreign-owned
</font>entity <font style="letter-spacing: -0.05pt">(“WFOE”)</font> in <font style="letter-spacing: -0.05pt">PRC.
On January</font> 9, <font style="letter-spacing: -0.05pt">2017,</font> the <font style="letter-spacing: -0.05pt">Controlling
Shareholder transferred his 100% equity interests</font> in <font style="letter-spacing: -0.1pt">HK</font> <font style="letter-spacing: -0.05pt">Dogness
</font>and <font style="letter-spacing: -0.05pt">HK Jiasheng to Dogness. After the reorganization, Dogness</font> ultimately <font style="letter-spacing: -0.05pt">owns
</font>100% <font style="letter-spacing: -0.05pt">equity interests</font> of <font style="letter-spacing: 0.05pt">the </font><font style="letter-spacing: -0.05pt">entities
mentioned above.</font></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Since
the Company and its wholly-owned subsidiaries are effectively controlled by the same Controlling Shareholder before and after
the reorganization, they are considered under common control. The above-mentioned transactions were accounted for as a recapitalization.
The consolidation of the Company and its subsidiaries has been accounted for at historical cost and prepared on the basis as if
the aforementioned transactions had become effective as of the beginning of the first period presented in the accompanying consolidated
financial statements.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On December 18, 2017, the Company completed
its initial public offering (“IPO”) of 10,913,631 Class A common shares at a public offering price of $5.00 per share.
The gross proceeds were approximately $54.6 million before deducting the placement agent’s commissions and other
offering expenses, resulting in net proceeds of approximately $50.2 million. In connection with the offering, the Company’s
Class A common shares began trading on the NASDAQ Global Market on December 20, 2017 under the symbol “DOGZ.”</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
January 2018, the Company formed a Delaware limited liability company, Dogness Group LLC (“Dogness Group”),
with its operation focusing primarily on pet product sales in the U.S. In February 2018, Dogness Overseas Ltd (“Dogness
Overseas”) was established in the British Virgin Islands as a holding company. Dogness Overseas owns all of the
interests in Dogness Group.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">On
March 16, 2018 (the “Acquisition Date”), the Company entered into a share purchase agreement to acquire 100% of the
equity interests in Zhangzhou Meijia Metal Product Co., Ltd (“Meijia”) from its original shareholder, Long Kai (Shenzheng)
Industrial Co., Ltd (“Longkai”), for a total cash consideration of approximately RMB 71.0 million ($10.7 million)
(the “Acquisition”). After the acquisition, Mejia became the Company’s wholly-owned subsidiary.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On July 6, 2018, Dogness
Intelligence Technology Co., Ltd. (“Intelligence Guangzhou”) was incorporated under the laws of PRC in Guangzhou
City of Guangdong Province in China with a total registered capital of RMB 80 million (approximately $11.8 million). One of
the Company’s subsidiaries, Dongguan Jiasheng, owns 58% of <font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.05pt">Intelligence
Guangzhou, with the remaining 42% ownership interest owned by two unrelated entities</font><font style="font: 10pt Times New Roman, Times, Serif">.
Intelligence Guangzhou had immaterial operation since its inception and will be the research and manufacturing facility
for the Company’s fast growing intelligent pet products.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">On
February 5, 2019, in order to expand into the Japanese market and expedite the development of new smart pet products, Dogness
Japan Co. Ltd. (“Dogness Japan”) was incorporated in Japan. The Company invested $250,000 for 51% ownership interest
in Dogness Japan, with the remaining 49% owned by an unrelated individual.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.9pt 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Basis
of Presentation and Principles of Consolidation</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0"><font style="font: 10pt Times New Roman, Times, Serif">The
accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted
in the United States of America (“US GAAP”) and have been consistently applied.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 5.65pt 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
accompanying consolidated financial statements include the financial statements of Dogness, HK Dogness, HK Jiasheng, Dongguan
Dogness, Dongguan Jiasheng, Meijia, Dogness Overseas, Intelligence Guangzhou, Dogness Japan and Dogness Group. All inter-company
balances and transactions have been eliminated upon consolidation. For the Company’s equity investment which the Company
does not have control and is not the primary beneficiary, but has significant influence in the decision-making of the ordinary
course of business, the equity method is applied.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company’s consolidated financial statements reflect the operating results of the following entities:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="border-bottom: Black 1.5pt solid; text-align: left">Name of Entity</td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: center">Date of Incorporation</td><td style="text-align: center"> </td>
<td style="text-align: center; border-bottom: Black 1.5pt solid">Place of Incorporation</td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">% of Ownership</td><td style="text-align: center"> </td><td style="text-align: center"> </td>
<td style="text-align: center; border-bottom: Black 1.5pt solid">Principal Activities</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Dogness (International) Corporation (“Dogness” or the “Company”)</td><td> </td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">July 11, 2016</font></td><td> </td>
<td style="text-align: center">BVI</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">Parent, 100</font></td><td style="text-align: left">%</td><td> </td>
<td style="text-align: center">Holding Company</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="width: 24%; text-align: left">Dogness (Hong Kong) Pet Products Co., Ltd. (“HK Dogness”)</td><td style="width: 2%"> </td>
<td style="width: 15%; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">March 10, 2009</font></td><td style="width: 2%"> </td>
<td style="width: 16%; text-align: center">Hong Kong</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 15%; text-align: right">100</td><td style="width: 1%; text-align: left">%</td><td style="width: 2%"> </td>
<td style="width: 20%; text-align: center">Trading</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Jiasheng Enterprise (Hong Kong) Co., Limited (“HK Jiasheng”)</td><td> </td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">July 12, 2007</font></td><td> </td>
<td style="text-align: center">Hong Kong</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">100</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: center">Trading</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Dogness Intelligence Technology (Dongguan) Co., Ltd. (“Dongguan Dogness”)</td><td> </td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">October 26, 2016</font></td><td> </td>
<td style="text-align: center">Dongguan, China</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">100</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: center">Holding Company</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Dongguan Jiasheng Enterprise Co., Ltd. (“Dongguan Jiasheng”)</td><td> </td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">May 15, 2009</font></td><td> </td>
<td style="text-align: center">Dongguan, China</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">100</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: center">Development and manufacturing of pet leash products</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Zhangzhou Meijia Metal Product Co., Ltd (“Meijia”)</td><td> </td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">July 09,2009</font></td><td> </td>
<td style="text-align: center">Zhangzhou, China</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">100</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: center">manufacturing of pet leash products</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Dogness Overseas Ltd (“Dogness Overseas”)</td><td> </td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">February 8, 2018</font></td><td> </td>
<td style="text-align: center">BVI</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">100</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: center">Holding Company</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Dogness Group LLC (“Dogness Group”)</td><td> </td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">January 23, 2018</font></td><td> </td>
<td style="text-align: center">Delaware, United States</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">100</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: center">Pet products trading</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Dogness Intelligence Technology Co., Ltd. (“Intelligence Guangzhou”)</td><td> </td>
<td style="text-align: center"><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">July
6, 2018</font></p></td><td> </td>
<td style="text-align: center">Guangzhou, China</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">58</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: center">Research and manufacturing of intelligent pet products</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Dogness Japan Co. Ltd. (“Dogness Japan”)</td><td> </td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">February 5, 2019</font></td><td> </td>
<td style="text-align: center">Osaka, Japan</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">51</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: center">Pet products trading</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Noncontrolling
interests</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">As
of June 30, 2019, noncontrolling interests represent 42% and 49% noncontrolling shareholders’ interests in Intelligence
Guangzhou and Dogness Japan, respectively. The noncontrolling interests are presented in the consolidated balance sheets, separately
from equity attributable to the shareholders of the Company. Noncontrolling interests in the operating results of the Company
are presented on the face of the consolidated statements of income and comprehensive income (loss) as an allocation of the total
income or loss for the year between noncontrolling interest holders and the shareholders of the Company.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Use
of Estimates</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
preparing the consolidated financial statements in conformity with US GAAP, management makes estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. These estimates are based on information
as of the date of the consolidated financial statements. Significant estimates required to be made by management include, but
are not limited to, the valuation of accounts receivable, inventories, advances to suppliers, useful lives of property, plant
and equipment, intangible assets, the recoverability of long-lived assets, provision necessary for contingent liabilities, revenue
recognition and realization of deferred tax assets. Actual results could differ from those estimates.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Cash</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company considers all highly liquid investment instruments with an original maturity of three months or less from the date of
purchase to be cash equivalents. The Company maintains most of its bank accounts in the PRC. Cash balances in bank accounts in
PRC are not insured by the Federal Deposit Insurance Corporation or other programs.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Short-term
Investments</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company’s short-term investments consist of wealth management financial products purchased from PRC banks with maturities
within one month to twelve months. The banks invest the Company’s fund in certain financial instruments including
money market funds, bonds or mutual funds, with rates of return on these investments ranging from 1.75% to 4.60% per annum. The
carrying values of the Company’s short-term investments approximate fair value because of their short-term maturities. The
interest earned is recognized in the consolidated statements of income and comprehensive income (loss) over the contractual term
of these investments.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company had short-term investments of $11,073,200 and $28,233,035 as of June 30, 2019 and 2018, respectively. The Company recorded
interest income of $536,345, $517,359 and $Nil for the years ended June 30, 2019, 2018 and 2017, respectively.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Accounts
Receivable, net</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Accounts receivable are recognized and carried at original invoiced amount less an estimated allowance for
uncollectible accounts. The Company usually determines the adequacy of reserves for doubtful accounts based on individual account
analysis and historical collection trends. The Company establishes a provision for doubtful receivables when there is objective
evidence that the Company may not be able to collect amounts due. The allowance is based on management’s best estimates of
specific losses on individual exposures, as well as a provision on historical trends of collections. The provision is recorded
against accounts receivables balances, with a corresponding charge recorded in the consolidated statements of income and comprehensive
income (loss). Delinquent account balances are written off against the allowance for doubtful accounts after management has determined
that the likelihood of collection is not probable. Allowance for uncollectible balances amounted to $128,106 and <font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.05pt">$40,012
as of June 30, 2019 and 2018, respectively.</font></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Inventories,
net</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0pt; text-align: justify; text-indent: 0"><font style="font: 10pt Times New Roman, Times, Serif">Inventories
are stated at net realizable value using the weighted average method. Costs include the cost of raw materials, freight, direct
labor and related production overhead. Any excess of the cost over the net realizable value of each item of inventories is recognized
as a provision for diminution in the value of inventories.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Net
realizable value is the estimated selling price in the normal course of business less any costs to complete and sell products.
The Company evaluates inventories on a quarterly basis for its net realizable value adjustments, and reduces the carrying value
of those inventories that are obsolete or in excess of the forecasted usage to their estimated net realizable value based on various
factors including aging and future demand of each type of inventories.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Prepayment</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0pt; text-align: justify; text-indent: 0"><font style="font: 10pt Times New Roman, Times, Serif">Prepayment
primarily consists of advances to suppliers for purchasing of raw materials that have not been received, and prepayment to a landlord
for lease of a piece of land in order to build a warehouse in the near future. These advances are interest free, unsecured and
short-term in nature and are reviewed periodically to determine whether their carrying value has become impaired.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Property,
plant and Equipment</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Property,
plant and equipment are stated at cost. The straight-line depreciation method is used to compute depreciation over the estimated
useful lives of the assets, as follows:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; text-align: justify; margin-bottom: 0pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" align="center" style="border-collapse: collapse; width: 70%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom; background-color: White">
<td> </td><td> </td>
<td style="text-align: center; border-bottom: Black 1.5pt solid">Useful life</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 43%">Buildings</td><td style="width: 2%"> </td>
<td style="width: 55%; text-align: center">10-50 years</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Leasehold improvement</td><td> </td>
<td style="text-align: center">Lesser of useful life and lease term</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Machinery equipment</td><td> </td>
<td style="text-align: center">5-10 years</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Transportation vehicles</td><td> </td>
<td style="text-align: center">5 years</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Office equipment and furniture</td><td> </td>
<td style="text-align: center">5 years</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Expenditures
for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred.
Expenditures for major renewals and betterments which substantially extend the useful life of assets are capitalized. The cost
and related accumulated depreciation of assets retired or sold are removed from the respective accounts, and any gain or loss
is recognized in the consolidated statements of income and other comprehensive income (loss) in other income or expenses.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Intangible
Assets</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Intangible
assets consist primarily of a customized software system purchased from a third-party vendor, used for accounting and production
management and land use rights. Under PRC law, all land in the PRC is owned by the government and cannot be sold to an individual
or company. The government grants individuals and companies the right to use parcels of land for specified periods of time. These
land use rights are sometimes referred to informally as “ownership.”</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Intangible
assets are stated at cost less accumulated amortization. Customized software system are amortized using the straight-line method
over the estimated useful economic life of 10 years. Land use rights are amortization using the straight-line method over the
estimated useful life of 50 years, which is determined in connection with the term of the land use rights.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Long-term
Investments in Equity Investees</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b><i> </i></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">On
July 1, 2018, the Company adopted Accounting Standards Codification (“ASC”) 321 “Investments—Equity Securities”
(“ASC 321”). In accordance with ASC 321, equity securities which the Company has no significant influence (generally
less than a 20% ownership interest) with readily determinable fair values are accounted for at fair value based on quoted market
prices. Equity securities without readily determinable fair values are accounted for either at fair value or using the measurement
alternative. Under the measurement alternative, the equity investments are measured at cost, less any impairment, if any, plus
or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of
the Company.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Nanjing
Rootaya Intelligence Technology Co., Ltd. (“Nanjing Rootaya”) is an entity incorporated on March 25, 2015 in the PRC
and is primarily engaged in development of smart pet products.</font><font style="font: 10pt Times New Roman, Times, Serif">
In July 2018, the Company entered into an equity investment agreement with Nanjing Rootaya to invest RMB 1.25 million ($182,125)
for 10% of the ownership interest in Nanjing Rootaya. Before the Company’s equity investment, Nanjing Rootaya
was owned by three unrelated shareholders.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="letter-spacing: -0.05pt">Dogness
Network Technology Co., Ltd (“Dogness Network”) is an entity incorporated on November 17, 2017 in the PRC and is engaged
in the development and sales of intelligent smart pet products.</font><font style="letter-spacing: -0.05pt"> In November 2018,
the Company entered into an equity investment agreement with Dogness Network to invest RMB 8.0 million ($1,165,600) for
10% of the ownership interest in Dogness Network. Before the Company’s equity investment, Dogness Network
was owned by an unrelated shareholder. As of June 30, 2019, the Company made capital contribution of RMB 3.08 million ($448,756).</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: justify"><font style="letter-spacing: -0.05pt"> </font></p>
<p style="margin-top: 0; margin-bottom: 0; text-align: justify">Linsun Smart Technology Co., Ltd (“Linsun”) is an entity incorporated
on January 25, 2018 in the PRC and is engaged in development and sales of smart pet products. In November 2018, the Company
entered into an equity investment agreement with Linsun to invest RMB 3.0 million ($437,100) for 13% of the ownership
interest in Linsun. Before the Company’s equity investment, Linsun was owned by three unrelated shareholders.
As of June 30, 2019, the Company made capital contribution of RMB 2.5 million ($364,250).</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">The purpose of entering into these equity
investment agreements with Nanjing Rootaya, Dogness Network and Linsun was to establish cooperative business with these investees
to jointly develop and distribute the Company’s intelligent smart pet products. The Company accounts for the above mentioned
investments <font style="font: 10pt Times New Roman, Times, Serif">using the measurement alternative in accordance
with ASC 321. <font style="letter-spacing: -0.05pt">As of June 30, 2019, these investments amounted to $995,131 and are reported
as long-term investments in equity investees on the consolidated balance sheets.</font></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company records the cost method investments at historical cost and subsequently records any dividends received from the
net accumulated earnings of the investee as income. Dividends received in excess of earnings are considered a return of investment
and are recorded as reductions in the cost of the investments. Investment in equity investees is evaluated for impairment when
facts or circumstances indicate that the fair value of the investment is less than its carrying value. An impairment is recognized
when a decline in fair value is determined to be other-than-temporary. The Company reviews several factors to determine whether
a loss is other-than-temporary. These factors include, but are not limited to, the: (i) nature of the investment; (ii) cause and
duration of the impairment; (iii) extent to which fair value is less than cost; (iv) financial condition and near term prospects
of the investments; and (v) ability to hold the security for a period of time sufficient to allow for any anticipated recovery
in fair value. There was no impairment for the Company’s equity investments for the year ended June 30, 2019.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Fair
Value of Financial Instruments</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">ASC
825-10 requires certain disclosures regarding the fair value of financial instruments. Fair value is defined as the price that
would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the
measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires
entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used
to measure fair value are as follows:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="width: 0.25in; font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 0.25in; font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><font style="font: 10pt Times New Roman, Times, Serif">●</font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Level
1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.</font></td></tr>
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><font style="font: 10pt Times New Roman, Times, Serif">●</font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Level
2 - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted
market prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable
and inputs derived from or corroborated by observable market data.</font></td></tr>
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><font style="font: 10pt Times New Roman, Times, Serif">●</font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Level
3 - inputs to the valuation methodology are unobservable.</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Unless
otherwise disclosed, the fair value of the Company’s financial instruments including cash, short-term investments, accounts
receivable, advances to suppliers, prepayments and other current assets, accounts payable, advance from customers, taxes payable,
accrued liabilities and other payable and short-term bank loans approximate their fair values because of the short-term nature
of these instruments. The Company’s long-term investments are accounted for using the measurement alternative in accordance
with ASC 321, which also approximate their recorded values.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 5.65pt 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Long-lived
assets impairment</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company reviews long-lived assets, including definitive-lived intangible assets, for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be recoverable. If the estimated cash flows from the use of
the asset and its eventual disposition below are the asset’s carrying value, then the asset is deemed to be impaired and
written down to its fair value. There were no impairments of these assets as of June 30, 2019, 2018 and 2017.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Revenue
Recognition</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">On
July 1, 2018, the Company adopted ASC 606 Revenue from Contracts with Customers, using the modified retrospective approach. ASC
606 establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows
arising from the entity’s contracts to provide goods or services to customers. The core principle requires an entity to
recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it
expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">ASC
606 requires the use of a new <i>five</i>-step model to recognize revenue from customer contracts. The <i>five</i>-step model
requires that the Company (i) identify the contract with the customer, (ii) identify the performance obligations in the contract,
(iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future
reversal will <i>not</i> occur, (iv) allocate the transaction price to the respective performance obligations in the contract,
and (v) recognize revenue when (or as) the Company satisfies the performance obligation. The Company has assessed the impact of
the guidance by reviewing its existing customer contracts and current accounting policies and practices to identify differences
that may result from applying the new requirements, including the evaluation of its performance obligations, transaction price,
customer payments, transfer of control and principal versus agent considerations. Based on the assessment, the Company concluded
that there was no change to the timing and pattern of revenue recognition for its current revenue streams in scope of Topic 606
and therefore there was no material changes to the Company’s consolidated financial statements upon adoption of ASC 606.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Revenue
is recognized when obligations under the terms of a contract with the Company’s customers are satisfied. Satisfaction of
contract terms occur with the transfer of title of the Company’s products to the customers. Net sale is measured as the
amount of consideration the Company expects to receive in exchange for transferring the goods to the wholesaler and retailers.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
amount of consideration the Company expects to receive consists of the sales price adjusted for any incentives if applicable.
Such incentives do not represent a standalone value and are accounted for as a reduction of revenue in accordance with ASC 606.
Prior to the adoption of ASC 606, the Company’s policy was also to account sales incentives, if applicable, as a reduction
of revenue in accordance with ASC 605-50. Therefore, there is no change as to how the Company accounts for sales incentives upon
its adoption of ASC 606. For the years ended June 30, 2019, 2018 and 2017, the Company did not provide any sales incentives to
its customers.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Incidental
promotional items that are immaterial in the context of the contract are recognized as expense. Fees charged to customers for
shipping and handling are included in net sales and the related costs incurred by the Company are included in cost of goods sold.
In applying judgment, the Company considered customer expectations of performance, materiality and the core principles of ASC
Topic 606. The Company’s performance obligations are generally transferred to the customer at a point in time. The Company’s
contracts with customers generally do not include any variable consideration.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company’s revenue is primarily generated from the sales of pet products, including leashes, accessories, collars, harnesses
and intelligent smart pet products, to wholesalers and retailers. Revenue is recognized when the merchandise is delivered, title
is transferred and the Company’s performance obligations to fulfill the customer contracts have been satisfied. Revenue
is reported net of all value added taxes (“VAT”). The Company does not routinely permit customers to return products
and historically, customer returns have been immaterial.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i> </i></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i>Contract
Assets and Liabilities</i></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i> </i></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Payment
terms are established on the Company’s pre-established credit requirements based upon an evaluation of customers’
credit quality. Contact assets are recognized for in related accounts receivable. Contract liabilities are recognized for contracts
where payment has been received in advance of delivery. The contract liability balance can vary significantly depending on the
timing of when an order is placed and when shipment or delivery occurs.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">As
of June 30, 2019 and 2018, other than accounts receivable and advances from customers, the Company had no other material contract
assets, contract liabilities or deferred contract costs recorded on its consolidated balance sheet. Costs of fulfilling customers’
purchase orders, such as shipping, handling and delivery, which occur prior to the transfer of control, are recognized in selling,
general and administrative expense when incurred.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i>Disaggregation
of Revenues</i></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company disaggregates its revenue from contracts by product types and geographic areas, as the Company believes it best depicts
how the nature, amount, timing and uncertainty of the revenue and cash flows are affected by economic factors. The Company’s
disaggregation of revenues for the years ended June 30, 2019, 2018 and 2017 are disclosed in Note 15 of this consolidation
financial statements.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Research
and development costs</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Research
and development expenses include costs directly attributable to the conduct of research and development projects, including the
cost of salaries and other employee benefits, testing expenses, consumable equipment and consulting fees. All costs associated
with research and development are expensed as incurred.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Income
Taxes</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company accounts for current income taxes in accordance with the laws of the relevant tax authorities. Deferred income taxes are
recognized when temporary differences exist between the tax bases of assets and liabilities and their reported amounts in the
consolidated financial statements. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply
to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred
tax assets and liabilities of a change in tax rates is recognized in income in the period including the enactment date. Valuation
allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">An
uncertain tax position is recognized as a benefit only if it is “more likely than not” that the tax position would
be sustained in a tax examination. The amount recognized is the largest amount of tax benefit that is greater than 50% likely
of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is
recorded. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period
incurred. No significant penalties or interest relating to income taxes have been incurred during the years ended June 30, 2019,
2018 and 2017. As of June 30, 2019, the tax years ended December 31, 2013 through December 31, 2018 for the Company’s PRC
entities remain open for statutory examination by PRC tax authorities.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Value
added tax (“VAT”)</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Sales
revenue represents the invoiced value of goods, net of VAT. The VAT is based on gross sales price and VAT rates range up to 17%
(starting from May 1, 2018, VAT rate was lowered to 16%, and starting from April 1, 2019, VAT rate was further lowered to 13%),
depending on the type of products sold. The VAT may be offset by VAT paid by the Company on raw materials and other materials
included in the cost of producing or acquiring its finished products. The Company recorded a VAT payable or receivable net of
payments in the accompanying consolidated financial statements. Further, when exporting goods, the exporter is entitled to some
or all of the refund of the VAT paid or assess.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 5.65pt 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Since
a majority of the Company’s products are exported to the U.S. and Europe, the Company is eligible for VAT refunds when the
Company completes all the required tax filing procedures. All of the VAT returns of the Company have been and remain subject to
examination by the tax authorities for five years from the date of filing.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Earnings
per Share</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company computes earnings per share (“EPS”) in accordance with ASC 260, “Earnings per Share” (“ASC
260”). ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured
as net income divided by the weighted average common shares outstanding for the period. Diluted presents the dilutive effect on
a per share basis of potential common shares (e.g., convertible securities, options and warrants) as if they had been converted
at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect
(i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. Basic
average shares outstanding and diluted average shares outstanding were the same for the years ended June 30, 2017. For the years
ended June 30, 2019 and 2018, the effect of potential shares of common stock from the unexercised options was dilutive
since the exercise prices for the options were lower than the average market price (See Note 13).</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Share-Based
compensation</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company follows the provisions of ASC 718, “Compensation — Stock Compensation,” which establishes the accounting
for employee stock-based awards. For employee stock-based awards, share-based compensation cost is measured at the grant date
based on the fair value of the award and is recognized as expense with graded vesting on a straight-line basis over the requisite
service period for the entire award. For the non-employee stock-based awards, the fair value of the awards to non-employees are
measured every reporting period based on the value of the Company’s common stock.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Foreign
Currency Translation</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">The Company’s principal
country of operations is the PRC. The financial position and results of the operations of <font style="font: 10pt Times New Roman, Times, Serif">HK
Dogness<font style="letter-spacing: -0.05pt">,</font> HK Jiasheng, Dongguan Dogness, Dongguan Jiasheng, Meijia <font style="letter-spacing: -0.05pt">and
</font>Intelligence Guangzhou</font><font style="font: 10pt Times New Roman, Times, Serif"> <font style="letter-spacing: -0.05pt">are
determined using RMB, the local currency, as the functional currency. Dogness Japan uses Japanese Yen as the functional currency,
while </font>Dogness Overseas and Dogness Group use U.S Dollar as their functional currency.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company’s financial statements are reported using U.S. Dollars. The results of operations and the consolidated statements
of cash flows denominated in foreign currencies are translated at the average rate of exchange during the reporting period.
Assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the applicable rates of exchange
in effect at that date. The equity denominated in the functional currency is translated at the historical rate of exchange at
the time of capital contribution. Because cash flows are translated based on the average translation rate, amounts related to
assets and liabilities reported on the consolidated statements of cash flows will not necessarily agree with changes in the corresponding
balances on the consolidated balance sheets. Translation adjustments arising from the use of different exchange rates from period
to period are included as a separate component of accumulated other comprehensive income included in consolidated statements of
changes in equity. Gains and losses from foreign currency transactions are included in the consolidated statement of income and
comprehensive income.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
following table outlines the currency exchange rates that were used in creating the consolidated financial statements in this
report:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; text-align: justify; margin-bottom: 0pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: center; padding-bottom: 1.5pt; vertical-align: bottom"> </td><td style="padding-bottom: 1.5pt; text-align: center; vertical-align: bottom"> </td>
<td colspan="3" style="text-align: center; border-bottom: Black 1.5pt solid; vertical-align: bottom"><b>June 30, 2019</b></td><td style="text-align: center; padding-bottom: 1.5pt; vertical-align: bottom"><b> </b></td>
<td style="text-align: center; border-bottom: Black 1.5pt solid; vertical-align: bottom"><b>June 30, 2018</b></td><td style="text-align: center; padding-bottom: 1.5pt; vertical-align: bottom"><b> </b></td>
<td style="text-align: center; border-bottom: Black 1.5pt solid; vertical-align: bottom"><b>June 30, 2017</b></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 28%; text-align: left">Year-end spot rate</td><td style="width: 2%"> </td>
<td style="width: 16%; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">US$1=RMB
6.8657</font></td><td style="width: 2%; text-align: center"> </td>
<td style="width: 16%; text-align: center"><p style="margin: 0">US$1=JPY 107.5</p>
</td><td style="width: 2%; text-align: left"> </td>
<td style="width: 16%; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">US$1=RMB 6.6181</font></td><td style="width: 2%; text-align: left"> </td>
<td style="width: 16%; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">US$1=RMB 6.7780</font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td>Average rate</td><td> </td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">US$1=RMB 6.8226</font></td><td style="text-align: center"> </td>
<td style="text-align: center"><p style="margin: 0">US$1=JPY 111.1</p>
</td><td style="text-align: left"> </td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">US$1=RMB 6.5020</font></td><td style="text-align: left"> </td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">US$1=RMB 6.8118</font></td></tr>
</table>
<p style="margin-top: 0; margin-bottom: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Comprehensive
income (loss)</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Comprehensive
income (loss) consists of two components, net income and other comprehensive income (loss). Other comprehensive income (loss)
refers to revenue, expenses, gains and losses that under GAAP are recorded as an element of shareholders’ equity but are
excluded from net income. Other comprehensive income (loss) consists of a foreign currency translation adjustment resulting from
the Company not using the U.S. dollar as its functional currency.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Concentrations
and Credit Risk</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">A
majority of the Company’s expense transactions are denominated in RMB and a significant portion of the Company and its subsidiaries’
assets and liabilities are denominated in RMB. RMB is not freely convertible into foreign currencies. In the PRC, certain foreign
exchange transactions are required by law to be transacted only by authorized financial institutions at exchange rates set by
the People’s Bank of China (“PBOC”). Remittances in currencies other than RMB by the Company in China must be
processed through the PBOC or other China foreign exchange regulatory bodies which require certain supporting documentation in
order to affect the remittance.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">As
of June 30, 2019, and 2018, $1,773,713 and $3,348,242 of the Company’s cash and cash equivalents was on deposit at financial
institutions in the PRC where there currently is no rule or regulation requiring such financial institutions to maintain insurance
to cover bank deposits in the event of bank failure. In addition, the Company’s short-term investments deposited with PRC
banks are also not insured.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">As
of June 30, <font style="letter-spacing: -0.05pt">2019, two customers accounted for 25% and 18% of the Company’s total accounts
receivable, respectively. As of June 30, 2018, two customers accounted for 16% and 11% of the Company’s total
accounts receivable, respectively. As of June 30, 2017, two customers accounted for 30% and 13% of the Company’s total accounts
receivable, respectively.</font></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">For
the years ended June 30, 2019, 2018 and 2017, export sales accounted for 42.5%, 50.2% and 67.7% of the Company’s total revenue,
respectively. For the year ended June 30, 2019, three customers accounted for 28.1%, 13.5% and 5.6% of the Company’s total
revenue, respectively. For the year ended June 30, 201<font style="letter-spacing: -0.05pt">8, three customers accounted for 24.9%,
14.0% and 7.4% of the Company’s total revenue, respectively. For the year ended June 30, 2017, three customers accounted
for 20%, 15% and 13% of the Company’s total revenue, respectively.</font></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">For
the year ended June 30, 2019, 2018 and 2017, no single supplier accounted for more than 10% of the Company’s total raw material
purchases.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Statement
of Cash Flows</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
accordance with ASC 230, “Statement of Cash Flows,” cash flows from the Company’s operations are formulated
based upon the local currencies. As a result, amounts related to assets and liabilities reported on the statements of cash flows
will not necessarily agree with changes in the corresponding balances on the balance sheets.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Risks
and Uncertainties</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
operations of the Company are located in the PRC. Accordingly, the Company’s business, financial condition, and results
of operations may be influenced by political, economic, and legal environments in the PRC, as well as by the general state of
the PRC economy. The Company’s results may be adversely affected by changes in the political, regulatory and social conditions
in the PRC. Although the Company has not experienced losses from these situations and believes that it is in compliance with existing
laws and regulations including its organization and structure disclosed in Note 1, this may not be indicative of future results.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 5.65pt 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Reclassifications</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Certain
prior year amounts have been reclassified to conform to the current year presentation, such as reclassification of negative VAT
tax payable as VAT tax recoverable, and segregation of capital expenditure on construction-in-progress out of capital expenditure
on property, plant and equipment. These reclassifications had no effect on the reported revenues, net income and cash flows.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Recent
Accounting Pronouncements</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically
reviews new accounting standards that are issued.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires lessees to recognize a right-of-use asset and lease
liability on the balance sheet for all leases, including operating leases, with a term in excess of 12 months. The guidance also
expands the quantitative and qualitative disclosure requirements. The guidance will be effective in fiscal year 2020, with early
adoption permitted, and must be applied using a modified retrospective approach. In July 2018, the FASB issued updates to the
lease standard making transition requirements less burdensome. The update provides an option to apply the transition provisions
of the new standard at its adoption date instead of at the earliest comparative period presented in the company’s financial
statements. The new guidance requires the lessee to record operating leases on the balance sheet with a right-of-use asset and
corresponding liability for future payment obligations. FASB further issued ASU 2018-11 “Target Improvement” and ASU
2018-20 “Narrow-scope Improvements for Lessors.” As an emerging growth company, the Company will adopt this guidance
effective July 1, 2019. The Company is evaluating the impact on its consolidated financial statements.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
February 2018, the FASB has issued Accounting Standards Update (ASU) No. 2018-02, “Reclassification of Certain Tax Effects
From Accumulated Other Comprehensive Income.” The ASU amends ASC 220, Income Statement — Reporting Comprehensive Income,
to “allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting
from the Tax Cuts and Jobs Act.” In addition, under the ASU, an entity will be required to provide certain disclosures regarding
stranded tax effects. The ASU is effective for all entities for fiscal years beginning after December 15, 2018, and interim periods
within those fiscal years. The Company does not expect this guidance will have a material impact on its consolidated financial
statements.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
March 2018, the FASB issued ASU 2018-05 — Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting
Bulletin No. 118 (“ASU 2018-05”), which amends the FASB Accounting Standards Codification and XBRL Taxonomy based
on the Tax Cuts and Jobs Act (the “Act”) that was signed into law on December 22, 2017 and Staff Accounting Bulletin
No. 118 (“SAB 118”) that was released by the Securities and Exchange Commission. The Act changes numerous provisions
that impact U.S. corporate tax rates, business-related exclusions, and deductions and credits and may additionally have international
tax consequences for many companies that operate internationally. The Company does not believe this guidance will have a material
impact on its consolidated financial statements.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">On
June 20, 2018, the FASB issued ASU No. 2018-07, <i>Compensation—Stock Compensation (Topic 718) - Improvements to Nonemployee
Share-Based Payment Accounting, </i>which aligns the accounting for share-based payment awards issued to employees and nonemployees.
Under ASU No. 2018-07, the existing employee guidance will apply to nonemployee share-based transactions (as long as the transaction
is not effectively a form of financing), with the exception of specific guidance related to the attribution of compensation cost.
The cost of nonemployee awards will continue to be recorded as if the grantor had paid cash for the goods or services. In addition,
the contractual term will be able to be used in lieu of an expected term in the option-pricing model for nonemployee awards. The
new standard is effective for all public entities for fiscal years beginning after December 15, 2018, and interim periods within
those fiscal years. Early adoption is permitted, but not before an entity adopts ASC 606. The Company does not believe this guidance
will have a material impact on its consolidated financial statements.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><b></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments-Credit Losses
(Topic 326), which requires entities to measure all expected credit losses for financial assets held at the reporting date based
on historical experience, current conditions, and reasonable and supportable forecasts. This replaces the existing incurred loss
model and is applicable to the measurement of credit losses on financial assets measured at amortized cost. ASU 2016-13 was subsequently
amended by Accounting Standards Update 2018-19, <i>Codification Improvements to Topic 326, Financial Instruments—Credit
Losses, </i>Accounting Standards Update 2019-04 <i>Codification Improvements to Topic 326, Financial Instruments—Credit
Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments</i>, and Accounting Standards Update 2019-05,
<i>Targeted Transition Relief.</i> For public entities, ASU 2016-13 and its amendments is effective for fiscal years, and interim
periods within those fiscal years, beginning after December 15, 2019. For all other entities, this guidance and its amendments
will be effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early
application will be permitted for all entities for fiscal years, and interim periods within those fiscal years, beginning after
December 15, 2018. The Company is currently evaluating the impact of adopting ASU 2016-13 on its consolidated financial statements.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
August 2018, the FASB Accounting Standards Board issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure
Framework Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”). ASU 2018-13 modifies
the disclosure requirements on fair value measurements. ASU 2018-13 is effective for public entities for fiscal years beginning
after December 15, 2019, with early adoption permitted for any removed or modified disclosures. The removed and modified disclosures
will be adopted on a retrospective basis and the new disclosures will be adopted on a prospective basis. The Company is currently
evaluating the impact of adopting ASU No. 2018-13 on its consolidated financial statements.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>NOTE
4 – ACCOUNTS RECEIVABLE, NET</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<table cellpadding="0" cellspacing="0" align="center" style="border-collapse: collapse; width: 80%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.5pt">Accounts receivable consisted of the following:</td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">As of June 30,</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2018</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 60%; text-align: justify">Accounts receivable from third-party customers</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">5,292,486</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">5,681,513</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify; padding-bottom: 1.5pt">Less: allowance for doubtful accounts</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(128,106</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(40,012</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify">Total accounts receivable from third-party customers, net</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5,164,380</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5,641,501</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1.5pt">Add: accounts receivable - related parties</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">244,764</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-bottom: 2.5pt">Total accounts receivable, net</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">5,409,144</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">5,641,501</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">For
the years ended June 30, 2019, 2018 and 2017, the Company recorded a bad debt provision of $90,077, a bad debt recovery of $5,356
and a bad debt provision of $43,987, respectively. Allowance for doubtful accounts amounted to $128,106 and $40,012 as of June
30, 2019 and 2018, respectively.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="letter-spacing: -0.05pt">Approximately
RMB 27 million ($3.9 million) or 76% of the accounts receivable balance as of June 30, 2019 from third-party
customers has been collected as of the date of this Report. </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">In connection with
the Company’s long-term investments in equity investees as disclosed in Note 2, the Company sold certain intelligence
pet products to Linshui and Dogness Network. The outstanding accounts receivable from these related parties amounted to
$244,764 as of June 30, 2019, which has been fully collected back as of the date of this Report (see Note 11).</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>NOTE
5 – INVENTORY, NET</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td>Inventories consisted of the following:</td><td style="font-weight: bold"> </td>
<td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">As of June 30,</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; border-bottom: Black 1.5pt solid; text-align: center">2019</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; border-bottom: Black 1.5pt solid; text-align: center">2018</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 60%; text-align: justify">Raw materials</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">795,047</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">825,675</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify">Work in process</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,136,582</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,076,749</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-bottom: 1.5pt">Finished goods</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">3,431,102</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">2,256,171</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5,362,731</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">4,158,595</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-bottom: 1.5pt">Less: inventory allowance</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(5,012</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify; padding-bottom: 2.5pt">Inventory, net</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">5,362,731</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">4,153,583</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Inventory
includes raw materials, work in progress and finished goods. Finished goods include direct material costs, direct labor costs
and manufacturing overhead.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">For
the years ended June 30, 2019, 2018 and 2017, the Company recorded an inventory reserve recovery of $4,863, $14,106 and $400,957,
respectively.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>NOTE
6 – PROPERTY, PLANT AND EQUIPMENT, NET</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Property,
plant and equipment stated at cost less accumulated depreciation consisted of the following:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="font-weight: bold"> </td>
<td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">As of June 30,</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2019</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2018</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 60%; text-align: justify">Buildings</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">9,492,699</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">9,794,094</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify">Machinery and equipment</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">9,543,080</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">8,309,138</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify">Office equipment and furniture</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">676,748</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">525,886</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify">Automobiles</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">765,214</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">622,720</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify">Leasehold improvements</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5,126,219</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">3,985,511</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify; padding-bottom: 1.5pt">Construction-in-progress (“CIP”) (1)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">15,787,348</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">2,375,461</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify">Total</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">41,391,308</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">25,612,810</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify; padding-bottom: 1.5pt">Less: accumulated depreciation</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(5,874,940</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(4,662,125</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-bottom: 2.5pt">Property, plant and equipment, net</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">35,516,368</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">20,950,685</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Depreciation
expense was $1,387,698, $1,179,814 and $809,313 for the years ended June 30, 2019, 2018 and 2017, respectively. In connection
with the $2.9 million loan from Bank of Communications of China, Dongguan Branch, the Company pledged fixed assets of approximately
$8,426,982 as the collateral to secure the loan (See Note 8).</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><font style="font: 10pt Times New Roman, Times, Serif">(1)</font> <font style="font: 10pt Times New Roman, Times, Serif">The Company’s CIP primarily consisted of the following:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">On
March 16, 2018, the Company acquired 100% of the equity interests in Zhangzhou Meijia Metal Product Co., Ltd (“Meijia”)
from its original shareholder, for a total cash consideration of RMB 71.0 million ($10.7 million) (See Note 1).</font><font style="font: 10pt Times New Roman, Times, Serif">
After the acquisition, the Company started building its own facilities and office spaces to expand the production capacity in
order to fulfill increased customer orders. Total budgeted capital expenditure on decoration and purchase of equipment and machinery
to bring Meijia manufacturing facility into use amounted to RMB 110 million ($16.0 million). As of June 30, 2019, the Company
has already spent RMB 80.8 million ($11.8 million) and had future capital expenditure commitment of approximately RMB 29.2
million ($4.2 million) on Meijia plant facilities. Meijia plant has started the test operation in August 2019, and is expected
to be ready for production before December 31, 2019 upon passing the final inspection conducted by local government. </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
addition, the Company’s subsidiary Dongguan Jiasheng is also working on a project to build a warehouse with original budgeted
costs of RMB 85 million ($12.4 million). In order to conform to the local government’s building code, the construction
plan has been recently modified and the budgeted cost has been reduced to RMB 75 million ($10.9 million). As of June 30, 2019,
the Company has already spent RMB 23.2 million ($3.4 million) and had future capital expenditure commitment of approximately
RMB 51.8 million ($7.5 million) on the warehouse construction. The warehouse construction is expected to be completed
by the end of 2020.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">As
of June 30, 2019, future minimum capital expenditures on the Company’s construction-in-progress projects are estimated as
follows:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">Capital expenditure commitment <br />on Meijia</td><td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">Capital expenditure commitment <br />on Dongguan Jiasheng</td><td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">Total</td><td style="text-align: center"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 43%; text-align: left">2020</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 15%; text-align: right">4,200,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 15%; text-align: right">6,000,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 15%; text-align: right">10,200,000</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1.5pt">2021</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,500,000</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,500,000</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 2.5pt; text-align: left">Total</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">4,200,000</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">7,500,000</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">11,700,000</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">Subsequently, from
July 2019 to September 2019, the Company spent additional RMB 30.6 million ($4.4 million) on the above mentioned
construction projects (including RMB 21.4 million ($3.1 million) on equipment and machinery purchase for Meijia plant,
and RMB 9.2 million ($1.3 million) on the warehouse construction). As a result, the Company’s future capital expenditure
commitment on CIP has been lowered down from approximately $11.7 million as of June 30, 2019 to approximately $7.3
million as of the date of this Report.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">The Company <font style="font: 10pt Times New Roman, Times, Serif">plans
to fund these CIP projects through working capital generated from operations, bank borrowings, the proceeds received from the
IPO and other potential capital raising activities.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>NOTE
7 – INTANGIBLE ASSETS, NET</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Intangible
assets, net consisted of the following:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="font-weight: bold"> </td>
<td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">As of June 30,</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2019</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2018</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 60%; text-align: justify">Software</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">199,984</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">207,396</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify">Land use right</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,212,619</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,294,624</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-bottom: 1.5pt">Less: accumulated amortization</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(185,805</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(111,449</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify; padding-bottom: 2.5pt">Intangible assets, net</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">2,226,798</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">2,390,571</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Amortization
expense was $78,824, $40,078 and $21,015 for the years ended June 30, 2019, 2018 and 2017, respectively. In connection with the
$2.9 million loan from Bank of Communications of China, Dongguan Branch., the Company pledged intangible assets of $2,212,619
as the collateral to secure the loan (See Note 8)</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Estimated
future amortization expense is as follows:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="border-bottom: Black 1.5pt solid; text-align: left">Year ending June 30,</td><td> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center">Amortization expense</td><td> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 78%; text-align: left">2020</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 18%; text-align: right">78,340</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">2021</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">78,340</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">2022</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">78,340</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">2023</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">72,881</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Thereafter</td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,918,897</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Total</td><td> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">2,226,798</td><td style="text-align: left"> </td></tr></table> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>NOTE
8 – SHORT-TERM BANK LOANS</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><font style="font: 10pt Times New Roman, Times, Serif">Short-term
loans consisted of the following:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">As of June 30,</td><td style="font-weight: bold; text-align: center"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; border-bottom: Black 1.5pt solid; text-align: center">2019</td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; border-bottom: Black 1.5pt solid; text-align: center">2018</td><td style="font-weight: bold; text-align: center"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font-weight: bold; text-align: left">Bank of Communications of China (“BCC”):</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="width: 60%; text-align: left">Effective interest rate at 5.655%, due on July 31, 2018 (1)</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">-</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">3,022,000</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Effective interest rate at 5.873%, due on August 20, 2019 (2)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,914,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font-weight: bold; text-align: left">Industrial and Commercial Bank of China (“ICBC”):</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1.5pt">Effective interest rate at 6.525%, due on January 10, 2019 (3)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,813,200</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font-weight: bold; padding-bottom: 2.5pt">Total</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">2,914,000</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">4,835,200</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="width: 0.25in; font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">(1)</font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><p style="font: 10pt Times New Roman, Times, Serif; text-align: justify; layout-grid-mode: line">In August 2016, Dongguan Jiasheng
signed a loan agreement with <font style="font: 10pt Times New Roman, Times, Serif">Bank
of Communication of China, <font style="letter-spacing: -0.05pt">Dongguan Branch to borrow
RMB 26 million ($3.8 million) as working capital for one year with a due date
on July 29, 2017. The loan was repaid in full upon maturity on August 8, 2017. In
August 2017, the Company renewed the above loan for another year to July 31, 2018. The
Company repaid the loan upon maturity on August 21, 2018.</font></font></p>
</td></tr>
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">(2)</font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><p style="font: 10pt Times New Roman, Times, Serif; text-align: justify; layout-grid-mode: line">On
August 17, 2018, the Company entered into a line of credit agreement with Bank of Communication
of China, Dongguan Branch to allow the Company to borrow RMB 30 million ($4.5 million)
for one year with a maturity date on August 13, 2019. The Company had drawn down
RMB 20 million ($3.0 million) of the loan to purchase raw materials on August
21, 2018. The loan bears a variable interest rate based on the prime interest rate set
by the People’s Bank of China at the time of borrowing, plus 1.5625 basis points.
The Company pledged the land use right of approximately $2.2 million and buildings of
approximately $8.4 million acquired from Meijia as the collateral to secure this loan
(see Note 6 and Note 7). In addition, Mr. Silong Chen, the CEO of the Company, provided
personal guarantee for the loan.</p>
</td></tr>
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: justify; font: 10pt Times New Roman, Times, Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><p style="margin-top: 0; text-align: justify; margin-bottom: 0">On August 20, 2019, the Company
repaid the loan upon maturity and entered <font style="font: 10pt Times New Roman, Times, Serif">into
two new loan agreements with BCC to borrow RMB 18 million ($2.6 million) as working
capital for one year (See Note 16).</font></p>
</td></tr>
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; layout-grid-mode: line"><font style="font: 10pt Times New Roman, Times, Serif">(3)</font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; layout-grid-mode: line"><font style="font: 10pt Times New Roman, Times, Serif">On
January 22, 2016, Dongguan Jiasheng entered into a loan agreement with ICBC to borrow RMB 12 million ($1.8 million)
as working capital for one year with the maturity date on January 20, 2017. The loan bears a variable interest rate based
on the prime interest rate set by the People’s Bank of China at the time of borrowing, plus 50 basis points. The loan
was renewed in January 2017 for another year, with the new maturity date of January 9, 2018. The loan was further renewed
for another year upon maturity, with a new maturity date of January 10, 2019. On October 13, 2018, the Company repaid the
loan in full before its maturity and has no plan to further renew the loan.</font></td></tr>
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="font: bold 10pt Times New Roman, Times, Serif; text-align: justify; layout-grid-mode: line"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font: bold 10pt Times New Roman, Times, Serif; text-align: justify; layout-grid-mode: line"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; layout-grid-mode: line"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; layout-grid-mode: line"><p style="font: 10pt Times New Roman, Times, Serif; text-align: justify; layout-grid-mode: line">In addition to the above loans borrowed from ICBC, the Company’s principal shareholder, Mr. Silong Chen,
pledged his personal assets as the collateral to safeguard a maximum line of credit of $2.3 million that Dongguan Jiasheng could
borrow from ICBC during the period from February 12, 2015 to February 12, 2020. In addition, Mr. Silong Chen and his relatives
jointly signed a maximum guarantee agreement with ICBC to provide an additional maximum RMB 16 million ($2.3 million) guarantee
to any loan that Dongguan Jiasheng could borrow from ICBC during the period from February 12, 2015 to February 12, 2020. The Company
has not yet drawn upon this line of credit.</p>
</td></tr>
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; layout-grid-mode: line"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; layout-grid-mode: line"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; layout-grid-mode: line"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; layout-grid-mode: line"><font style="font: 10pt Times New Roman, Times, Serif">Interest
expenses for the above-mentioned loans amounted to $209,842, $546,681 and $333,170 for the years ended June 30, 2019, 2018
and 2017, respectively.</font></td></tr></table> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>NOTE
9 – TAXES</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">(a)
Corporate Income Taxes (“CIT”)</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Dogness
is incorporated in the BVI as an offshore holding company and is not subject to tax on income or capital gain under the laws of
BVI.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Under
Hong Kong tax laws, subsidiaries in Hong Kong are subject to statutory income tax rate at 16.5% if revenue is generated in Hong
Kong and there are no withholding taxes in Hong Kong on remittance of dividends.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Under
the Enterprise Income Tax (“EIT”) Law of PRC, domestic enterprises and Foreign Investment Enterprises (the “FIE”)
are usually subject to a unified 25% enterprise income tax rate while preferential tax rates, tax holidays and even tax exemption
may be granted on case-by-case basis. EIT grants preferential tax treatment to High and New Technology Enterprises (“HNTEs”).
Under this preferential tax treatment, HNTEs are entitled to an income tax rate of 15%, subject to a requirement that they re-apply
for HNTE status every three years. In October 2015, Dongguan Jiasheng, the Company’s main operating subsidiary in PRC, was
approved as HNTEs and is entitled to a reduced income tax rate of 15% for three years. On November 28, 2018, Dongguan Jiasheng
successfully renewed the High-technology certificate for another three years. The certificate is valid for another three years
and is subject to further renewal.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">EIT
is typically governed by the local tax authority in China. Each local tax authority at times may grant tax holidays to local enterprises
as a way to encourage entrepreneurship and stimulate local economy. The corporate income taxes for the fiscal year 2019, 2018
and 2017 were reported at a reduced rate of 15% as a result of Dongguan Jiasheng being approved as HNTE. The impact of the tax
holidays noted above decreased foreign taxes by $3,003, $545,805 and $552,132 for the years ended June 30, 2019, 2018 and 2017,
respectively. The benefit of the tax holidays on net income per share (basic and diluted) was $0.00, $0.03 and $0.04 for the years
ended June 30, 2019, 2018 and 2017, respectively. As of June 30, 2019, the tax years ended December 31, 2013 through December
31, 2018 for the Company’s PRC entities remain open for statutory examination by PRC tax authorities.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
following table reconciles the statutory rate to the Company’s effective tax rate:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td colspan="10" style="font-weight: bold; border-bottom: Black 1.5pt solid; text-align: center">For the years ended June 30,</td><td style="font-weight: bold; text-align: center"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; border-bottom: Black 1.5pt solid; text-align: center">2019</td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; border-bottom: Black 1.5pt solid; text-align: center">2018</td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; border-bottom: Black 1.5pt solid; text-align: center">2017</td><td style="font-weight: bold; text-align: center"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">%</td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">%</td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">%</td><td style="font-weight: bold; text-align: center"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 46%; text-align: left">Hong Kong Statutory income tax rate</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 14%; text-align: right">16.5</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 14%; text-align: right">16.5</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 14%; text-align: right">16.5</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Income not generated in Hong Kong</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(8.9</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(15.3</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(15.4</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">China statutory income tax rate</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">25.0</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">25.0</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">25.0</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Effect of PRC preferential tax rate and tax holidays</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(10.0</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(8.3</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(9.3</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Non-deductible permanent difference</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0.7</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(1.8</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(1.6</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1.5pt">Research and development tax credit</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(2.0</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(0.9</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(0.1</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 2.5pt; padding-left: 10pt">Effective tax rate</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; text-align: right">21.3</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; text-align: right">15.2</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; text-align: right">15.1</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
provision for income tax consists of the following:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; background-color: white"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td colspan="10" style="font-weight: bold; border-bottom: Black 1.5pt solid; text-align: center">For the years ended June 30,</td><td style="font-weight: bold; text-align: center"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; border-bottom: Black 1.5pt solid; text-align: center">2019</td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; border-bottom: Black 1.5pt solid; text-align: center">2018</td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; border-bottom: Black 1.5pt solid; text-align: center">2017</td><td style="font-weight: bold; text-align: center"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 46%; text-align: left">Current income tax provision</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right">614,622</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right">938,119</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right">889,799</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1.5pt">Deferred income tax provision (benefit)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(234,326</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(12,747</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">53,398</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 2.5pt; padding-left: 10pt">Total income tax expense</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">380,296</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">925,372</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">943,197</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
components of deferred tax assets and deferred tax liability as of June 30, 2019 and 2018 consist of the following:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">June 30, 2019</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">June 30, 2018</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Deferred tax assets:</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="width: 60%; text-align: left; padding-left: 10pt">Net operating losses</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">234,319</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">24,717</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt; padding-left: 10pt">Inventory and accounts receivable reserves</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">21,137</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">255,456</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">24,717</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt">Deferred tax liability</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt; padding-left: 10pt">Inventory and accounts receivable reserves</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(2,420</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1.5pt">Deferred tax assets (liability) - net</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">255,456</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">22,297</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">(b)
Taxes Payable</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company’s taxes payable consists of the following:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">June 30, 2019</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">June 30, 2018</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2"> </td><td> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 60%; text-align: justify">Corporate income tax payable</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 16%; text-align: right">2,907,079</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 16%; text-align: right">2,416,098</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify; padding-bottom: 1.5pt">Other tax payable</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">2,018</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">5,205</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-bottom: 2.5pt">Total taxes payable</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">2,909,097</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">2,421,303</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">As
of June 30, 2019 and 2018, the Company had accrued tax liabilities of approximately $2.9 million and $2.4 million, respectively,
mostly related to the unpaid income tax and business tax in China. According to PRC taxation regulation, if tax has not been fully
paid, tax authorities may impose tax and late payment penalties within three years. In practice, since all of the taxes owed are
local taxes, the local tax authority is typically more flexible and willing to provide incentives or settlements with local small
and medium-size businesses to relieve their burden and to stimulate the local economy. Management has discussed with local tax
authorities regarding the outstanding tax payable balance after the Company successfully completed its IPO and is in the process
of negotiating a settlement plan agreement. There was no interest and penalty accrued as of June 30, 2019 becaue the Company
has not received any penalty and interest charge notice from local tax authorities. The Company believes it is likely that
the Company can reach an agreement with the local tax authority to fully settle its tax liabilities within fiscal 2020 but cannot
guarantee such settlement will ultimately occur.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>NOTE
10 – COMMITMENTS AND CONTINGENCIES</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Operating
Lease Commitments</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company’s subsidiary Dongguan Jiasheng leases manufacturing facilities and administration office spaces under operating
leases. These leases of the major manufacturing facilities and office space expire between April 30, 2027 and October 14, 2038.
The Company’s subsidiary Dogness Group also leases warehouse which expires on June 20, 2024.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Operating
lease expense amounted to $640,626, $391,784 and $333,452 for the years ended June 30, 2019, 2018 and 2017, respectively.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Future
minimum lease payments under non-cancelable operating leases are as follows:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" align="center" style="border-collapse: collapse; width: 70%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: left; border-bottom: Black 1.5pt solid">Twelve months ending June 30,</td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">Lease payments</td><td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 78%; text-align: left">2020</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 18%; text-align: right">150,531</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">2021</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">75,849</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">2022</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">77,660</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">2023</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">79,795</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">2024</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">83,005</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-bottom: 1.5pt; text-align: left">Thereafter</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">62,425</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 2.5pt; text-align: left">Total</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">529,265</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Contingencies</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company may be involved in various legal proceedings, claims and other disputes arising from the commercial operations, projects,
employees and other matters which, in general, are subject to uncertainties and in which the outcomes are not predictable. The
Company determines whether an estimated loss from a contingency should be accrued by assessing whether a loss is deemed probable
and can be reasonably estimated. Although the Company can give no assurances about the resolution of pending claims, litigation
or other disputes and the effect such outcomes may have on the Company, the Company believes that any ultimate liability resulting
from the outcome of such proceedings, to the extent not otherwise provided or covered by insurance, will not have a material adverse
effect on the Company’s consolidated financial position or results of operations or liquidity.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Capital
Investment Obligation</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">On July 6, 2018, a new entity called Dogness Intelligence Technology Co., Ltd. (“<font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.05pt">Intelligence
Guangzhou</font><font style="font: 10pt Times New Roman, Times, Serif">”), was incorporated under the
laws of the People’s Republic of China in Guangzhou City, Guangdong Province, China with a total registered capital of RMB
80 million ($11.8 million). The Company’s subsidiary, Dongguan Jiasheng, is requited to contribute RMB 46.4 million ($6.8
million) as paid-in capital in exchange for 58% ownership interest in Intelligence Guangzhou. As of the date of this report, Dongguang
Jiasheng has not made the capital contribution. Pursuant to the article of incorporation, the Company is required to complete the
capital contribution before May 22, 2038.</font></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">In connection with
the Company’s long-term investments in equity investees in Dogness Network and Linsun, as disclosed in Note 2 above, the
Company is required to invest RMB 8.0 million ($1,165,600) in exchange for 10% ownership interest in Dogness Network, and
is required to invest RMB 3.0 million ($437,100) in exchange for 13% ownership interest in Linsun. As of June 30, 2019,
the Company already made the cash investment of RMB 3.08 million ($448,756) and RMB 2.5 million ($364,250) to Dogness
Network and Linsun, respectively, and is obligated to contribute additional $798,694 in aggregate (including $725,844 to Dogness
Network and $72,850 to Linsun) capital investment within the next twelve months from June 30, 2019.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Capital
Expenditure Commitment on the CIP</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">In connection with
the Company’s construction-in-progress projects on Meijia and Dongguan Jiasheng, future minimum capital expenditure commitment
on these CIP projects is estimated to be $11.7 million as of June 30, 2019 and approximately $7.3 million as of
the date of this Report (see Note 6)<font style="font: 10pt Times New Roman, Times, Serif">.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>NOTE
11 – RELATED PARTY TRANSACTIONS</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">As
of June 30, 2019 and 2018, the balances due from related parties were as follows:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold"> </td>
<td colspan="6" style="font-weight: bold; border-bottom: Black 1.5pt solid; text-align: center">As of June 30,</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td>Accounts receivable - related parties, net:</td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; border-bottom: Black 1.5pt solid; text-align: center">2019</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; border-bottom: Black 1.5pt solid; text-align: center">2018</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 60%; text-align: left">-Linsun Smart Technology Co., Ltd (“Linsun”)</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">92,563</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">     -</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1.5pt">-Dogness Network Technology Co., Ltd (“Dogness Network”),</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">152,201</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">244,764</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="letter-spacing: -0.05pt">During
the year ended June 30, 2019, the Company sold intelligent pet products to related parties Linsun and Dogness Network.
Sales of intelligent pet products to Linsun and Dogness Network amounted to $185,126 and </font>$143,441, respectively
in fiscal 2019. As of June 30, 2019, total accounts receivable from these two related parties amounted to $244,764,
which has been fully collected back as of the date of this Report.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">During
the year ended June 30, 2019, the Company also purchased certain pet product components and parts, such as smart drinking water
machines and pet feeding devices, from related party Linsun. Total purchases from Linsun amounted to $850,589 in the fiscal
year 2019. </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
addition, in connection with the Company’s bank borrowings, Mr. Silong Chen, the Chairman of the Board and CEO of the Company,
pledged his personal assets as collateral and signed guarantee agreements to provide guarantee to the Company’s short-term
bank loans (See Note 8).</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>NOTE
13 - EARNINGS PER SHARE</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">For the years ended
June 30, 2019 and 2018, the effect of potential shares of common stock from the unexercised options was dilutive since the exercise
prices for the options were lower than the average market price. <font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.05pt">For
the years ended June 30, 2019 and 2018, the effect of potential shares of common stock from the warrants was anti-dilutive since
the exercise prices were higher than the average market price.</font><font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.05pt">
As a result, a total of 27,975 and 9,280 unexercised options are dilutive, and were included in the computation of diluted earnings
per share for the years ended June 30, 2019 and 2018, respectively. </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">For the year ended
June 30, 2017, basic average shares outstanding and diluted average shares outstanding were the same because there were no warrants
or options outstanding.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
following table presents a reconciliation of basic and diluted net income per share:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td colspan="10" style="font-weight: bold; border-bottom: Black 1.5pt solid; text-align: center">For the years ended June 30,</td><td style="font-weight: bold; text-align: center"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; border-bottom: Black 1.5pt solid; text-align: center">2019</td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; border-bottom: Black 1.5pt solid; text-align: center">2018</td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; border-bottom: Black 1.5pt solid; text-align: center">2017</td><td style="font-weight: bold; text-align: center"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 46%; text-align: left; padding-bottom: 1.5pt">Net income attributable to the Company</td><td style="width: 2%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="width: 14%; border-bottom: Black 1.5pt solid; text-align: right">1,421,781</td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left"> </td><td style="width: 2%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="width: 14%; border-bottom: Black 1.5pt solid; text-align: right">4,603,708</td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left"> </td><td style="width: 2%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="width: 14%; border-bottom: Black 1.5pt solid; text-align: right">4,945,764</td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td>Weighted average number of common shares outstanding - Basic</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">25,913,631</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">20,800,670</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">15,000,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">Dilutive securities -unexercised warrants and options</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">27,975</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">9,280</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td>Weighted average number of common shares outstanding – diluted</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">25,941,606</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">20,809,950</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">15,000,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-bottom: 1.5pt">Earnings per share - Basic</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">0.05</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">0.22</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">0.33</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 1.5pt">Earnings per share – Diluted</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">0.05</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">0.22</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">0.33</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr></table> <p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">NOTE
15 – SEGMENT INFORMATION AND REVENUE ANALYSIS</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">An
operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur
expenses, and is identified on the basis of the internal financial reports that are provided to and regularly reviewed by the
Company’s chief operating decision maker in order to allocate resources and assess performance of the segment.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
management of the Company concludes that it has only one reporting segment. The Company designs and manufactures fashionable and
high-quality leashes, collars and harnesses to complement cats’ and dogs’ appearances. The Company’s products
have similar economic characteristics with respect to raw materials, vendors, marketing and promotions, customers and methods
of distribution. The Company’s chief operating decision maker has been identified as the Chief Executive Officer, who reviews
consolidated results when making decisions about allocating resources and assessing performance of the Company, rather than by
product types or geographic area; hence the Company has only one reporting segment.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b><u>Geographic
information</u></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
summary of our total revenues by geographic market for the years ended June 30, 2019, 2018 and 2017 was as follows:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="10" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">For the year ended June 30,</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2018</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2017</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 46%; text-align: left">China</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right">15,082,443</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right">14,865,940</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right">6,839,534</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">United States</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5,522,008</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">10,168,945</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">9,082,419</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td>Europe</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,510,190</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,994,085</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,618,851</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td>Australia</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">216,993</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">223,463</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">149,635</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td>Canada</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">950,353</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">128,320</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">481,142</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Central and South America</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">231,426</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">106,098</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">411,281</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">Japan and other Asian countries and regions</td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; border-bottom: Black 1.5pt solid"> </td><td style="text-align: right; border-bottom: Black 1.5pt solid">1,703,102</td><td style="text-align: left; padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; border-bottom: Black 1.5pt solid"> </td><td style="text-align: right; border-bottom: Black 1.5pt solid">2,637,444</td><td style="text-align: left; padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; border-bottom: Black 1.5pt solid"> </td><td style="text-align: right; border-bottom: Black 1.5pt solid">1,589,229</td><td style="text-align: left; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-bottom: 2.5pt">Total</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">26,216,515</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">30,135,295</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">21,172,091</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b><u>Revenue
by product categories</u></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
summary of our total revenues by our product categories for the years ended June 30, 2019, 2018 and 2017 was as follows:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td colspan="10" style="font-weight: bold; border-bottom: Black 1.5pt solid; text-align: center">For the years ended June 30,</td><td style="font-weight: bold; text-align: center"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; border-bottom: Black 1.5pt solid; text-align: center">2019</td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; border-bottom: Black 1.5pt solid; text-align: center">2018</td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; border-bottom: Black 1.5pt solid; text-align: center">2017</td><td style="font-weight: bold; text-align: center"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 46%; text-align: left">Pet leashes</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right">6,266,952</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right">7,102,233</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right">5,290,918</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Pet collars</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">6,188,672</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">10,684,908</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">7,529,420</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Pet harnesses</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">3,587,128</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">4,980,771</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,508,426</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Retractable dog leashes</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,771,805</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,650,932</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,691,066</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Intelligent pet products</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,103,523</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">59,719</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Gift suspender</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">4,058,229</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">3,481,500</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,415,118</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Other pet accessories</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,024,742</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,175,232</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,737,143</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1.5pt">Climbing hooks</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">215,464</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 2.5pt">Total</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">26,216,515</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">30,135,295</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">21,172,091</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table> <p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">NOTE
16 – SUBSEQUENT EVENTS</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: normal 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">On July 4, 2019,
the Company made additional capital contribution of RMB 3<font style="font: 10pt Times New Roman, Times, Serif">.0
million ($0.4 million) to increase the paid-in capital of Meijia.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">On
July 30, 2019, the Company renegotiated and signed a new Corporate and Executive Service Agreement with TJ Capital to provide
strategic consulting services to the Company relating to services such as investor relations, capital markets and shareholder
value creation strategy. The consulting service period is for two years, unless sooner terminated by either party or extended
by the agreement of both parties. Pursuant to the agreement, as the compensation for the services, TJ Capital will be granted
stock options to purchase 160,000 shares of the Company’s Class A common shares. The options are exercisable at a
purchase price of $1.50 per share, and the options shall be deemed to be fully paid at a rate of 6,667 options per month,
commencing on August 1, 2019. The aggregated fair value of the options granted to TJ Capital was $284,300. The fair value
has been estimated using the Black-Scholes pricing model with the following weighted-average assumptions: market value of underlying
stock of $2.90; risk free rate of 1.85%; expected term of 2 years; exercise price of the options of $1.50; volatility of 77.0%;
and expected future dividends of $Nil.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: justify">On August 9, 2019, the Company entered into
a loan agreement with ICBC to borrow RMB 12 million ($1.8 million) as working capital for one year. The loan bears a variable
interest rate based on the prime interest rate set by the People’s Bank of China at the time of borrowing, plus 1.345 basis
points. Mr. Silong Chen, the CEO of the Company, provided personal guarantee for the loan.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">On August 20, 2019,
the Company repaid the bank loan of RMB 20 million ($3.0 million) borrowed from Bank of Communications upon maturity. On
September 5 and September 10, 2019, the Company entered into a loan agreement with Bank of Communications to borrow RMB 18 million
($2.6 million) as working capital for one year. The loans bear a variable interest rate based on the prime interest rate
set by the People’s Bank of China at the time of borrowing, plus 1.405 basis points. <font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.05pt">The
Company pledged the land use right of approximately $2.2 million and buildings of approximately $8.4 million acquired from Meijia
as collateral to secure this loan. </font><font style="font: 10pt Times New Roman, Times, Serif">Mr. Silong
Chen, the CEO of the Company, provided personal guarantee for the loans.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Basis
of Presentation and Principles of Consolidation</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0"><font style="font: 10pt Times New Roman, Times, Serif">The
accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted
in the United States of America (“US GAAP”) and have been consistently applied.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 5.65pt 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
accompanying consolidated financial statements include the financial statements of Dogness, HK Dogness, HK Jiasheng, Dongguan
Dogness, Dongguan Jiasheng, Meijia, Dogness Overseas, Intelligence Guangzhou, Dogness Japan and Dogness Group. All inter-company
balances and transactions have been eliminated upon consolidation. For the Company’s equity investment which the Company
does not have control and is not the primary beneficiary, but has significant influence in the decision-making of the ordinary
course of business, the equity method is applied.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company’s consolidated financial statements reflect the operating results of the following entities:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="border-bottom: Black 1.5pt solid; text-align: left">Name of Entity</td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: center">Date of Incorporation</td><td style="text-align: center"> </td>
<td style="text-align: center; border-bottom: Black 1.5pt solid">Place of Incorporation</td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">% of Ownership</td><td style="text-align: center"> </td><td style="text-align: center"> </td>
<td style="text-align: center; border-bottom: Black 1.5pt solid">Principal Activities</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Dogness (International) Corporation (“Dogness” or the “Company”)</td><td> </td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">July 11, 2016</font></td><td> </td>
<td style="text-align: center">BVI</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">Parent, 100</font></td><td style="text-align: left">%</td><td> </td>
<td style="text-align: center">Holding Company</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="width: 24%; text-align: left">Dogness (Hong Kong) Pet Products Co., Ltd. (“HK Dogness”)</td><td style="width: 2%"> </td>
<td style="width: 15%; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">March 10, 2009</font></td><td style="width: 2%"> </td>
<td style="width: 16%; text-align: center">Hong Kong</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 15%; text-align: right">100</td><td style="width: 1%; text-align: left">%</td><td style="width: 2%"> </td>
<td style="width: 20%; text-align: center">Trading</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Jiasheng Enterprise (Hong Kong) Co., Limited (“HK Jiasheng”)</td><td> </td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">July 12, 2007</font></td><td> </td>
<td style="text-align: center">Hong Kong</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">100</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: center">Trading</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Dogness Intelligence Technology (Dongguan) Co., Ltd. (“Dongguan Dogness”)</td><td> </td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">October 26, 2016</font></td><td> </td>
<td style="text-align: center">Dongguan, China</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">100</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: center">Holding Company</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Dongguan Jiasheng Enterprise Co., Ltd. (“Dongguan Jiasheng”)</td><td> </td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">May 15, 2009</font></td><td> </td>
<td style="text-align: center">Dongguan, China</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">100</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: center">Development and manufacturing of pet leash products</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Zhangzhou Meijia Metal Product Co., Ltd (“Meijia”)</td><td> </td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">July 09,2009</font></td><td> </td>
<td style="text-align: center">Zhangzhou, China</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">100</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: center">manufacturing of pet leash products</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Dogness Overseas Ltd (“Dogness Overseas”)</td><td> </td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">February 8, 2018</font></td><td> </td>
<td style="text-align: center">BVI</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">100</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: center">Holding Company</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Dogness Group LLC (“Dogness Group”)</td><td> </td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">January 23, 2018</font></td><td> </td>
<td style="text-align: center">Delaware, United States</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">100</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: center">Pet products trading</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Dogness Intelligence Technology Co., Ltd. (“Intelligence Guangzhou”)</td><td> </td>
<td style="text-align: center"><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">July
6, 2018</font></p></td><td> </td>
<td style="text-align: center">Guangzhou, China</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">58</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: center">Research and manufacturing of intelligent pet products</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Dogness Japan Co. Ltd. (“Dogness Japan”)</td><td> </td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">February 5, 2019</font></td><td> </td>
<td style="text-align: center">Osaka, Japan</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">51</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: center">Pet products trading</td></tr>
</table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Use
of Estimates</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
preparing the consolidated financial statements in conformity with US GAAP, management makes estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. These estimates are based on information
as of the date of the consolidated financial statements. Significant estimates required to be made by management include, but
are not limited to, the valuation of accounts receivable, inventories, advances to suppliers, useful lives of property, plant
and equipment, intangible assets, the recoverability of long-lived assets, provision necessary for contingent liabilities, revenue
recognition and realization of deferred tax assets. Actual results could differ from those estimates.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Cash</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company considers all highly liquid investment instruments with an original maturity of three months or less from the date of
purchase to be cash equivalents. The Company maintains most of its bank accounts in the PRC. Cash balances in bank accounts in
PRC are not insured by the Federal Deposit Insurance Corporation or other programs.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Short-term
Investments</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company’s short-term investments consist of wealth management financial products purchased from PRC banks with maturities
within one month to twelve months. The banks invest the Company’s fund in certain financial instruments including
money market funds, bonds or mutual funds, with rates of return on these investments ranging from 1.75% to 4.60% per annum. The
carrying values of the Company’s short-term investments approximate fair value because of their short-term maturities. The
interest earned is recognized in the consolidated statements of income and comprehensive income (loss) over the contractual term
of these investments.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company had short-term investments of $11,073,200 and $28,233,035 as of June 30, 2019 and 2018, respectively. The Company recorded
interest income of $536,345, $517,359 and $Nil for the years ended June 30, 2019, 2018 and 2017, respectively.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Accounts
Receivable, net</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Accounts receivable are recognized and carried at original invoiced amount less an estimated allowance for
uncollectible accounts. The Company usually determines the adequacy of reserves for doubtful accounts based on individual account
analysis and historical collection trends. The Company establishes a provision for doubtful receivables when there is objective
evidence that the Company may not be able to collect amounts due. The allowance is based on management’s best estimates of
specific losses on individual exposures, as well as a provision on historical trends of collections. The provision is recorded
against accounts receivables balances, with a corresponding charge recorded in the consolidated statements of income and comprehensive
income (loss). Delinquent account balances are written off against the allowance for doubtful accounts after management has determined
that the likelihood of collection is not probable. Allowance for uncollectible balances amounted to $128,106 and <font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.05pt">$40,012
as of June 30, 2019 and 2018, respectively.</font></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Inventories,
net</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0pt; text-align: justify; text-indent: 0"><font style="font: 10pt Times New Roman, Times, Serif">Inventories
are stated at net realizable value using the weighted average method. Costs include the cost of raw materials, freight, direct
labor and related production overhead. Any excess of the cost over the net realizable value of each item of inventories is recognized
as a provision for diminution in the value of inventories.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Net
realizable value is the estimated selling price in the normal course of business less any costs to complete and sell products.
The Company evaluates inventories on a quarterly basis for its net realizable value adjustments, and reduces the carrying value
of those inventories that are obsolete or in excess of the forecasted usage to their estimated net realizable value based on various
factors including aging and future demand of each type of inventories.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Property,
plant and Equipment</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Property,
plant and equipment are stated at cost. The straight-line depreciation method is used to compute depreciation over the estimated
useful lives of the assets, as follows:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; text-align: justify; margin-bottom: 0pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" align="center" style="border-collapse: collapse; width: 70%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom; background-color: White">
<td> </td><td> </td>
<td style="text-align: center; border-bottom: Black 1.5pt solid">Useful life</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 43%">Buildings</td><td style="width: 2%"> </td>
<td style="width: 55%; text-align: center">10-50 years</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Leasehold improvement</td><td> </td>
<td style="text-align: center">Lesser of useful life and lease term</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Machinery equipment</td><td> </td>
<td style="text-align: center">5-10 years</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Transportation vehicles</td><td> </td>
<td style="text-align: center">5 years</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Office equipment and furniture</td><td> </td>
<td style="text-align: center">5 years</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Expenditures
for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred.
Expenditures for major renewals and betterments which substantially extend the useful life of assets are capitalized. The cost
and related accumulated depreciation of assets retired or sold are removed from the respective accounts, and any gain or loss
is recognized in the consolidated statements of income and other comprehensive income (loss) in other income or expenses.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Intangible
Assets</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Intangible
assets consist primarily of a customized software system purchased from a third-party vendor, used for accounting and production
management and land use rights. Under PRC law, all land in the PRC is owned by the government and cannot be sold to an individual
or company. The government grants individuals and companies the right to use parcels of land for specified periods of time. These
land use rights are sometimes referred to informally as “ownership.”</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Intangible
assets are stated at cost less accumulated amortization. Customized software system are amortized using the straight-line method
over the estimated useful economic life of 10 years. Land use rights are amortization using the straight-line method over the
estimated useful life of 50 years, which is determined in connection with the term of the land use rights.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Long-lived
assets impairment</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company reviews long-lived assets, including definitive-lived intangible assets, for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be recoverable. If the estimated cash flows from the use of
the asset and its eventual disposition below are the asset’s carrying value, then the asset is deemed to be impaired and
written down to its fair value. There were no impairments of these assets as of June 30, 2019, 2018 and 2017.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Fair
Value of Financial Instruments</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">ASC
825-10 requires certain disclosures regarding the fair value of financial instruments. Fair value is defined as the price that
would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the
measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires
entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used
to measure fair value are as follows:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="width: 0.25in; font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 0.25in; font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><font style="font: 10pt Times New Roman, Times, Serif">●</font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Level
1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.</font></td></tr>
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><font style="font: 10pt Times New Roman, Times, Serif">●</font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Level
2 - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted
market prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable
and inputs derived from or corroborated by observable market data.</font></td></tr>
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><font style="font: 10pt Times New Roman, Times, Serif">●</font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Level
3 - inputs to the valuation methodology are unobservable.</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Unless
otherwise disclosed, the fair value of the Company’s financial instruments including cash, short-term investments, accounts
receivable, advances to suppliers, prepayments and other current assets, accounts payable, advance from customers, taxes payable,
accrued liabilities and other payable and short-term bank loans approximate their fair values because of the short-term nature
of these instruments. The Company’s long-term investments are accounted for using the measurement alternative in accordance
with ASC 321, which also approximate their recorded values.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Revenue
Recognition</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">On
July 1, 2018, the Company adopted ASC 606 Revenue from Contracts with Customers, using the modified retrospective approach. ASC
606 establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows
arising from the entity’s contracts to provide goods or services to customers. The core principle requires an entity to
recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it
expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">ASC
606 requires the use of a new <i>five</i>-step model to recognize revenue from customer contracts. The <i>five</i>-step model
requires that the Company (i) identify the contract with the customer, (ii) identify the performance obligations in the contract,
(iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future
reversal will <i>not</i> occur, (iv) allocate the transaction price to the respective performance obligations in the contract,
and (v) recognize revenue when (or as) the Company satisfies the performance obligation. The Company has assessed the impact of
the guidance by reviewing its existing customer contracts and current accounting policies and practices to identify differences
that may result from applying the new requirements, including the evaluation of its performance obligations, transaction price,
customer payments, transfer of control and principal versus agent considerations. Based on the assessment, the Company concluded
that there was no change to the timing and pattern of revenue recognition for its current revenue streams in scope of Topic 606
and therefore there was no material changes to the Company’s consolidated financial statements upon adoption of ASC 606.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Revenue
is recognized when obligations under the terms of a contract with the Company’s customers are satisfied. Satisfaction of
contract terms occur with the transfer of title of the Company’s products to the customers. Net sale is measured as the
amount of consideration the Company expects to receive in exchange for transferring the goods to the wholesaler and retailers.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
amount of consideration the Company expects to receive consists of the sales price adjusted for any incentives if applicable.
Such incentives do not represent a standalone value and are accounted for as a reduction of revenue in accordance with ASC 606.
Prior to the adoption of ASC 606, the Company’s policy was also to account sales incentives, if applicable, as a reduction
of revenue in accordance with ASC 605-50. Therefore, there is no change as to how the Company accounts for sales incentives upon
its adoption of ASC 606. For the years ended June 30, 2019, 2018 and 2017, the Company did not provide any sales incentives to
its customers.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Incidental
promotional items that are immaterial in the context of the contract are recognized as expense. Fees charged to customers for
shipping and handling are included in net sales and the related costs incurred by the Company are included in cost of goods sold.
In applying judgment, the Company considered customer expectations of performance, materiality and the core principles of ASC
Topic 606. The Company’s performance obligations are generally transferred to the customer at a point in time. The Company’s
contracts with customers generally do not include any variable consideration.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company’s revenue is primarily generated from the sales of pet products, including leashes, accessories, collars, harnesses
and intelligent smart pet products, to wholesalers and retailers. Revenue is recognized when the merchandise is delivered, title
is transferred and the Company’s performance obligations to fulfill the customer contracts have been satisfied. Revenue
is reported net of all value added taxes (“VAT”). The Company does not routinely permit customers to return products
and historically, customer returns have been immaterial.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i> </i></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i>Contract
Assets and Liabilities</i></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i> </i></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Payment
terms are established on the Company’s pre-established credit requirements based upon an evaluation of customers’
credit quality. Contact assets are recognized for in related accounts receivable. Contract liabilities are recognized for contracts
where payment has been received in advance of delivery. The contract liability balance can vary significantly depending on the
timing of when an order is placed and when shipment or delivery occurs.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">As
of June 30, 2019 and 2018, other than accounts receivable and advances from customers, the Company had no other material contract
assets, contract liabilities or deferred contract costs recorded on its consolidated balance sheet. Costs of fulfilling customers’
purchase orders, such as shipping, handling and delivery, which occur prior to the transfer of control, are recognized in selling,
general and administrative expense when incurred.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><i>Disaggregation
of Revenues</i></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company disaggregates its revenue from contracts by product types and geographic areas, as the Company believes it best depicts
how the nature, amount, timing and uncertainty of the revenue and cash flows are affected by economic factors. The Company’s
disaggregation of revenues for the years ended June 30, 2019, 2018 and 2017 are disclosed in Note 15 of this consolidation
financial statements</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Research
and development costs</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Research
and development expenses include costs directly attributable to the conduct of research and development projects, including the
cost of salaries and other employee benefits, testing expenses, consumable equipment and consulting fees. All costs associated
with research and development are expensed as incurred.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Income
Taxes</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company accounts for current income taxes in accordance with the laws of the relevant tax authorities. Deferred income taxes are
recognized when temporary differences exist between the tax bases of assets and liabilities and their reported amounts in the
consolidated financial statements. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply
to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred
tax assets and liabilities of a change in tax rates is recognized in income in the period including the enactment date. Valuation
allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">An
uncertain tax position is recognized as a benefit only if it is “more likely than not” that the tax position would
be sustained in a tax examination. The amount recognized is the largest amount of tax benefit that is greater than 50% likely
of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is
recorded. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period
incurred. No significant penalties or interest relating to income taxes have been incurred during the years ended June 30, 2019,
2018 and 2017. As of June 30, 2019, the tax years ended December 31, 2013 through December 31, 2018 for the Company’s PRC
entities remain open for statutory examination by PRC tax authorities.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Value
added tax (“VAT”)</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Sales
revenue represents the invoiced value of goods, net of VAT. The VAT is based on gross sales price and VAT rates range up to 17%
(starting from May 1, 2018, VAT rate was lowered to 16%, and starting from April 1, 2019, VAT rate was further lowered to 13%),
depending on the type of products sold. The VAT may be offset by VAT paid by the Company on raw materials and other materials
included in the cost of producing or acquiring its finished products. The Company recorded a VAT payable or receivable net of
payments in the accompanying consolidated financial statements. Further, when exporting goods, the exporter is entitled to some
or all of the refund of the VAT paid or assess.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 5.65pt 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Since
a majority of the Company’s products are exported to the U.S. and Europe, the Company is eligible for VAT refunds when the
Company completes all the required tax filing procedures. All of the VAT returns of the Company have been and remain subject to
examination by the tax authorities for five years from the date of filing.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Earnings
per Share</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company computes earnings per share (“EPS”) in accordance with ASC 260, “Earnings per Share” (“ASC
260”). ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured
as net income divided by the weighted average common shares outstanding for the period. Diluted presents the dilutive effect on
a per share basis of potential common shares (e.g., convertible securities, options and warrants) as if they had been converted
at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect
(i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. Basic
average shares outstanding and diluted average shares outstanding were the same for the years ended June 30, 2017. For the years
ended June 30, 2019 and 2018, the effect of potential shares of common stock from the unexercised options was dilutive
since the exercise prices for the options were lower than the average market price (See Note 13).</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Share-Based
compensation</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company follows the provisions of ASC 718, “Compensation — Stock Compensation,” which establishes the accounting
for employee stock-based awards. For employee stock-based awards, share-based compensation cost is measured at the grant date
based on the fair value of the award and is recognized as expense with graded vesting on a straight-line basis over the requisite
service period for the entire award. For the non-employee stock-based awards, the fair value of the awards to non-employees are
measured every reporting period based on the value of the Company’s common stock.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Comprehensive
income (loss)</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Comprehensive
income (loss) consists of two components, net income and other comprehensive income (loss). Other comprehensive income (loss)
refers to revenue, expenses, gains and losses that under GAAP are recorded as an element of shareholders’ equity but are
excluded from net income. Other comprehensive income (loss) consists of a foreign currency translation adjustment resulting from
the Company not using the U.S. dollar as its functional currency.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Concentrations
and Credit Risk</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">A
majority of the Company’s expense transactions are denominated in RMB and a significant portion of the Company and its subsidiaries’
assets and liabilities are denominated in RMB. RMB is not freely convertible into foreign currencies. In the PRC, certain foreign
exchange transactions are required by law to be transacted only by authorized financial institutions at exchange rates set by
the People’s Bank of China (“PBOC”). Remittances in currencies other than RMB by the Company in China must be
processed through the PBOC or other China foreign exchange regulatory bodies which require certain supporting documentation in
order to affect the remittance.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">As
of June 30, 2019, and 2018, $1,773,713 and $3,348,242 of the Company’s cash and cash equivalents was on deposit at financial
institutions in the PRC where there currently is no rule or regulation requiring such financial institutions to maintain insurance
to cover bank deposits in the event of bank failure. In addition, the Company’s short-term investments deposited with PRC
banks are also not insured.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">As
of June 30, <font style="letter-spacing: -0.05pt">2019, two customers accounted for 25% and 18% of the Company’s total accounts
receivable, respectively. As of June 30, 2018, two customers accounted for 16% and 11% of the Company’s total
accounts receivable, respectively. As of June 30, 2017, two customers accounted for 30% and 13% of the Company’s total accounts
receivable, respectively.</font></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">For
the years ended June 30, 2019, 2018 and 2017, export sales accounted for 42.5%, 50.2% and 67.7% of the Company’s total revenue,
respectively. For the year ended June 30, 2019, three customers accounted for 28.1%, 13.5% and 5.6% of the Company’s total
revenue, respectively. For the year ended June 30, 201<font style="letter-spacing: -0.05pt">8, three customers accounted for 24.9%,
14.0% and 7.4% of the Company’s total revenue, respectively. For the year ended June 30, 2017, three customers accounted
for 20%, 15% and 13% of the Company’s total revenue, respectively.</font></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">For
the year ended June 30, 2019, 2018 and 2017, no single supplier accounted for more than 10% of the Company’s total raw material
purchases.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Statement
of Cash Flows</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
accordance with ASC 230, “Statement of Cash Flows,” cash flows from the Company’s operations are formulated
based upon the local currencies. As a result, amounts related to assets and liabilities reported on the statements of cash flows
will not necessarily agree with changes in the corresponding balances on the balance sheets.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Risks
and Uncertainties</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
operations of the Company are located in the PRC. Accordingly, the Company’s business, financial condition, and results
of operations may be influenced by political, economic, and legal environments in the PRC, as well as by the general state of
the PRC economy. The Company’s results may be adversely affected by changes in the political, regulatory and social conditions
in the PRC. Although the Company has not experienced losses from these situations and believes that it is in compliance with existing
laws and regulations including its organization and structure disclosed in Note 1, this may not be indicative of future results.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Recent
Accounting Pronouncements</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically
reviews new accounting standards that are issued.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires lessees to recognize a right-of-use asset and lease
liability on the balance sheet for all leases, including operating leases, with a term in excess of 12 months. The guidance also
expands the quantitative and qualitative disclosure requirements. The guidance will be effective in fiscal year 2020, with early
adoption permitted, and must be applied using a modified retrospective approach. In July 2018, the FASB issued updates to the
lease standard making transition requirements less burdensome. The update provides an option to apply the transition provisions
of the new standard at its adoption date instead of at the earliest comparative period presented in the company’s financial
statements. The new guidance requires the lessee to record operating leases on the balance sheet with a right-of-use asset and
corresponding liability for future payment obligations. FASB further issued ASU 2018-11 “Target Improvement” and ASU
2018-20 “Narrow-scope Improvements for Lessors.” As an emerging growth company, the Company will adopt this guidance
effective July 1, 2019. The Company is evaluating the impact on its consolidated financial statements.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
February 2018, the FASB has issued Accounting Standards Update (ASU) No. 2018-02, “Reclassification of Certain Tax Effects
From Accumulated Other Comprehensive Income.” The ASU amends ASC 220, Income Statement — Reporting Comprehensive Income,
to “allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting
from the Tax Cuts and Jobs Act.” In addition, under the ASU, an entity will be required to provide certain disclosures regarding
stranded tax effects. The ASU is effective for all entities for fiscal years beginning after December 15, 2018, and interim periods
within those fiscal years. The Company does not expect this guidance will have a material impact on its consolidated financial
statements.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
March 2018, the FASB issued ASU 2018-05 — Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting
Bulletin No. 118 (“ASU 2018-05”), which amends the FASB Accounting Standards Codification and XBRL Taxonomy based
on the Tax Cuts and Jobs Act (the “Act”) that was signed into law on December 22, 2017 and Staff Accounting Bulletin
No. 118 (“SAB 118”) that was released by the Securities and Exchange Commission. The Act changes numerous provisions
that impact U.S. corporate tax rates, business-related exclusions, and deductions and credits and may additionally have international
tax consequences for many companies that operate internationally. The Company does not believe this guidance will have a material
impact on its consolidated financial statements.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">On
June 20, 2018, the FASB issued ASU No. 2018-07, <i>Compensation—Stock Compensation (Topic 718) - Improvements to Nonemployee
Share-Based Payment Accounting, </i>which aligns the accounting for share-based payment awards issued to employees and nonemployees.
Under ASU No. 2018-07, the existing employee guidance will apply to nonemployee share-based transactions (as long as the transaction
is not effectively a form of financing), with the exception of specific guidance related to the attribution of compensation cost.
The cost of nonemployee awards will continue to be recorded as if the grantor had paid cash for the goods or services. In addition,
the contractual term will be able to be used in lieu of an expected term in the option-pricing model for nonemployee awards. The
new standard is effective for all public entities for fiscal years beginning after December 15, 2018, and interim periods within
those fiscal years. Early adoption is permitted, but not before an entity adopts ASC 606. The Company does not believe this guidance
will have a material impact on its consolidated financial statements.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments-Credit Losses
(Topic 326), which requires entities to measure all expected credit losses for financial assets held at the reporting date based
on historical experience, current conditions, and reasonable and supportable forecasts. This replaces the existing incurred loss
model and is applicable to the measurement of credit losses on financial assets measured at amortized cost. ASU 2016-13 was subsequently
amended by Accounting Standards Update 2018-19, <i>Codification Improvements to Topic 326, Financial Instruments—Credit
Losses, </i>Accounting Standards Update 2019-04 <i>Codification Improvements to Topic 326, Financial Instruments—Credit
Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments</i>, and Accounting Standards Update 2019-05,
<i>Targeted Transition Relief.</i> For public entities, ASU 2016-13 and its amendments is effective for fiscal years, and interim
periods within those fiscal years, beginning after December 15, 2019. For all other entities, this guidance and its amendments
will be effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early
application will be permitted for all entities for fiscal years, and interim periods within those fiscal years, beginning after
December 15, 2018. The Company is currently evaluating the impact of adopting ASU 2016-13 on its consolidated financial statements.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
August 2018, the FASB Accounting Standards Board issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure
Framework Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”). ASU 2018-13 modifies
the disclosure requirements on fair value measurements. ASU 2018-13 is effective for public entities for fiscal years beginning
after December 15, 2019, with early adoption permitted for any removed or modified disclosures. The removed and modified disclosures
will be adopted on a retrospective basis and the new disclosures will be adopted on a prospective basis. The Company is currently
evaluating the impact of adopting ASU No. 2018-13 on its consolidated financial statements.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
following table outlines the currency exchange rates that were used in creating the consolidated financial statements in this
report:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; text-align: justify; margin-bottom: 0pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: center; padding-bottom: 1.5pt; vertical-align: bottom"> </td><td style="padding-bottom: 1.5pt; text-align: center; vertical-align: bottom"> </td>
<td colspan="3" style="text-align: center; border-bottom: Black 1.5pt solid; vertical-align: bottom"><b>June 30, 2019</b></td><td style="text-align: center; padding-bottom: 1.5pt; vertical-align: bottom"><b> </b></td>
<td style="text-align: center; border-bottom: Black 1.5pt solid; vertical-align: bottom"><b>June 30, 2018</b></td><td style="text-align: center; padding-bottom: 1.5pt; vertical-align: bottom"><b> </b></td>
<td style="text-align: center; border-bottom: Black 1.5pt solid; vertical-align: bottom"><b>June 30, 2017</b></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 28%; text-align: left">Year-end spot rate</td><td style="width: 2%"> </td>
<td style="width: 16%; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">US$1=RMB
6.8657</font></td><td style="width: 2%; text-align: center"> </td>
<td style="width: 16%; text-align: center"><p style="margin: 0">US$1=JPY 107.5</p>
</td><td style="width: 2%; text-align: left"> </td>
<td style="width: 16%; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">US$1=RMB 6.6181</font></td><td style="width: 2%; text-align: left"> </td>
<td style="width: 16%; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">US$1=RMB 6.7780</font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td>Average rate</td><td> </td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">US$1=RMB 6.8226</font></td><td style="text-align: center"> </td>
<td style="text-align: center"><p style="margin: 0">US$1=JPY 111.1</p>
</td><td style="text-align: left"> </td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">US$1=RMB 6.5020</font></td><td style="text-align: left"> </td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">US$1=RMB 6.8118</font></td></tr></table> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b></b></font></p>
<table cellpadding="0" cellspacing="0" align="center" style="border-collapse: collapse; width: 80%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.5pt">Accounts receivable consisted of the following:</td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">As of June 30,</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2018</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 60%; text-align: justify">Accounts receivable from third-party customers</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">5,292,486</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">5,681,513</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify; padding-bottom: 1.5pt">Less: allowance for doubtful accounts</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(128,106</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(40,012</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify">Total accounts receivable from third-party customers, net</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5,164,380</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5,641,501</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1.5pt">Add: accounts receivable - related parties</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">244,764</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-bottom: 2.5pt">Total accounts receivable, net</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">5,409,144</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">5,641,501</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr></table> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"><tr style="vertical-align: bottom"><td>Inventories consisted of the following:</td><td style="font-weight: bold"> </td>
<td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">As of June 30,</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; border-bottom: Black 1.5pt solid; text-align: center">2019</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; border-bottom: Black 1.5pt solid; text-align: center">2018</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 60%; text-align: justify">Raw materials</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">795,047</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">825,675</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify">Work in process</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,136,582</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,076,749</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-bottom: 1.5pt">Finished goods</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">3,431,102</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">2,256,171</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5,362,731</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">4,158,595</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-bottom: 1.5pt">Less: inventory allowance</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(5,012</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify; padding-bottom: 2.5pt">Inventory, net</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">5,362,731</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">4,153,583</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr></table> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Intangible
assets, net consisted of the following:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="font-weight: bold"> </td>
<td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">As of June 30,</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2019</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2018</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 60%; text-align: justify">Software</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">199,984</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">207,396</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify">Land use right</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,212,619</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,294,624</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-bottom: 1.5pt">Less: accumulated amortization</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(185,805</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(111,449</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify; padding-bottom: 2.5pt">Intangible assets, net</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">2,226,798</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">2,390,571</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr></table> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><font style="font: 10pt Times New Roman, Times, Serif">Short-term
loans consisted of the following:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">As of June 30,</td><td style="font-weight: bold; text-align: center"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; border-bottom: Black 1.5pt solid; text-align: center">2019</td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; border-bottom: Black 1.5pt solid; text-align: center">2018</td><td style="font-weight: bold; text-align: center"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font-weight: bold; text-align: left">Bank of Communications of China (“BCC”):</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="width: 60%; text-align: left">Effective interest rate at 5.655%, due on July 31, 2018 (1)</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">-</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">3,022,000</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Effective interest rate at 5.873%, due on August 20, 2019 (2)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,914,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font-weight: bold; text-align: left">Industrial and Commercial Bank of China (“ICBC”):</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1.5pt">Effective interest rate at 6.525%, due on January 10, 2019 (3)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,813,200</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font-weight: bold; padding-bottom: 2.5pt">Total</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">2,914,000</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">4,835,200</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="width: 0.25in; font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">(1)</font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><p style="font: 10pt Times New Roman, Times, Serif; text-align: justify; layout-grid-mode: line">In August 2016, Dongguan Jiasheng
signed a loan agreement with <font style="font: 10pt Times New Roman, Times, Serif">Bank
of Communication of China, <font style="letter-spacing: -0.05pt">Dongguan Branch to borrow
RMB 26 million ($3.8 million) as working capital for one year with a due date
on July 29, 2017. The loan was repaid in full upon maturity on August 8, 2017. In
August 2017, the Company renewed the above loan for another year to July 31, 2018. The
Company repaid the loan upon maturity on August 21, 2018.</font></font></p>
</td></tr>
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">(2)</font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><p style="font: 10pt Times New Roman, Times, Serif; text-align: justify; layout-grid-mode: line">On
August 17, 2018, the Company entered into a line of credit agreement with Bank of Communication
of China, Dongguan Branch to allow the Company to borrow RMB 30 million ($4.5 million)
for one year with a maturity date on August 13, 2019. The Company had drawn down
RMB 20 million ($3.0 million) of the loan to purchase raw materials on August
21, 2018. The loan bears a variable interest rate based on the prime interest rate set
by the People’s Bank of China at the time of borrowing, plus 1.5625 basis points.
The Company pledged the land use right of approximately $2.2 million and buildings of
approximately $8.4 million acquired from Meijia as the collateral to secure this loan
(see Note 6 and Note 7). In addition, Mr. Silong Chen, the CEO of the Company, provided
personal guarantee for the loan.</p>
</td></tr>
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: justify; font: 10pt Times New Roman, Times, Serif"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><p style="margin-top: 0; text-align: justify; margin-bottom: 0">On August 20, 2019, the Company
repaid the loan upon maturity and entered <font style="font: 10pt Times New Roman, Times, Serif">into
two new loan agreements with BCC to borrow RMB 18 million ($2.6 million) as working
capital for one year (See Note 16).</font></p>
</td></tr>
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; layout-grid-mode: line"><font style="font: 10pt Times New Roman, Times, Serif">(3)</font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; layout-grid-mode: line"><font style="font: 10pt Times New Roman, Times, Serif">On
January 22, 2016, Dongguan Jiasheng entered into a loan agreement with ICBC to borrow RMB 12 million ($1.8 million)
as working capital for one year with the maturity date on January 20, 2017. The loan bears a variable interest rate based
on the prime interest rate set by the People’s Bank of China at the time of borrowing, plus 50 basis points. The loan
was renewed in January 2017 for another year, with the new maturity date of January 9, 2018. The loan was further renewed
for another year upon maturity, with a new maturity date of January 10, 2019. On October 13, 2018, the Company repaid the
loan in full before its maturity and has no plan to further renew the loan.</font></td></tr>
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="font: bold 10pt Times New Roman, Times, Serif; text-align: justify; layout-grid-mode: line"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font: bold 10pt Times New Roman, Times, Serif; text-align: justify; layout-grid-mode: line"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; layout-grid-mode: line"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; layout-grid-mode: line"><p style="font: 10pt Times New Roman, Times, Serif; text-align: justify; layout-grid-mode: line">In addition to the above loans borrowed from ICBC, the Company’s principal shareholder, Mr. Silong Chen,
pledged his personal assets as the collateral to safeguard a maximum line of credit of $2.3 million that Dongguan Jiasheng could
borrow from ICBC during the period from February 12, 2015 to February 12, 2020. In addition, Mr. Silong Chen and his relatives
jointly signed a maximum guarantee agreement with ICBC to provide an additional maximum RMB 16 million ($2.3 million) guarantee
to any loan that Dongguan Jiasheng could borrow from ICBC during the period from February 12, 2015 to February 12, 2020. The Company
has not yet drawn upon this line of credit.</p>
</td></tr>
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; layout-grid-mode: line"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; layout-grid-mode: line"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: top; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; layout-grid-mode: line"><font style="font: 10pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; layout-grid-mode: line"><font style="font: 10pt Times New Roman, Times, Serif">Interest
expenses for the above-mentioned loans amounted to $209,842, $546,681 and $333,170 for the years ended June 30, 2019, 2018
and 2017, respectively.</font></td></tr></table> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
following table reconciles the statutory rate to the Company’s effective tax rate:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td colspan="10" style="font-weight: bold; border-bottom: Black 1.5pt solid; text-align: center">For the years ended June 30,</td><td style="font-weight: bold; text-align: center"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; border-bottom: Black 1.5pt solid; text-align: center">2019</td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; border-bottom: Black 1.5pt solid; text-align: center">2018</td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; border-bottom: Black 1.5pt solid; text-align: center">2017</td><td style="font-weight: bold; text-align: center"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">%</td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">%</td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">%</td><td style="font-weight: bold; text-align: center"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 46%; text-align: left">Hong Kong Statutory income tax rate</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 14%; text-align: right">16.5</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 14%; text-align: right">16.5</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 14%; text-align: right">16.5</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Income not generated in Hong Kong</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(8.9</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(15.3</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(15.4</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">China statutory income tax rate</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">25.0</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">25.0</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">25.0</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Effect of PRC preferential tax rate and tax holidays</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(10.0</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(8.3</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(9.3</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Non-deductible permanent difference</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">0.7</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(1.8</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(1.6</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1.5pt">Research and development tax credit</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(2.0</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(0.9</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(0.1</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 2.5pt; padding-left: 10pt">Effective tax rate</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; text-align: right">21.3</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; text-align: right">15.2</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; text-align: right">15.1</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr></table> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
provision for income tax consists of the following:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify; background-color: white"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td colspan="10" style="font-weight: bold; border-bottom: Black 1.5pt solid; text-align: center">For the years ended June 30,</td><td style="font-weight: bold; text-align: center"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; border-bottom: Black 1.5pt solid; text-align: center">2019</td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; border-bottom: Black 1.5pt solid; text-align: center">2018</td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; border-bottom: Black 1.5pt solid; text-align: center">2017</td><td style="font-weight: bold; text-align: center"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 46%; text-align: left">Current income tax provision</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right">614,622</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right">938,119</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right">889,799</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1.5pt">Deferred income tax provision (benefit)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(234,326</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(12,747</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">53,398</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 2.5pt; padding-left: 10pt">Total income tax expense</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">380,296</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">925,372</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">943,197</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr></table> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
components of deferred tax assets and deferred tax liability as of June 30, 2019 and 2018 consist of the following:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">June 30, 2019</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">June 30, 2018</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Deferred tax assets:</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="width: 60%; text-align: left; padding-left: 10pt">Net operating losses</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">234,319</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">24,717</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt; padding-left: 10pt">Inventory and accounts receivable reserves</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">21,137</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">255,456</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">24,717</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 10pt">Deferred tax liability</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt; padding-left: 10pt">Inventory and accounts receivable reserves</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(2,420</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1.5pt">Deferred tax assets (liability) - net</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">255,456</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">22,297</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr></table> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company’s taxes payable consists of the following:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">June 30, 2019</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">June 30, 2018</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2"> </td><td> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 60%; text-align: justify">Corporate income tax payable</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 16%; text-align: right">2,907,079</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 16%; text-align: right">2,416,098</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify; padding-bottom: 1.5pt">Other tax payable</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">2,018</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">5,205</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-bottom: 2.5pt">Total taxes payable</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">2,909,097</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">2,421,303</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr></table> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Future
minimum lease payments under non-cancelable operating leases are as follows:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" align="center" style="border-collapse: collapse; width: 70%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: left; border-bottom: Black 1.5pt solid">Twelve months ending June 30,</td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">Lease payments</td><td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 78%; text-align: left">2020</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 18%; text-align: right">150,531</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">2021</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">75,849</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">2022</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">77,660</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">2023</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">79,795</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">2024</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">83,005</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-bottom: 1.5pt; text-align: left">Thereafter</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">62,425</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 2.5pt; text-align: left">Total</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">529,265</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr></table> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">As
of June 30, 2019 and 2018, the balances due from related parties were as follows:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold"> </td>
<td colspan="6" style="font-weight: bold; border-bottom: Black 1.5pt solid; text-align: center">As of June 30,</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td>Accounts receivable - related parties, net:</td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; border-bottom: Black 1.5pt solid; text-align: center">2019</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; border-bottom: Black 1.5pt solid; text-align: center">2018</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 60%; text-align: left">-Linsun Smart Technology Co., Ltd (“Linsun”)</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">92,563</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">     -</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1.5pt">-Dogness Network Technology Co., Ltd (“Dogness Network”),</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">152,201</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">244,764</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr></table> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
following table presents a reconciliation of basic and diluted net income per share:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td colspan="10" style="font-weight: bold; border-bottom: Black 1.5pt solid; text-align: center">For the years ended June 30,</td><td style="font-weight: bold; text-align: center"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; border-bottom: Black 1.5pt solid; text-align: center">2019</td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; border-bottom: Black 1.5pt solid; text-align: center">2018</td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; border-bottom: Black 1.5pt solid; text-align: center">2017</td><td style="font-weight: bold; text-align: center"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 46%; text-align: left; padding-bottom: 1.5pt">Net income attributable to the Company</td><td style="width: 2%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="width: 14%; border-bottom: Black 1.5pt solid; text-align: right">1,421,781</td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left"> </td><td style="width: 2%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="width: 14%; border-bottom: Black 1.5pt solid; text-align: right">4,603,708</td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left"> </td><td style="width: 2%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="width: 14%; border-bottom: Black 1.5pt solid; text-align: right">4,945,764</td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td>Weighted average number of common shares outstanding - Basic</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">25,913,631</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">20,800,670</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">15,000,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">Dilutive securities -unexercised warrants and options</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">27,975</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">9,280</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td>Weighted average number of common shares outstanding – diluted</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">25,941,606</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">20,809,950</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">15,000,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-bottom: 1.5pt">Earnings per share - Basic</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">0.05</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">0.22</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">0.33</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 1.5pt">Earnings per share – Diluted</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">0.05</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">0.22</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">0.33</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr></table> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The following table summarized the Company’s stock option activity:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="font: bold 10pt Times New Roman, Times, Serif; text-align: center"> </td>
<td colspan="2" style="font: bold 10pt Times New Roman, Times, Serif; border-bottom: Black 1.5pt solid; text-align: center">Number of<br /> Options</td><td style="font: bold 10pt Times New Roman, Times, Serif; text-align: center"> </td><td style="font: bold 10pt Times New Roman, Times, Serif; text-align: center"> </td>
<td colspan="2" style="font: bold 10pt Times New Roman, Times, Serif; border-bottom: Black 1.5pt solid; text-align: center">Weighted Average<br /> Exercise Price</td><td style="font: bold 10pt Times New Roman, Times, Serif; text-align: center"> </td><td style="font: bold 10pt Times New Roman, Times, Serif; text-align: center"> </td>
<td colspan="2" style="font: bold 10pt Times New Roman, Times, Serif; border-bottom: Black 1.5pt solid; text-align: center">Weighted Average Remaining Life in Years</td><td style="font: bold 10pt Times New Roman, Times, Serif; text-align: center"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 46%; font: 10pt Times New Roman, Times, Serif; padding-bottom: 2.5pt">Outstanding, June 30, 2018</td><td style="width: 2%; font: 10pt Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="width: 1%; border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="width: 14%; border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">640,000</td><td style="width: 1%; padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="width: 2%; font: 10pt Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="width: 1%; border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="width: 14%; border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">1.50</td><td style="width: 1%; padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="width: 2%; font: 10pt Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="width: 1%; border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="width: 14%; border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">1.81</td><td style="width: 1%; padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 2.5pt">Exercisable, June 30, 2018</td><td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">90,000</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">1.50</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">2.14</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="font: 10pt Times New Roman, Times, Serif">Granted</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right">-</td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right">-</td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right">-</td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font: 10pt Times New Roman, Times, Serif">Cancelled</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right">160,000</td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right">-</td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right">-</td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="font: 10pt Times New Roman, Times, Serif">Exercised</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right">-</td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right">-</td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right">-</td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 2.5pt">Outstanding June 30, 2019</td><td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">480,000</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">1.50</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">1.22</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 2.5pt">Exercisable, June 30, 2019</td><td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">270,000</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">1.50</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">1.14</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td></tr></table> 60834018 60739532
-45334
-97216
45334
97216
27349
-27349
11073200
28233035
5164380
5641501
5362731
4153583
1527397
1231298
25922624
46344652
35516368
20950685
2226798
2390571
69023927
69708205
2914000
4835200
543158
351375
179306
240216
2909097
2421303
1526862
1120579
8072423
8968673
52827145
52144891
400000
3000000
191716
164367
11657630
10263198
-3894300
-1884751
69023927
69708205
18000708
12837219
16786510
12134587
8334872
9430005
3958355
1527563
6015901
580379
208447
673131
6193363
2525454
8790435
5941224
5809418
639570
-6410
91226
23498
-412144
79543
1143904
5529080
5888961
1783474
925372
943197
380296
0.00
0.18
0.00
-381773
320566
503528
30135295
21172091
26216515
15082443
14865940
6839534
5522008
10168945
9082419
2510190
1994085
2618851
216993
223463
149635
950353
128320
481142
231426
106098
411281
1703102
2637444
1589229
6266952
7102233
5290918
6188672
10684908
7529420
3587128
4980771
1508426
1771805
2650932
1691066
2024742
1175232
2737143
2103523
59719
4058229
3481500
2415118
215464
4603708
4945764
1421781
1219892
830328
1466522
5053
14106
400957
4863
-5356
43987
90077
-12747
53398
-209015
103922
33104
87893
1462024
743349
-55189
1235858
434413
1356110
805370
93568
4475109
-317716
57359
205428
-198827
353134
-52719
753832
871307
577877
751752
53052
436233
3514385
5507991
-1268951
11030538
3620512
3157281
2079731
-44260971
-3620512
-1622638
4921600
5842759
2932000
3000000
20000000
2600000
18000000
1800000
12000000
18000000
18000000
2600000
2600000
6121240
5872120
4691200
3000000
20000000
-1387864
745579
-25629
47612781
-2009665
-1648119
34393
74284
2550152
7085235
1384235
1504596
5580639
120361
-4535083
-1285556
242547
4625
328567
185126
143441
10913631
10913631
50200285
21827
50178458
54600000
341127
0
341127
682254
682254
136710
136710
-18603
117486
995131
182125
12500000
1165600
8000000
437100
3000000
4107550
60951504
60739532
30000
30000
51827
1625306
1625306
52144891
3671085
5756706
10263198
-264541
-122022
-1884751
5083667
7357141
21817
67151
164367
51827
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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: justify"><font style="letter-spacing: -0.05pt"><b>NOTE
3 – LIQUIDITY</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: justify"><font style="letter-spacing: -0.05pt"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: justify">For the year ended June 30, 2019, the Company’s
revenue decreased by approximately $3.9 million or 13%, from approximately $30.1 million in fiscal year 2018 to approximately
$26.2 million in fiscal year 2019. The decrease in the Company’s revenue was largely affected by reduced export sales to
major customers located in the United States when uncertainties arose from the China-U.S trade dispute, including the increase
in the US’ tariff on certain Chinese imports from 10% in September 2018 to 25% since May 2019. As a result, the Company’s
total unit sales volume decreased by 24.1% when export sales to customers located in the United States decreased by approximately
$4.6 million in fiscal 2019 as compared to fiscal 2018. In addition, the Company’s working capital decreased by approximately
$19.5 million or 52% from approximately $37.4 million as of June 30, 2018 to approximately $17.9 million as of June 30, 2019,
mainly because of large capital expenditures on the Company’s construction-in-progress projects on the construction of a
new manufacturing plant under the Company’s subsidiary Meijia and a new warehouse under the Company’s subsidiary Dongguan
Jiasheng (see Note 6 below). As of the date of this annual report, the Company had future minimum capital expenditure commitment
on its construction-in-progress projects of approximately $7.3 million within the next twelve months.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: justify"> </p>
<p style="margin-top: 0; margin-bottom: 0; text-align: justify">In assessing its liquidity, management monitors and analyzes the Company’s cash on-hand, its ability
to generate sufficient revenue sources in the future, and its operating and capital expenditure commitments. The Company currently
plans to fund its operations mainly through cash flow from its operations, <font style="font: 10pt Times New Roman, Times, Serif">remaining
cash from its 2017 IPO proceeds, renewal of bank borrowings and equity financing, if necessary, to ensure sufficient working capital.
</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="margin-top: 0; margin-bottom: 0; text-align: justify">As of June 30, 2019, the Company had cash of approximately $2.6 million, the Company
<font style="font: 10pt Times New Roman, Times, Serif">also had short-term investments of approximately $11.1
million because the Company invested remaining IPO proceeds to purchase interest-bearing wealth management financial products
from the banks and such short-term investments have maturities ranging from one to three months. These short-term investments
are highly liquid and can be used as working capital when needed. In addition, the Company also had outstanding accounts receivable
of approximately $5.4 million, of which approximately $3.9 million or 76% has been subsequently collected back</font><font style="font: 9pt Times New Roman, Times, Serif">
</font><font style="font: 10pt Times New Roman, Times, Serif">during July to September 2019, and become
available for use as working capital.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">  </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: justify">As of June 30, 2019, the Company had outstanding
bank loans of approximately $2.9 million from a PRC bank, and an unused line of credit of RMB 16 million ($2.3 million) with another
bank that is available for withdrawal on an as-needed basis. Management expects that it would be able to renew all of its existing
bank loans upon their maturity based on past experience and the Company’s good credit history. Subsequently, on August 9,
2019, the Company entered into a loan agreement with Industrial and Commercial Bank of China (“ICBC”) to borrow RMB
12 million ($1.8 million) as working capital for one year. On September 5, 2019 and September 10, 2019, the Company further entered
into two loan agreements with Bank of Communications to borrow approximately RMB 18 million ($2.6 million) as working capital
for one year (see Note 16).</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: justify">Although the
Company’s revenue decreased in fiscal year 2019 due to decreased export sales to the United States affected by
increased tariffs and trade war between China and the United States, the Company has adjusted its sales strategy to increase
its sales and marketing efforts to target China’s domestic market, European, Australia and other countries. In
addition, Company’s US subsidiary has entered into agreements with several large retail chains in the United States,
Canada and Australia for the distribution of the Company’s intelligent pet products. The Company expects the revenues
to be generated from these markets will partially mitigate sales decreases in the United States. Management also sees strong
opportunities in the newly developed intelligent pet products, which may further increase the Company’s revenue and net
income to strengthen its cash position for the next 12 months.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: justify">Based on the current operating plan, management believes that the above-mentioned
measures collectively will provide sufficient liquidity for the Company to meet its future liquidity and capital requirement for
at least 12 months from the date of this report.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Prepayment</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0pt; text-align: justify; text-indent: 0"><font style="font: 10pt Times New Roman, Times, Serif">Prepayment
primarily consists of advances to suppliers for purchasing of raw materials that have not been received, and prepayment to a landlord
for lease of a piece of land in order to build a warehouse in the near future. These advances are interest free, unsecured and
short-term in nature and are reviewed periodically to determine whether their carrying value has become impaired.</font></p> 80000000 11800000
46400000
6800000
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72850
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244764
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20800670
15000000
25913631
20809950
15000000
25941606
0.22
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0.05
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0.05
1654629
789444
2101403
1143707
British Virgin Islands
2016-07-11
1.00
1.00
0.58
0.42
0.51
0.49
1.00
1.00
-23961
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616878
128106
40012
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3348242
BVI
Hong Kong
Hong Kong
Dongguan, China
Dongguan, China
Zhangzhou, China
BVI
Delaware, United States
Guangzhou, China
Osaka, Japan
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
0.58
0.51
Holding Company
Trading
Trading
Holding Company
Development and manufacturing of pet leash products
manufacturing of pet leash products
Holding Company
Pet products trading
Research and manufacturing of intelligent pet products
Pet products trading
P10Y
P50Y
P5Y
P10Y
P5Y
P5Y
37400000
17900000
3900000
2600000
2300000
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5164380
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244764
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7100000
10700000
71000000
40078
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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>NOTE
12 – EQUITY</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Common
Shares</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Dogness
was established under the laws of BVI on July 11, 2016. The original authorized number of common shares was 15,000,000
shares with par value of $0.002 each. On April 26, 2017, Shareholders of the Company held a meeting (the “Meeting”)
and approved the following resolutions: (i) increase the authorized number of common shares to 100,000,000 shares with
par value of $0.002 each, of which 15,000,000 were issued and outstanding; and (ii) reclassify the currently issued and outstanding
common shares into two classes, Class A common shares and Class B common shares, which have equal economic rights
but unequal voting rights, pursuant to which Class A common shares receive one vote each and Class B common shares
receive three votes each. The Meeting approved to reclassify all the shares beneficially owned by Mr. Silong Chen as Class B common
shares and all other shares owned by the other shareholders as Class A common shares. As a result, Mr. Silong Chen owns 9,069,000
Class B common shares of par value of $0.002. The rest of shareholders as of the date of the meeting owned an aggregated
of 5,931,000 Class A common shares of par value of $0.002 each.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Initial
Public Offering</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">On December 18,
2017, the Company completed its initial public offering (“IPO”) of 10,913,631 Class A common shares at a public offering
price of $5.00 per share. The gross proceeds were approximately $54.6 million before deducting placement agent’s
commission and other offering expenses, resulting in net proceeds of approximately $50.2 million. In connection with the offering,
the Company’s Class A common shares began trading on the NASDAQ Global Market on December 20, 2017 under the symbol
“DOGZ.”</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">As
of June 30, 2019 and 2018, the Company had an aggregate of 25,913,631 common shares outstanding, consisting of 16,844,631 Class
A and 9,069,000 Class B common shares.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Cash
Dividends</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
November 2016, the Company’s Board of Directors approved a resolution to pay a cash dividend of RMB 600,259 ($90,699) to its shareholder at the time of record, out of the retained earnings balance of Dongguan Jiasheng. This dividend
was paid in January 2017.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
December 2016, the Company’s Board of Directors approved another resolution and paid a cash dividend of RMB 17,000,000 (equivalent
to $2,568,700) to its shareholder at the time of record, out of the retained earnings balance of HK Dogness.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company did not declare a cash dividend during the years ended June 30, 2019 and 2018.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Public
Offering Warrants</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">In connection with
and upon closing of the IPO on December 18, 2017, the Company agreed to issue to the underwriters and to register herein
warrants to purchase up to a total of up to 500,000 Class A common shares (equal to 5% of the aggregate number of Class
A common shares sold in the IPO).</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: justify">The warrants carry a term of three years,
and are exercisable at any time, and from time to time, in whole or in part, commencing 180 days from the closing of the
IPO and are exercisable at a price equal to $6.25 per share. Management determined that these warrants meet
the requirements for equity classification under ASC 815-40 because they are indexed to its own stock. The warrants were recorded
at their fair value on the date of grant as a component of shareholders’ equity. </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">As of June 30, 2019, 500,000 underwriter warrants were issued and outstanding; and
none of the warrants has been exercised.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Statutory
Reserve</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company’s subsidiaries located in mainland China are required to make appropriations to certain reserve funds, comprising
the statutory surplus reserve and the discretionary surplus reserve, based on after-tax net income determined in accordance with
generally accepted accounting principles of the PRC (“PRC GAAP”). Appropriations to the statutory surplus reserve
are required to be at least 10% of the after-tax net income determined in accordance with PRC GAAP until the reserve is equal
to 50% of the entity’s registered capital. Appropriations to the discretionary surplus reserve are made at the discretion
of the Board of Directors. The Company allocated $27,349, $97,216 and $45,334 to statutory reserves during the years ended June
30, 2019, 2018 and 2017 in accordance with PRC GAAP, respectively. The restricted amounts as determined by the PRC statutory laws
totaled $191,716, $164,367 and $67,151 as of June 30, 2019, 2018 and 2017, respectively.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Noncontrolling
interests</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">As
of June 30, 2019, noncontrolling interests represent 42% and 49% noncontrolling shareholders’ interests in Intelligence
Guangzhou and Dogness Japan, respectively. The noncontrolling interests are presented in the consolidated balance sheets, separately
from equity attributable to the shareholders of the Company. Noncontrolling interests in the operating results of the Company
are presented on the face of the consolidated statements of income and comprehensive income (loss) as an allocation of the total
income or loss for the year between noncontrolling interest holders and the shareholders of the Company.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Long-term
Investments in Equity Investees</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b><i> </i></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">On
July 1, 2018, the Company adopted Accounting Standards Codification (“ASC”) 321 “Investments—Equity Securities”
(“ASC 321”). In accordance with ASC 321, equity securities which the Company has no significant influence (generally
less than a 20% ownership interest) with readily determinable fair values are accounted for at fair value based on quoted market
prices. Equity securities without readily determinable fair values are accounted for either at fair value or using the measurement
alternative. Under the measurement alternative, the equity investments are measured at cost, less any impairment, if any, plus
or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of
the Company.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Nanjing
Rootaya Intelligence Technology Co., Ltd. (“Nanjing Rootaya”) is an entity incorporated on March 25, 2015 in the PRC
and is primarily engaged in development of smart pet products.</font><font style="font: 10pt Times New Roman, Times, Serif">
In July 2018, the Company entered into an equity investment agreement with Nanjing Rootaya to invest RMB 1.25 million ($182,125)
for 10% of the ownership interest in Nanjing Rootaya. Before the Company’s equity investment, Nanjing Rootaya
was owned by three unrelated shareholders.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="letter-spacing: -0.05pt">Dogness
Network Technology Co., Ltd (“Dogness Network”) is an entity incorporated on November 17, 2017 in the PRC and is engaged
in the development and sales of intelligent smart pet products.</font><font style="letter-spacing: -0.05pt"> In November 2018,
the Company entered into an equity investment agreement with Dogness Network to invest RMB 8.0 million ($1,165,600) for
10% of the ownership interest in Dogness Network. Before the Company’s equity investment, Dogness Network
was owned by an unrelated shareholder. As of June 30, 2019, the Company made capital contribution of RMB 3.08 million ($448,756).</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: justify"><font style="letter-spacing: -0.05pt"> </font></p>
<p style="margin-top: 0; margin-bottom: 0; text-align: justify">Linsun Smart Technology Co., Ltd (“Linsun”) is an entity incorporated
on January 25, 2018 in the PRC and is engaged in development and sales of smart pet products. In November 2018, the Company
entered into an equity investment agreement with Linsun to invest RMB 3.0 million ($437,100) for 13% of the ownership
interest in Linsun. Before the Company’s equity investment, Linsun was owned by three unrelated shareholders.
As of June 30, 2019, the Company made capital contribution of RMB 2.5 million ($364,250).</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">The purpose of entering into these equity
investment agreements with Nanjing Rootaya, Dogness Network and Linsun was to establish cooperative business with these investees
to jointly develop and distribute the Company’s intelligent smart pet products. The Company accounts for the above mentioned
investments <font style="font: 10pt Times New Roman, Times, Serif">using the measurement alternative in accordance
with ASC 321. <font style="letter-spacing: -0.05pt">As of June 30, 2019, these investments amounted to $995,131 and are reported
as long-term investments in equity investees on the consolidated balance sheets.</font></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company records the cost method investments at historical cost and subsequently records any dividends received from the
net accumulated earnings of the investee as income. Dividends received in excess of earnings are considered a return of investment
and are recorded as reductions in the cost of the investments. Investment in equity investees is evaluated for impairment when
facts or circumstances indicate that the fair value of the investment is less than its carrying value. An impairment is recognized
when a decline in fair value is determined to be other-than-temporary. The Company reviews several factors to determine whether
a loss is other-than-temporary. These factors include, but are not limited to, the: (i) nature of the investment; (ii) cause and
duration of the impairment; (iii) extent to which fair value is less than cost; (iv) financial condition and near term prospects
of the investments; and (v) ability to hold the security for a period of time sufficient to allow for any anticipated recovery
in fair value. There was no impairment for the Company’s equity investments for the year ended June 30, 2019.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Foreign
Currency Translation</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">The Company’s principal
country of operations is the PRC. The financial position and results of the operations of <font style="font: 10pt Times New Roman, Times, Serif">HK
Dogness<font style="letter-spacing: -0.05pt">,</font> HK Jiasheng, Dongguan Dogness, Dongguan Jiasheng, Meijia <font style="letter-spacing: -0.05pt">and
</font>Intelligence Guangzhou</font><font style="font: 10pt Times New Roman, Times, Serif"> <font style="letter-spacing: -0.05pt">are
determined using RMB, the local currency, as the functional currency. Dogness Japan uses Japanese Yen as the functional currency,
while </font>Dogness Overseas and Dogness Group use U.S Dollar as their functional currency.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company’s financial statements are reported using U.S. Dollars. The results of operations and the consolidated statements
of cash flows denominated in foreign currencies are translated at the average rate of exchange during the reporting period.
Assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the applicable rates of exchange
in effect at that date. The equity denominated in the functional currency is translated at the historical rate of exchange at
the time of capital contribution. Because cash flows are translated based on the average translation rate, amounts related to
assets and liabilities reported on the consolidated statements of cash flows will not necessarily agree with changes in the corresponding
balances on the consolidated balance sheets. Translation adjustments arising from the use of different exchange rates from period
to period are included as a separate component of accumulated other comprehensive income included in consolidated statements of
changes in equity. Gains and losses from foreign currency transactions are included in the consolidated statement of income and
comprehensive income.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
following table outlines the currency exchange rates that were used in creating the consolidated financial statements in this
report:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; text-align: justify; margin-bottom: 0pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: center; padding-bottom: 1.5pt; vertical-align: bottom"> </td><td style="padding-bottom: 1.5pt; text-align: center; vertical-align: bottom"> </td>
<td colspan="3" style="text-align: center; border-bottom: Black 1.5pt solid; vertical-align: bottom"><b>June 30, 2019</b></td><td style="text-align: center; padding-bottom: 1.5pt; vertical-align: bottom"><b> </b></td>
<td style="text-align: center; border-bottom: Black 1.5pt solid; vertical-align: bottom"><b>June 30, 2018</b></td><td style="text-align: center; padding-bottom: 1.5pt; vertical-align: bottom"><b> </b></td>
<td style="text-align: center; border-bottom: Black 1.5pt solid; vertical-align: bottom"><b>June 30, 2017</b></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 28%; text-align: left">Year-end spot rate</td><td style="width: 2%"> </td>
<td style="width: 16%; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">US$1=RMB
6.8657</font></td><td style="width: 2%; text-align: center"> </td>
<td style="width: 16%; text-align: center"><p style="margin: 0">US$1=JPY 107.5</p>
</td><td style="width: 2%; text-align: left"> </td>
<td style="width: 16%; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">US$1=RMB 6.6181</font></td><td style="width: 2%; text-align: left"> </td>
<td style="width: 16%; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">US$1=RMB 6.7780</font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td>Average rate</td><td> </td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">US$1=RMB 6.8226</font></td><td style="text-align: center"> </td>
<td style="text-align: center"><p style="margin: 0">US$1=JPY 111.1</p>
</td><td style="text-align: left"> </td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">US$1=RMB 6.5020</font></td><td style="text-align: left"> </td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">US$1=RMB 6.8118</font></td></tr></table> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Reclassifications</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Certain
prior year amounts have been reclassified to conform to the current year presentation, such as reclassification of negative VAT
tax payable as VAT tax recoverable, and segregation of capital expenditure on construction-in-progress out of capital expenditure
on property, plant and equipment. These reclassifications had no effect on the reported revenues, net income and cash flows.</font></p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"><tr style="vertical-align: bottom"><td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">Capital expenditure commitment <br />on Meijia</td><td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">Capital expenditure commitment <br />on Dongguan Jiasheng</td><td style="text-align: center"> </td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">Total</td><td style="text-align: center"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 43%; text-align: left">2020</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 15%; text-align: right">4,200,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 15%; text-align: right">6,000,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 15%; text-align: right">10,200,000</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1.5pt">2021</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,500,000</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,500,000</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 2.5pt; text-align: left">Total</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">4,200,000</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">7,500,000</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">11,700,000</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr></table> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Estimated
future amortization expense is as follows:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="border-bottom: Black 1.5pt solid; text-align: left">Year ending June 30,</td><td> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center">Amortization expense</td><td> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 78%; text-align: left">2020</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 18%; text-align: right">78,340</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">2021</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">78,340</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">2022</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">78,340</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">2023</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">72,881</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Thereafter</td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,918,897</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Total</td><td> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">2,226,798</td></tr></table> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
summary of our total revenues by our product categories for the years ended June 30, 2019, 2018 and 2017 was as follows:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td colspan="10" style="font-weight: bold; border-bottom: Black 1.5pt solid; text-align: center">For the years ended June 30,</td><td style="font-weight: bold; text-align: center"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; border-bottom: Black 1.5pt solid; text-align: center">2019</td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; border-bottom: Black 1.5pt solid; text-align: center">2018</td><td style="font-weight: bold; text-align: center"> </td><td style="font-weight: bold; text-align: center"> </td>
<td colspan="2" style="font-weight: bold; border-bottom: Black 1.5pt solid; text-align: center">2017</td><td style="font-weight: bold; text-align: center"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 46%; text-align: left">Pet leashes</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right">6,266,952</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right">7,102,233</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right">5,290,918</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Pet collars</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">6,188,672</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">10,684,908</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">7,529,420</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Pet harnesses</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">3,587,128</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">4,980,771</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,508,426</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Retractable dog leashes</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,771,805</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,650,932</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,691,066</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Intelligent pet products</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,103,523</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">59,719</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Gift suspender</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">4,058,229</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">3,481,500</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,415,118</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Other pet accessories</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,024,742</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,175,232</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,737,143</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1.5pt">Climbing hooks</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">215,464</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 2.5pt">Total</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">26,216,515</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">30,135,295</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">21,172,091</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr></table> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
summary of our total revenues by geographic market for the years ended June 30, 2019, 2018 and 2017 was as follows:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="10" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">For the year ended June 30,</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2018</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2017</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 46%; text-align: left">China</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right">15,082,443</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right">14,865,940</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right">6,839,534</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">United States</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5,522,008</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">10,168,945</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">9,082,419</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td>Europe</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,510,190</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,994,085</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2,618,851</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td>Australia</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">216,993</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">223,463</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">149,635</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td>Canada</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">950,353</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">128,320</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">481,142</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Central and South America</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">231,426</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">106,098</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">411,281</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">Japan and other Asian countries and regions</td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; border-bottom: Black 1.5pt solid"> </td><td style="text-align: right; border-bottom: Black 1.5pt solid">1,703,102</td><td style="text-align: left; padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; border-bottom: Black 1.5pt solid"> </td><td style="text-align: right; border-bottom: Black 1.5pt solid">2,637,444</td><td style="text-align: left; padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="text-align: left; border-bottom: Black 1.5pt solid"> </td><td style="text-align: right; border-bottom: Black 1.5pt solid">1,589,229</td><td style="text-align: left; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-bottom: 2.5pt">Total</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">26,216,515</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">30,135,295</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">21,172,091</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr></table> 30135295 21172091
25887948
-19224
136710
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>NOTE
14 – OPTIONS</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="letter-spacing: -0.05pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="letter-spacing: -0.05pt">On November
10, 2017, the Company signed a consulting agreement to engage TJ Capital Management, L.P. (“TJ Capital”) to provide
strategic consulting services to the Company in matters relating to investor relations, capital markets and shareholder value creation
strategy.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: justify"><font style="letter-spacing: -0.05pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="letter-spacing: -0.05pt">As
the part of the agreement, TJ Capital was granted stock option to purchase 160,000 shares of the Company’s common
stock. The options are exercisable at a purchase price of $1.50 per share with no restriction for sale, among which options 60,000
shares were to vest 7 months after the Company’s IPO date, 50,000 shares were to vest 10 months after the IPO date,
and 50,000 shares were to vest 15 months after the IPO date. </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: justify"><font style="letter-spacing: -0.05pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">On May 23, 2019,
the Company signed a service termination agreement with TJ Capital to terminate the consulting agreement previously entered on
November 10, 2017. As a result, the options granted under the original service agreement were also cancelled. No stock-based
compensation expenses were accrued up to the date of the termination of this agreement, because TJ Capital had not
provided the services.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="letter-spacing: -0.05pt">On
May 28, 2017, the Company signed an employment agreement with Dr. Yunhao Chen, the Chief Financial Officer of the Company. As
the part of the compensation, the Company agreed to grant Ms. Chen options to purchase up to 120,000 Class A common shares,
at an exercise price of $1.50 per share. The grant was effective at the IPO date and the options vest at a rate of 5,000 per month,
beginning one month following completion of the IPO. </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: justify"><font style="letter-spacing: -0.05pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">The aggregate fair
value of the options granted to Dr. <font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.05pt">Yunhao
Chen, the CFO,</font> <font style="font: 10pt Times New Roman, Times, Serif">was $440,840. The fair value
has been estimated using the Black-Scholes pricing model with the following weighted-average assumptions: market value of underlying
stock of $5.0; risk free rate of 1.84%; expected term of 2 years; exercise price of the options of $1.50; volatility of
69.5%; and expected future dividends of $Nil. <font style="letter-spacing: -0.05pt">As of June 30, 2019, no options were
exercised by the CFO and 90,000 options were vested.</font></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="letter-spacing: -0.05pt">On
May 28, 2017, the Company signed an employment agreement with Mr. Silong Chen, the Chief Executive Officer of the Company. As
the part of the compensation, the Company agrees to grant Mr. Chen options to purchase up to 360,000 Class A common shares,
at an exercise price of $1.50 per share. The grant was effective at the IPO date and the options vest at a rate of 10,000
per month, beginning one month following completion of the IPO. </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: justify"><font style="letter-spacing: -0.05pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">The aggregate fair
value of the options granted to Mr. <font style="font: 10pt Times New Roman, Times, Serif; letter-spacing: -0.05pt">Silong
Chen</font> <font style="font: 10pt Times New Roman, Times, Serif">was $1,385,500. The fair value has
been estimated using the Black-Scholes pricing model with the following weighted-average assumptions: market value of underlying
stock of $5.0; risk free rate of 1.94%; expected term of 3 years; exercise price of the options of $1.50; volatility of
74.7%; and expected future dividends of $Nil. <font style="letter-spacing: -0.05pt">As of June 30, 2019, no options were
exercised by the CEO and 180,000 options were vested.</font></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company recorded $682,254 and $341,127 stock-based compensation expense for the years ended June 30, 2019 and 2018, respectively.
No stock-based compensation expense was recorded for the years ended June 30, 2017.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">As
of June 30, 2019, the Company had 270,000 outstanding vested stock options with a weighted average remaining term over 1.14 years
and 210,000 unvested stock options with a weighted average remaining term over 1.33 years. Unamortized stock-based compensation
expense was $802,959 as of June 30, 2019. The following table summarized the Company’s stock option activity:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="font: bold 10pt Times New Roman, Times, Serif; text-align: center"> </td>
<td colspan="2" style="font: bold 10pt Times New Roman, Times, Serif; border-bottom: Black 1.5pt solid; text-align: center">Number of<br /> Options</td><td style="font: bold 10pt Times New Roman, Times, Serif; text-align: center"> </td><td style="font: bold 10pt Times New Roman, Times, Serif; text-align: center"> </td>
<td colspan="2" style="font: bold 10pt Times New Roman, Times, Serif; border-bottom: Black 1.5pt solid; text-align: center">Weighted Average<br /> Exercise Price</td><td style="font: bold 10pt Times New Roman, Times, Serif; text-align: center"> </td><td style="font: bold 10pt Times New Roman, Times, Serif; text-align: center"> </td>
<td colspan="2" style="font: bold 10pt Times New Roman, Times, Serif; border-bottom: Black 1.5pt solid; text-align: center">Weighted Average Remaining Life in Years</td><td style="font: bold 10pt Times New Roman, Times, Serif; text-align: center"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 46%; font: 10pt Times New Roman, Times, Serif; padding-bottom: 2.5pt">Outstanding, June 30, 2018</td><td style="width: 2%; font: 10pt Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="width: 1%; border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="width: 14%; border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">640,000</td><td style="width: 1%; padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="width: 2%; font: 10pt Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="width: 1%; border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="width: 14%; border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">1.50</td><td style="width: 1%; padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="width: 2%; font: 10pt Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="width: 1%; border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="width: 14%; border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">1.81</td><td style="width: 1%; padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 2.5pt">Exercisable, June 30, 2018</td><td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">90,000</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">1.50</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">2.14</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="font: 10pt Times New Roman, Times, Serif">Granted</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right">-</td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right">-</td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right">-</td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font: 10pt Times New Roman, Times, Serif">Cancelled</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right">160,000</td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right">-</td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right">-</td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="font: 10pt Times New Roman, Times, Serif">Exercised</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right">-</td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right">-</td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right">-</td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 2.5pt">Outstanding June 30, 2019</td><td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">480,000</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">1.50</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">1.22</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 2.5pt">Exercisable, June 30, 2019</td><td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">270,000</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">1.50</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">1.14</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td></tr>
</table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company’s consolidated financial statements reflect the operating results of the following entities:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="border-bottom: Black 1.5pt solid; text-align: left">Name of Entity</td><td> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: center">Date of Incorporation</td><td style="text-align: center"> </td>
<td style="text-align: center; border-bottom: Black 1.5pt solid">Place of Incorporation</td><td style="text-align: center"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">% of Ownership</td><td style="text-align: center"> </td><td style="text-align: center"> </td>
<td style="text-align: center; border-bottom: Black 1.5pt solid">Principal Activities</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Dogness (International) Corporation (“Dogness” or the “Company”)</td><td> </td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">July 11, 2016</font></td><td> </td>
<td style="text-align: center">BVI</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">Parent, 100</font></td><td style="text-align: left">%</td><td> </td>
<td style="text-align: center">Holding Company</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="width: 24%; text-align: left">Dogness (Hong Kong) Pet Products Co., Ltd. (“HK Dogness”)</td><td style="width: 2%"> </td>
<td style="width: 15%; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">March 10, 2009</font></td><td style="width: 2%"> </td>
<td style="width: 16%; text-align: center">Hong Kong</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 15%; text-align: right">100</td><td style="width: 1%; text-align: left">%</td><td style="width: 2%"> </td>
<td style="width: 20%; text-align: center">Trading</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Jiasheng Enterprise (Hong Kong) Co., Limited (“HK Jiasheng”)</td><td> </td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">July 12, 2007</font></td><td> </td>
<td style="text-align: center">Hong Kong</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">100</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: center">Trading</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Dogness Intelligence Technology (Dongguan) Co., Ltd. (“Dongguan Dogness”)</td><td> </td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">October 26, 2016</font></td><td> </td>
<td style="text-align: center">Dongguan, China</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">100</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: center">Holding Company</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Dongguan Jiasheng Enterprise Co., Ltd. (“Dongguan Jiasheng”)</td><td> </td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">May 15, 2009</font></td><td> </td>
<td style="text-align: center">Dongguan, China</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">100</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: center">Development and manufacturing of pet leash products</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Zhangzhou Meijia Metal Product Co., Ltd (“Meijia”)</td><td> </td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">July 09,2009</font></td><td> </td>
<td style="text-align: center">Zhangzhou, China</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">100</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: center">manufacturing of pet leash products</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Dogness Overseas Ltd (“Dogness Overseas”)</td><td> </td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">February 8, 2018</font></td><td> </td>
<td style="text-align: center">BVI</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">100</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: center">Holding Company</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Dogness Group LLC (“Dogness Group”)</td><td> </td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">January 23, 2018</font></td><td> </td>
<td style="text-align: center">Delaware, United States</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">100</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: center">Pet products trading</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Dogness Intelligence Technology Co., Ltd. (“Intelligence Guangzhou”)</td><td> </td>
<td style="text-align: center"><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">July
6, 2018</font></p></td><td> </td>
<td style="text-align: center">Guangzhou, China</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">58</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: center">Research and manufacturing of intelligent pet products</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Dogness Japan Co. Ltd. (“Dogness Japan”)</td><td> </td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">February 5, 2019</font></td><td> </td>
<td style="text-align: center">Osaka, Japan</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">51</td><td style="text-align: left">%</td><td> </td>
<td style="text-align: center">Pet products trading</td></tr></table> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The straight-line depreciation method is used to compute depreciation over the estimated
useful lives of the assets, as follows:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; text-align: justify; margin-bottom: 0pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" align="center" style="border-collapse: collapse; width: 70%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom; background-color: White">
<td> </td><td> </td>
<td style="text-align: center; border-bottom: Black 1.5pt solid">Useful life</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 43%">Buildings</td><td style="width: 2%"> </td>
<td style="width: 55%; text-align: center">10-50 years</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Leasehold improvement</td><td> </td>
<td style="text-align: center">Lesser of useful life and lease term</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Machinery equipment</td><td> </td>
<td style="text-align: center">5-10 years</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Transportation vehicles</td><td> </td>
<td style="text-align: center">5 years</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Office equipment and furniture</td><td> </td>
<td style="text-align: center">5 years</td></tr></table> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Property,
plant and equipment stated at cost less accumulated depreciation consisted of the following:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="font-weight: bold"> </td>
<td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">As of June 30,</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2019</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2018</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 60%; text-align: justify">Buildings</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">9,492,699</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">9,794,094</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify">Machinery and equipment</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">9,543,080</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">8,309,138</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify">Office equipment and furniture</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">676,748</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">525,886</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify">Automobiles</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">765,214</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">622,720</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify">Leasehold improvements</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5,126,219</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">3,985,511</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify; padding-bottom: 1.5pt">Construction-in-progress (“CIP”) (1)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">15,787,348</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">2,375,461</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify">Total</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">41,391,308</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">25,612,810</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: justify; padding-bottom: 1.5pt">Less: accumulated depreciation</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(5,874,940</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(4,662,125</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: justify; padding-bottom: 2.5pt">Property, plant and equipment, net</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">35,516,368</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">20,950,685</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr></table> 50200000 250000
0.42
0.49
0.0175
0.0460
517359
536345
P10Y
P50Y
448756
3080000
364250
2500000
The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the "more likely than not" test, no tax benefit is recorded.
The VAT is based on gross sales price and VAT rates range up to 17% (starting from May 1, 2018, VAT rate was lowered to 16%, and starting from April 1, 2019, VAT rate was further lowered to 13%), depending on the type of products sold.
0.25
0.16
0.18
0.11
0.30
0.13
0.425
0.502
0.677
0.249
0.20
0.281
0.140
0.15
0.135
0.074
0.13
0.056
0.25
0.10
0.76
2016-07-11
2009-03-10
2007-07-12
2016-10-26
2009-05-15
2009-07-09
2018-02-08
2018-01-23
2018-07-06
2019-02-05
Lesser of useful life and lease term
6.8657
6.8226
6.6181
6.7780
107.5
111.1
6.5020
6.8118
3900000
4600000
0.13
0.241
19500000
0.52
0.76
7300000
5400000
2900000
2900000
5362731
4158595
3431102
2256171
1136582
1076749
795047
825675
2212619
2900000
8426982
2212619
2294624
1918897
546681
333170
209842
0.05873
0.05655
0.06525
2018-07-31
2019-08-20
2019-01-10
2019-08-13
2017-07-29
2017-01-20
2200000
8400000
2018-01-09
2300000
In addition, Mr. Silong Chen and his relatives jointly signed a maximum guarantee agreement with ICBC to provide an additional maximum RMB 16 million (approximately $2.3 million) guarantee to any loan that Dongguan Jiasheng could borrow from ICBC during the period from February 12, 2015 to February 12, 2020.
2300000
16000000
0.15
0.15
0.15
0.165
0.165
0.165
0.250
0.250
0.250
Under the Enterprise Income Tax ("EIT") Law of PRC, domestic enterprises and Foreign Investment Enterprises (the "FIE") are usually subject to a unified 25% enterprise income tax rate while preferential tax rates, tax holidays and even tax exemption may be granted on case-by-case basis. EIT grants preferential tax treatment to High and New Technology Enterprises ("HNTEs"). Under this preferential tax treatment, HNTEs are entitled to an income tax rate of 15%, subject to a requirement that they re-apply for HNTE status every three years. In October 2015, Dongguan Jiasheng, the Company's main operating subsidiary in PRC, was approved as HNTEs and is entitled to a reduced income tax rate of 15% for three years.
545805
552132
3003
0.03
0.04
0.00
-0.089
-0.153
-0.154
0.083
0.093
0.100
-0.018
-0.016
0.007
0.009
0.001
0.020
938119
889799
614622
-12747
53398
-234326
234319
24717
21137
255456
24717
2420
255456
22297
2907079
2416098
2909097
2421303
These leases of the major manufacturing facilities and office space expire between April 30, 2027 and October 14, 2038.
2024-06-20
391784
333452
640626
1165600
8000000
437100
3000000
448756
3080000
364250
2500000
150531
75849
77660
79795
83005
62425
529265
850589
54600000
50200000
P3Y
6.25
500000
500000
0
Appropriations to the statutory surplus reserve are required to be at least 10% of the after-tax net income determined in accordance with PRC GAAP until the reserve is equal to 50% of the entity's registered capital.
97216
45334
27349
191716
164367
67151
9280
27975
4603708
4945764
1421781
120000
160000
160000
360000
1.50
1.50
1.50
1.50
1.50
1.50
60000
50000
50000
5000
90000
180000
10000
P7M
P10M
P15M
P2Y
P2Y
P3Y
440840
1385500
Black-Scholes pricing model
Black-Scholes pricing model
5.0
2.90
5.0
0.0184
0.0185
0.0194
1.50
1.50
1.50
0.695
0.770
0.747
0
0
0
0
270000
P1Y1M20D
210000
P1Y3M29D
802959
1.50
1.50
P1Y9M22D
P2Y1M20D
P0Y
P0Y
P0Y
P1Y2M19D
P1Y1M20D
1
6667
284300
0.00
2200000
8400000
28737530
-16250610
5012
1179814
809313
1387698
4400000
30600000
3100000
21400000
1300000
9200000
9492699
9794094
9543080
8309138
676748
525886
765214
622720
5126219
3985511
41391308
25612810
5874940
4662125
16000000
110000000
10200000
4200000
6000000
1500000
1500000
11700000
4200000
7500000
10900000
75000000
12400000
85000000
2018
5205
480000
640000
270000
90000
160000
15000000
15000000
25913631
25913631
0001707303
20-F
2019-06-30
false
--06-30
No
No
Yes
Yes
true
false
Non-accelerated Filer
false
16844631
9069000
FY
2019
true
false
false
0.152
0.151
0.213
2840979
5088283
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2840979
5088283
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5292486
5681513
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0.05
Dogness (International) Corp
The Company's CIP primarily consisted of the following: On March 16, 2018, the Company acquired 100% of the equity interests in Zhangzhou Meijia Metal Product Co., Ltd ("Meijia") from its original shareholder, for a total cash consideration of RMB 71.0 million ($10.7 million) (See Note 1). After the acquisition, the Company started building its own facilities and office spaces to expand the production capacity in order to fulfill increased customer orders. Total budgeted capital expenditure on decoration and purchase of equipment and machinery to bring Meijia manufacturing facility into use amounted to RMB 110 million ($16.0 million). As of June 30, 2019, the Company has already spent RMB 80.8 million ($11.8 million) and had future capital expenditure commitment of approximately RMB 29.2 million ($4.2 million) on Meijia plant facilities. Meijia plant has started the test operation in August 2019, and is expected to be ready for production before December 31, 2019 upon passing the final inspection conducted by local government. In addition, the Company's subsidiary Dongguan Jiasheng is also working on a project to build a warehouse with original budgeted costs of RMB 85 million ($12.4 million). In order to conform to the local government's building code, the construction plan has been recently modified and the budgeted cost has been reduced to RMB 75 million ($10.9 million). As of June 30, 2019, the Company has already spent RMB 23.2 million ($3.4 million) and had future capital expenditure commitment of approximately RMB 51.8 million ($7.5 million) on the warehouse construction. The warehouse construction is expected to be completed by the end of 2020. In August 2016, Dongguan Jiasheng signed a loan agreement with Bank of Communication of China, Dongguan Branch to borrow RMB 26 million ($3.8 million) as working capital for one year with a due date on July 29, 2017. The loan was repaid in full upon maturity on August 8, 2017. In August 2017, the Company renewed the above loan for another year to July 31, 2018. The Company repaid the loan upon maturity on August 21, 2018. On August 17, 2018, the Company entered into a line of credit agreement with Bank of Communication of China, Dongguan Branch to allow the Company to borrow RMB 30 million ($4.5 million) for one year with a maturity date on August 13, 2019. The Company had drawn down RMB 20 million ($3.0 million) of the loan to purchase raw materials on August 21, 2018. The loan bears a variable interest rate based on the prime interest rate set by the People's Bank of China at the time of borrowing, plus 1.5625 basis points. The Company pledged the land use right of approximately $2.2 million and buildings of approximately $8.4 million acquired from Meijia as the collateral to secure this loan (see Note 6 and Note 7). In addition, Mr. Silong Chen, the CEO of the Company, provided personal guarantee for the loan. On August 20, 2019, the Company repaid the loan upon maturity and entered into two new loan agreements with BCC to borrow RMB 18 million ($2.6 million) as working capital for one year (See Note 16). On January 22, 2016, Dongguan Jiasheng entered into a loan agreement with ICBC to borrow RMB 12 million ($1.8 million) as working capital for one year with the maturity date on January 20, 2017. The loan bears a variable interest rate based on the prime interest rate set by the People's Bank of China at the time of borrowing, plus 50 basis points. The loan was renewed in January 2017 for another year, with the new maturity date of January 9, 2018. The loan was further renewed for another year upon maturity, with a new maturity date of January 10, 2019. On October 13, 2018, the Company repaid the loan in full before its maturity and has no plan to further renew the loan. In addition to the above loans borrowed from ICBC, the Company's principal shareholder, Mr. Silong Chen, pledged his personal assets as the collateral to safeguard a maximum line of credit of $2.3 million that Dongguan Jiasheng could borrow from ICBC during the period from February 12, 2015 to February 12, 2020. In addition, Mr. Silong Chen and his relatives jointly signed a maximum guarantee agreement with ICBC to provide an additional maximum RMB 16 million ($2.3 million) guarantee to any loan that Dongguan Jiasheng could borrow from ICBC during the period from February 12, 2015 to February 12, 2020. The Company has not yet drawn upon this line of credit.