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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.9pt 0 0; text-align: justify"><b>NOTE 1 – ORGANIZATION AND
DESCRIPTION OF BUSINESS</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Dogness (International) Corporation (“Dogness” or the
“Company”), is a company limited by shares 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, intelligent pet products, 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”) of the Company is the controlling shareholder (the “Controlling
Shareholder”) of 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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Reorganization</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">A Reorganization of the legal structure was
completed on January 9, 2017. The Reorganization involved the incorporation of 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 (Hongkong) Pet’s Products Co., Limited (“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 November 24, 2016, the Controlling Shareholder transferred his 100% ownership interest in Dongguan Jiasheng to
Dongguan Dogness, which is 100% owned by HK Dogness and considered a wholly foreign-owned entity (“WFOE”) in PRC. On
January 9, 2017, the Controlling Shareholder transferred his 100% equity interests in HK Dogness and HK Jiasheng to Dogness. After
the reorganization, Dogness ultimately owns 100% equity interests of the entities mentioned above.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 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: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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 (Shenzhen) 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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 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 $11.3 million). One of the Company’s subsidiaries,
Dongguan Jiasheng, owns 58% of Intelligence Guangzhou, with the remaining 42% ownership interest owned by two unrelated entities.
Intelligence Guangzhou had immaterial operation since its inception and will conduct research and manufacturing of the Company’s
fast-growing intelligent pet products in the future.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">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. </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"> </p>
<p style="font: 10pt/107% Times New Roman, Times, Serif; margin: 0">Dogness Pet Culture (Dongguan) Co., Ltd. (“Dogness Culture”)
was incorporated on December 14, 2018 with registered capital of RMB 10 million (approximately $1.4 million). The capital was not
paid and there were no active business operations. On January 15, 2020, the Company’s subsidiary, Dongguan Dogness, entered
into an agreement with the original shareholder of Dogness Culture, who is related to Mr. Silong Chen, the Chief Executive
Officer, to acquire 51.2% ownership interest of Dogness Culture for a nominal fee. The remaining equity interest of 48.8%
was also transferred to other two third parties for a nominal fee. Dongguan Dogness thereafter contributed cash
consideration of RMB 5.12 million (approximately $0.73 million) on April 16, 2020 along with other two shareholders’
capital contributions of RMB 4.88 million (approximately $0.67 million). Dogness Culture will mainly focus on developing and expanding
pet food market in China in the near future.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.9pt 0 0; text-align: justify"><b>NOTE 3 – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Basis of Presentation and Principles of
Consolidation</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 5.65pt 0 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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. Dogness Culture and Dogness Group. All inter-company balances and transactions have been
eliminated upon consolidation.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company’s consolidated financial
statements reflect the operating results of the following entities:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr>
<td style="border-bottom: black 1.5pt solid; vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">Name of Entity</font></td>
<td style="text-align: justify"> </td>
<td style="border-bottom: black 1.5pt solid; vertical-align: bottom; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Date of Incorporation</font></td>
<td style="vertical-align: bottom; text-align: center"> </td>
<td style="border-bottom: black 1.5pt solid; vertical-align: bottom; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Place of Incorporation</font></td>
<td style="vertical-align: bottom; text-align: center"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; vertical-align: bottom; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">% of Ownership</font></td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom; text-align: center"> </td>
<td style="border-bottom: black 1.5pt solid; vertical-align: bottom; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Principal Activities</font></td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; width: 29%"><font style="font: 10pt Times New Roman, Times, Serif">Dogness (International) Corporation (“Dogness” or the “Company”)</font></td>
<td style="width: 2%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 17%; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">July 11, 2016</font></td>
<td style="width: 2%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 19%; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">BVI</font></td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 8%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">Parent, 100</font></td>
<td style="vertical-align: bottom; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">%</font></td>
<td style="width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 19%; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Holding Company</font></td></tr>
<tr style="background-color: white">
<td style="vertical-align: top"><font style="font: 10pt Times New Roman, Times, Serif">Dogness (Hongkong) Pet’s Products Co., Limited (“HK Dogness”)</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">March 10, 2009</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Hong Kong</font></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">100</font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">%</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Trading</font></td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top"><font style="font: 10pt Times New Roman, Times, Serif">Jiasheng Enterprise (Hong Kong) Co., Limited (“HK Jiasheng”)</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">July 12, 2007</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Hong Kong</font></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">100</font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">%</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Trading</font></td></tr>
<tr style="background-color: white">
<td style="vertical-align: top"><font style="font: 10pt Times New Roman, Times, Serif">Dogness Intelligence Technology (Dongguan) Co., Ltd. (“Dongguan Dogness”)</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">October 26, 2016</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Dongguan, China</font></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">100</font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">%</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Holding Company</font></td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">Dongguan Jiasheng Enterprise Co., Ltd. (“Dongguan Jiasheng”)</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">May 15, 2009</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Dongguan, China</font></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">100</font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">%</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Development and manufacturing of pet leash products</font></td></tr>
<tr style="background-color: white">
<td style="vertical-align: top"><font style="font: 10pt Times New Roman, Times, Serif">Zhangzhou Meijia Metal Product Co., Ltd (“Meijia”)</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">July 9,2009</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Zhangzhou, China</font></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">100</font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">%</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Manufacturing of pet leash products</font></td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top"><font style="font: 10pt Times New Roman, Times, Serif">Dogness Overseas Ltd (“Dogness Overseas”)</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">February 8, 2018</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">BVI</font></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">100</font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">%</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Holding Company</font></td></tr>
<tr style="background-color: white">
<td style="vertical-align: top"><font style="font: 10pt Times New Roman, Times, Serif">Dogness Group LLC (“Dogness Group”)</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">January 23, 2018</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Delaware, United States</font></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">100</font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">%</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Pet products trading</font></td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top"><font style="font: 10pt Times New Roman, Times, Serif">Dogness Intelligence Technology Co., Ltd. (“Intelligence Guangzhou”)</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">July 6, 2018</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Guangzhou, China</font></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">58</font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">%</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Research and manufacturing of intelligent pet products</font></td></tr>
<tr style="background-color: white">
<td style="vertical-align: top"><font style="font: 10pt Times New Roman, Times, Serif">Dogness Japan Co. Ltd. (“Dogness Japan”)</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">February 5, 2019</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Osaka, Japan</font></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">51</font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">%</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Pet products trading</font></td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top"><font style="font: 10pt Times New Roman, Times, Serif">Dogness Pet Culture (Dongguan) Co. Ltd. (Dogness Culture)</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">December 14, 2018</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Dongguan, China</font></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">51.2</font></td>
<td style="vertical-align: bottom"><font style="font: 10pt Times New Roman, Times, Serif">%</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Developing and expanding pet food market</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Noncontrolling interests</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As of June 30, 2020, noncontrolling interests
represent 42.0%, 49.0% and 48.8% noncontrolling shareholders’ interests in Intelligence Guangzhou, Dogness Japan and Dogness
Culture, 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 operations 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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Use of Estimates</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Cash</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Short-term Investments</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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 3.95% 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 operations and comprehensive income (loss) over the contractual term of these investments.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company had short-term investments of $3,551,968, $11,073,200 and
$28,233,035 as of June 30, 2020, 2019 and 2018, respectively. The Company recorded interest income of
$243,661, $536,345 and $517,359 for the years ended June 30, 2020, 2019 and 2018, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Accounts Receivable, net</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Accounts receivable are presented net of allowance
for doubtful 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 $23,982 and $128,106 as
of June 30, 2020 and 2019, respectively. For the years ended June 30, 2020, 2019 and 2018, $856,383, $Nil and $Nil delinquent accounts
receivable were directly written off, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Inventories, net</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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. As of June 30, 2020 and 2019, for certain obsolete, slow-moving and damaged fabric and leather raw materials
and metal components or parts used in the manufacturing the Company’s pet leash and other pet products, the Company
recorded inventory reserve of $1,158,551 and $Nil, respectively.<b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Prepayment</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Property, plant and Equipment, net</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Property, plant and equipment are stated at
cost less accumulated depreciation and amortization. The straight-line depreciation method is used to compute depreciation over
the estimated useful lives of the assets, as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="background-color: white">
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Useful life</font></td></tr>
<tr style="background-color: #CCEEFF">
<td style="width: 48%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Buildings</font></td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 51%; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">10-50 years</font></td></tr>
<tr style="background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Leasehold improvement</font></td>
<td style="text-align: justify"> </td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Lesser of useful life and lease term</font></td></tr>
<tr style="background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Machinery equipment</font></td>
<td style="text-align: justify"> </td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">5-10 years</font></td></tr>
<tr style="background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Transportation vehicles</font></td>
<td style="text-align: justify"> </td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">5 years</font></td></tr>
<tr style="background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Office equipment and furniture</font></td>
<td style="text-align: justify"> </td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">5 years</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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 that 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 operations and other comprehensive income (loss) in other income or expenses.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Intangible Assets, net</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.”</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Intangible assets are stated at cost less accumulated
amortization. Customized software systems 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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Long-term Investments in Equity Investees</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i> </i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On July 1, 2018, the Company adopted Accounting
Standards Codification (“ASC”) 321 “Investments—Equity Securities” (“ASC 321”). In accordance
with ASC 321, equity securities over 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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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. In July 2018, the Company entered into an equity investment agreement with Nanjing Rootaya to invest
RMB 1.25 million ($177,750) for 10% of the ownership interest in Nanjing Rootaya, with the remaining 90% of the ownership interest
owned by three unrelated shareholders.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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 smart
pet products. In November 2018, the Company entered into an equity investment agreement with Dogness Network to invest RMB
8.0 million ($1,131,200) 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, 2020, the Company made capital contribution of RMB 4.4 million ($622,160).
Subsequently, in August 2020, the Company made additional capital contribution of RMB 1.6 million ($0.2 million). As of the date
of this report, the Company is obligated to make the remaining capital contribution of RMB 2.0 million ($0.3 million) before December
31,2020.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 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 ($424,200) for 13% of the ownership
interest in Linsun,with the remaining 87% of the ownership interest owned by three unrelated shareholders.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; 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 using
the measurement alternative in accordance with ASC 321. </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="background-color: white">As of
June 30, 2020, based on the financial condition and operating performance of </font>Nanjing Rootaya, <font style="background-color: white">it reported
significant net loss and working capital deficit, </font>and is unable to generate positive cash flow in the foreseeable future<font style="background-color: white">.
As a result, a full impairment loss of $177,750 has been applied against this investment, which was reflected
in the consolidated statements of operations and comprehensive income (loss) for the year ended June 30, 2020. </font>For
the Company’s investments in Dogness Network and Linsun, no material impairment indicator was noted as of June 30, 2020 because
their operation results indicated net income and cash inflows.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As of June 30, 2020 and 2019, the Company’s
long-term investments in equity investees amounted to $1,046,360 and $995,131, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Fair Value of Financial Instruments</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr>
<td style="width: 24px; text-align: justify"> </td>
<td style="vertical-align: top; width: 24px"><font style="font: 10pt Times New Roman, Times, Serif">●</font></td>
<td style="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>
<td style="text-align: justify"> </td>
<td style="vertical-align: top"> </td>
<td style="text-align: justify"> </td></tr>
<tr>
<td style="text-align: justify"> </td>
<td style="vertical-align: top"><font style="font: 10pt Times New Roman, Times, Serif">●</font></td>
<td style="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>
<td style="text-align: justify"> </td>
<td style="vertical-align: top"> </td>
<td style="text-align: justify"> </td></tr>
<tr>
<td style="text-align: justify"> </td>
<td style="vertical-align: top"><font style="font: 10pt Times New Roman, Times, Serif">●</font></td>
<td style="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: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Unless otherwise disclosed, the fair value
of the Company’s financial instruments including cash, short-term investments, accounts receivable, inventories, 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. </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Long-lived assets impairment</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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. During the year ended
June 30, 2020, the Company disposed approximately $1.2 million outdated and fully depreciated equipment and machinery (see Note
6). Given the Company’s net loss position in fiscal 2020, the Company further assessed that the expected future cash flow
generated from certain machinery and equipment used to manufacture the Company’s low-end traditional pet products would not
recover their carrying value, as a result, the Company recorded an additional impairment of $281,680 on these fixed assets for
the year ended June 30, 2020.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Leases</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company adopted ASU No. 2016-02—Leases
(Topic 842) since July 1, 2019, using a modified retrospective transition method permitted under ASU No. 2018-11. This transition
approach provides a method for recording existing leases only at the date of adoption and does not require previously reported
balances to be adjusted. In addition, we elected the package of practical expedients permitted under the transition guidance within
the new standard, which among other things, allowed us to carry forward the historical lease classification. Adoption of the new
standard resulted in the recording of additional lease assets and lease liabilities of approximately $5.1 million and $1.4 million,
respectively, as of June 30, 2020. The standard did not materially impact our consolidated net earnings and cash flows.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Revenue Recognition</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">To determine revenue recognition for contracts
with customers, the Company performs the following five steps: (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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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. For the years ended June 30, 2020, 2019 and 2018,
the Company did not provide any sales incentives to its customers.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company’s revenue is primarily generated
from the sales of pet products, including leashes, accessories, collars, harnesses and intelligent 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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Contract Assets and Liabilities</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i> </i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As of June 30, 2020 and 2019, 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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i> </i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Disaggregation of Revenues</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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, 2020, 2019 and 2018 are disclosed in Note 16 of this consolidation financial statements.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Research and development costs</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Income Taxes</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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, 2020, 2019 and 2018. As of June 30, 2020, all of the Company’s
tax returns of its PRC Subsidiaries and U.S subsidiary remain open for statutory examination by relevant tax authorities.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Value added tax (“VAT”)</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Earnings (loss) per Share</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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 (loss) 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. For the years ended June 30, 2020, given the Company’s
net loss position, potential shares of common stock from the unexercised options are excluded from diluted net (loss) per share
as such amounts are anti-dilutive. 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. For
the years ended June 30, 2020, 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 (See Note 14).</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Share-Based compensation</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Foreign Currency Translation</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company’s principal country of operations
is the PRC. The financial position and results of the operations of HK Dogness, HK Jiasheng, Dongguan Dogness, Dongguan
Jiasheng, Meijia, Intelligence Guangzhou and Dogness Culture are determined using RMB, the local currency, as the functional currency.
Dogness Japan uses Japanese Yen as the functional currency, while Dogness Overseas and Dogness Group use U.S Dollar as their
functional currency.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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 (loss) included in consolidated statements of changes in equity. Gains and losses from foreign currency
transactions are included in the consolidated statement of operations and comprehensive income (loss).</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The following table outlines the currency exchange
rates that were used in creating the consolidated financial statements in this report:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="background-color: white">
<td> </td>
<td style="text-align: center"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>June 30, 2020</b></font></td>
<td style="text-align: center"> </td>
<td colspan="3" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>June 30, 2019</b></font></td>
<td style="text-align: center"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>June 30, 2018</b></font></td>
<td style="text-align: center"> </td></tr>
<tr style="background-color: #CCE9FF">
<td style="width: 23%"><font style="font: 10pt Times New Roman, Times, Serif">Year-end spot rate</font></td>
<td style="width: 2%; text-align: justify"> </td>
<td style="width: 15%; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">US$1=RMB 7.0721</font></td>
<td style="width: 14%; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">US$1=JPY 107.5</font></td>
<td style="width: 1%; text-align: center"> </td>
<td style="width: 14%; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">US$1=RMB 6.8657</font></td>
<td style="width: 1%; text-align: center"> </td>
<td style="width: 14%; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">US$1=JPY 107.5</font></td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 14%; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">US$1=RMB 6.6181</font></td>
<td style="width: 1%; text-align: center"> </td></tr>
<tr>
<td style="background-color: white; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Average rate</font></td>
<td style="background-color: white; text-align: justify"> </td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">US$1=RMB 7.0323</font></td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">US$1=JPY 107.5</font></td>
<td style="background-color: white; text-align: center"> </td>
<td style="background-color: white; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">US$1=RMB 6.8226</font></td>
<td style="background-color: white; text-align: center"> </td>
<td style="background-color: white; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">US$1=JPY 111.1</font></td>
<td style="background-color: white; text-align: justify"> </td>
<td style="background-color: white; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">US$1=RMB 6.5020</font></td>
<td style="background-color: white; text-align: center"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Comprehensive income (loss)</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Comprehensive income (loss) consists of two
components, net income (loss) 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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Concentrations and Credit Risk</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As of June 30, 2020, and 2019, $879,040 and
$1,773,713 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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As of June 30, 2020, four customers aggregately accounted
for 73% of the Company’s total accounts receivable, with related party customer Guangdong Dogness Network accounted
for 23%, and three third party customers accounted for 20%, 17% and 13% of the Company’s total accounts receivable,
respectively. As of June 30, 2019, two customers accounted for 25% and 18% of the Company’s total accounts receivable,
respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">For the years ended June 30, 2020, 2019 and
2018, export sales accounted for 49%, 42.5% and 50.2% of the Company’s total revenue, respectively. For the year ended June
30, 2020, three customers accounted for 27.6%, 6.5% and 4.4% 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, 2018, three customers accounted for 24.9%, 14.0% and 7.4% of the Company’s total revenue, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">For the year ended June 30, 2020, two suppliers accounted for
35.1% of the Company’s total raw materials purchases, with related party supplier Linsun and a third party supplier accounted
for 23.3% and 11.8% of the Company’s total raw material purchases, respectively. For the years ended June 30, 2019
and 2018, no single supplier accounted for more than 10% of the Company’s total raw material purchases.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Statement of Cash Flows</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Risks and Uncertainties</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company’s business, financial condition
and results of operations may also be negatively impacted by risks related to natural disasters, extreme weather conditions, health
epidemics and other catastrophic incidents, which could significantly disrupt the Company’s operations. The COVID-19 outbreak
and spread have led to a prolonged global economy downturn. The Company’s results of operations and financial condition will
depend on future developments, including the duration and spread of the outbreak and the impact on the Company’s customers,
which are still uncertain and cannot be reasonably estimated at this point of time (see Note 17).</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Reclassifications</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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 (loss) and cash flows.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Recent Accounting Pronouncements</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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, Accounting
Standards Update 2019-04, Accounting Standards Update 2019-05. In January 2020, the FASB issued ASU 2020-2, “Financial Instruments
– Credit Losses (Topic 326) and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin
No. 119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No. 2016-02, Leases (Topic 842), February
2020” (“ASU 2020-02”). ASU 2020-02 added and amended SEC paragraphs in the Accounting Standards Codification
to reflect the issuance of SEC Staff Accounting Bulletin No. 119, related to the new credit losses standard, and comments by the
SEC staff related to the revised effective date of the new standard. 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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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 all 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 does not expect this guidance will have a material impact on its
consolidated financial statements.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In December 2019, the FASB issued ASU No. 2019-12,
Income Taxes (Topic 740)—Simplifying the Accounting for Income Taxes. ASU 2019-12 is intended to simplify accounting for
income taxes. It removes certain exceptions to the general principles in Topic 740 and amends existing guidance to improve consistent
application. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020 and interim periods within those fiscal
years, with early adoption permitted. The Company does not expect adoption of the new guidance to have a significant impact on
our financial statements.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In January 2020, the FASB issued ASU 2020-01,
Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging
(Topic 815) (“ASU 2020-01”), which is intended to clarify the interaction of the accounting for equity securities under
Topic 321 and investments accounted for under the equity method of accounting in Topic 323 and the accounting for certain forward
contracts and purchased options accounted for under Topic 815. ASU 2020-01 is effective for the Company beginning January 1, 2021.
The Company is currently evaluating the effect of adopting this ASU on the Group’s financial statements.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>NOTE 4 – ACCOUNTS RECEIVABLE, NET</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Accounts receivable consisted of the following:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td>
<td> </td>
<td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>As of June 30,</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2020</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2019</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 70%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Accounts receivable from third-party customers</font></td>
<td style="width: 2%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 12%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,940,822</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 11%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">5,292,486</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Less: allowance for doubtful accounts</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(23,982</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(128,106</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Total accounts receivable from third-party customers, net</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,916,840</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">5,164,380</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Add: accounts receivable - related parties</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">559,465</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">244,764</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Total accounts receivable, net</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,476,305</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">5,409,144</font></td>
<td> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">For the years ended June 30, 2020, 2019 and
2018, the Company recorded a bad debt provision of $755,472 and $90,077 and a bad debt recovery of $5,356, respectively. Allowance
for doubtful accounts amounted to $23,982 and $128,106 as of June 30, 2020 and 2019, respectively. For the years ended June 30,
2020, delinquent account balances of $856,383 are written off against the allowance for doubtful accounts after management has
determined that the likelihood of collection of such receivables became remote.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Approximately RMB 12.4 million ($1.8
million) or 92% of the accounts receivable balance as of June 30, 2020 from third-party customers has been collected as of
the date of this report.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In connection with the Company’s long-term
investments in equity investees as disclosed in Note 3, the Company sold certain intelligence pet products to related parties Linsun
and Dogness Network. The outstanding accounts receivable from these related parties amounted to $559,465 as of June 30, 2020, of
which $434,098 has been collected as of the date of this report (see Note 12).</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Allowance for doubtful accounts movement is
as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>June 30,</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2020</b></p></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>June 30,</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2019</b></p></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 70%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Beginning balance</font></td>
<td style="width: 2%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 12%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">128,106</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 11%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">40,012</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Additions</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">755,472</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">90,077</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Write-off</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(856,383</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Foreign currency translation adjustments</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(3,213</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(1,983</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Ending balance</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">23,982</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">128,106</font></td>
<td> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>NOTE 5 – INVENTORIES, NET</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Inventories consisted of the following:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td>
<td> </td>
<td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>As of June 30,</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2020</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2019</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 70%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Raw materials</font></td>
<td style="width: 2%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 12%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">140,745</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 11%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">795,047</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Work in process</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">677,301</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,136,582</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Finished goods</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">3,201,205</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">3,431,102</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">4,019,251</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">5,362,731</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Less: inventory allowance</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(1,158,551</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Inventory, net</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,860,700</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">5,362,731</font></td>
<td> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Inventory includes raw materials, work in progress
and finished goods. Finished goods include direct material costs, direct labor costs and manufacturing overhead.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/107% Times New Roman, Times, Serif; margin: 0">For the years ended June 30, 2020, for certain obsolete,
slow-moving and damaged fabric and leather raw materials and metal components or parts used in the manufacturing the Company’s
pet leash and other pet products, the Company recorded an inventory provision of $1,165,044. For the years ended June 30,
2019 and 2018, the Company recorded inventory reserve recovery of $4,863 and $14,106, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>NOTE 6 – PROPERTY, PLANT AND EQUIPMENT,
NET</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Property, plant and equipment stated at cost
less accumulated depreciation consisted of the following:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td>
<td> </td>
<td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>As of June 30,</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2020</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2019</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 70%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Buildings</font></td>
<td style="width: 2%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 12%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">25,532,908</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 11%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">9,492,699</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Machinery and equipment</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">6,698,443</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">9,543,080</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Office equipment and furniture</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">765,597</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">676,748</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Automobiles</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">810,156</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">765,214</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Leasehold improvements</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">5,028,382</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">5,126,219</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Construction-in-progress (“CIP”) (1)</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">10,647,107</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">15,787,348</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Total</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">49,482,593</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">41,391,308</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Less: accumulated depreciation</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(5,668,986</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(5,874,940</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-left: 10pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">     Impairment of fixed assets</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(280,095</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Property, plant and equipment, net</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">43,533,512</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">35,516,368</font></td>
<td> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">During the year ended June 30, 2020, the Company
disposed approximately $1.2 million old fashioned and fully depreciated equipment and machinery and reported a loss from disposition
of fixed assets of $1,036,304. Given the Company’s net loss position in 2020, the Company further assessed that the expected
future cash flow generated from certain machinery and equipment used to manufacture the Company’s low-end traditional pet
products would not recover their carrying value, as a result, the Company recorded an additional impairment of $281,680
on these fixed assets for the year ended June 30, 2020.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Depreciation expense was $2,189,863 $1,387,698
and $1,179,814 for the years ended June 30, 2020, 2019 and 2018, respectively. In connection with the $2.9 million loans from Bank
of Communications of China Dongguan Branch, the Company’s subsidiary Meijia pledged its fixed assets of approximately $ 8,178,279
as the collateral to secure the loans. In addition, in connection with the Company’s $0.9 million loan from Cathay Bank,
the Company’s U.S. subsidiary Dogness Group pledged its fixed assets as collateral to secure the borrowing (see Note 9).</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">(1) The Company’s CIP primarily
consisted of the following:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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 ($10.0 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 to bring Meijia manufacturing facility into use was originally estimated to be completed at a cost of RMB 110
million ($15.6 million). The actual costs have been adjusted based on additional works required for waterproofing, sewage pipeline
and hazardous waste leakage prevention. As a result, total actual costs incurred as of June 30, 2020, amounted to RMB 118.1 million
($16.7 million). As of June 30, 2020, the Company had future capital expenditure commitment of approximately RMB 460,000 ($65,044).
Meijia plant started test operations in August 2019, and has started normal production since December 2019 upon passing the final
inspection conducted by the local government. The Company expects that the Meijia plant will reach its designed production capacity
by June 2021.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In addition, the Company’s subsidiary
Dongguan Jiasheng is also working on a capital project which expanded from the original plan of building a warehouse, to build
new manufacturing and operating facilities, which including workshops, office building, security gate, employee apartment building,
electrical transformer station and exhibition hall, etc. The original budgeted cost for the construction of the main bodies of
the warehouse, employee dormitory, office building and manufacturing facilities amounted to RMB 75 million ($10.6 million).
The budget was later adjusted and revised to RMB 231.1 million ($32.7 million) to add costs associated with interior and exterior
decoration, parking lots construction, and road and landscaping on top of the original budget. During the year ended June 30, 2020,
the Company has spent RMB 73.6 million ($10.4 million) and completed the construction of the main body of the warehouse, employee
dormitory, office building and has set up the new manufacturing facilities. As of June 30, 2020, the Company still had future minimum
capital expenditure commitment of RMB 157.5 million ($22.3 million) on the decoration of the second floor of the office building,
construction of the stone wall and parking lots, and improvement of the landscaping, which is expected to be invested into the
CIP project within the next five years whenever the Company has available fund. The project is expected to be fully completed by
2025.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As of June 30, 2020, future minimum capital
expenditures on the Company’s construction-in-progress projects are estimated as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Capital expenditure<br />
commitment<br />
on Meijia</font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Capital expenditure<br />
commitment<br />
on Dongguan Jiasheng</font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Total</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 44%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">2021</font></td>
<td style="width: 2%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 16%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">65,044</font></td>
<td style="width: 1%"> </td>
<td style="width: 2%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 19%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">5,796,736</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 10%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">5,861,780</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">2022</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">4,468,240</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">4,468,240</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">2023</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">4,240,090</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">4,240,090</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">2024</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">3,966,619</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">3,966,619</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">2025</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">3,804,450</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">3,804,450</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Total</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">65,044</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">22,276,135</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">22,341,179</font></td>
<td> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Subsequently, from July 2020 to September 2020,
the Company made payment of RMB 31.5 million ($4.4 million) on the above-mentioned construction projects. As a result, the Company’s
future capital expenditure commitment on CIP has been lowered down from approximately $22.3 million as of June 30, 2020 to approximately
$17.9 million as of the date of this report, as detailed below:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Capital expenditure commitment<br />
on Meijia</font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Capital expenditure commitment<br />
on Dongguan Jiasheng</font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Total</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 44%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">2021</font></td>
<td style="width: 2%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 16%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">25,452</font></td>
<td style="width: 1%"> </td>
<td style="width: 2%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 19%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,383,448</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 10%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,408,900</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">2022</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">4,468,240</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">4,468,240</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">2023</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">4,240,090</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">4,240,090</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">2024</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">3,966,619</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">3,966,619</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">2025</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">3,804,450</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">3,804,450</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Total</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">25,452</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">17,862,847</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">17,888,299</font></td>
<td> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/107% Times New Roman, Times, Serif; margin: 0">The Company plans to fund these CIP projects through working
capital generated from operations, bank borrowings, the proceeds received from the 2017 IPO and other potential capital raising
activities. No assurance can be given that the required capital expenditure funding on the CIP projects would be available at favorable
terms or at all.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>NOTE 7 – INTANGIBLE ASSETS, NET</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Net intangible assets consisted of the following:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td>
<td> </td>
<td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>As of June 30,</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2020</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2019</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 70%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Software</font></td>
<td style="width: 2%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 12%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">212,478</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 11%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">199,984</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Land use right</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,147,318</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,212,619</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Less: accumulated amortization</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(254,993</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(185,805</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Intangible assets, net</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,104,803</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,226,798</font></td>
<td> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Amortization expense was $75,094, $78,824,
and $40,078 for the years ended June 30, 2020, 2019 and 2018, respectively. In connection with the $2.9 million loans from Bank
of Communications of China, Dongguan Branch., the Company’s subsidiary Meijia pledged its intangible assets of $2,147,318
as the collateral to secure the loans (See Note 9)</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Estimated future amortization expense is as
follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="border-bottom: black 1.5pt solid; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Year ending June 30,</font></td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Amortization expense</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 79%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">2021</font></td>
<td style="width: 2%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 17%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">75,710</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">2022</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">75,710</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">2023</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">67,799</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">2024</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">62,147</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Thereafter</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,823,437</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Total</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,104,803</font></td>
<td> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>NOTE 9 – BANK LOANS</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Short-term loans consisted of the following: </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td>
<td> </td>
<td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>As of June 30,</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2020</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2019</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Bank of Communications of China (“BCC”):</b></font></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="width: 70%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Effective interest rate at 5.655%(1)</font></td>
<td style="width: 2%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 12%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,545,200</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 11%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,914,000</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Industrial and Commercial Bank of China (“ICBC”):</b></font></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Effective interest rate at 5.655% (2)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,696,800</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Cathay Bank</b></font></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Effective interest rate at 4.25% (3)</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">900,000</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Total</b></font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">5,142,000</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,914,000</font></td>
<td> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr>
<td style="vertical-align: top; width: 3%"><font style="font: 10pt Times New Roman, Times, Serif">(1)</font></td>
<td style="width: 97%">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On August 17, 2018, Dongguan Jiasheng entered
into a line of credit agreement with BCC Dongguan Branch to allow the Company to borrow RMB 30 million ($4.2 million) for one year
with a maturity date on August 13, 2019. The Company had drawn down RMB 20 million ($2.9 million) of the loan to purchase raw materials
on August 21, 2018. On August 20, 2019, the Company repaid the loan upon maturity.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In August 2019, the Company entered into two
loan agreements with BCC Dongguan Branch to borrow total of RMB 18 million ($2.5 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. The Company’s subsidiary Meijia pledged its land use right of approximately $2.1 million and
buildings of approximately $8.2 million as collaterals to secure these loans (see Note 6 and Note 7). In addition, Mr. Silong
Chen, the CEO of the Company, provided personal guarantee for the loans. The Company fully repaid the loans in July 2020 upon maturity.</p></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr>
<td style="vertical-align: top; width: 3%"><font style="font: 10pt Times New Roman, Times, Serif">(2)</font></td>
<td style="width: 97%">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On August 9, 2019, Dongguan Jiasheng entered
into a loan agreement with ICBC to borrow RMB 12 million ($1.7 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, pledged his personal assets as the collateral to secure this loan. Related parties, Mr. Junqiang Chen
and Ms. Caiyuan He, the relatives of Mr. Silong Chen, and Dongguan Dogness also provided the joint guarantee to this loan. The
Company fully repaid the loan in July 2020 upon maturity.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p></td></tr>
<tr>
<td style="vertical-align: top"><font style="font: 10pt Times New Roman, Times, Serif">(3)</font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">On February 6, 2020, one of the Company’s U.S. subsidiary Dogness Group, obtained a line of credit from Cathay Bank, pursuant to which, Dogness Group has the availability to borrow a maximum $1.2 million out of this line of credit for two years at the U.S. prime rate. The loan is guaranteed by the fixed assets of Dogness Group. The purpose of this loan is to expand the business operation and increase the marketing and sales activities in the United States and other international markets. During the year ended June 30, 2020, Dogness Group borrowed total of $945,000 and made repayment of $45,000. As of June 30, 2020, the outstanding balance was $900,000, which was recorded as current liabilities because Dogness Group plans to repay this loan within one year.</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Long-term loan consisted of the following: </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td>
<td> </td>
<td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>As of June 30,</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2020</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2019</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Southwestern National Bank</b></font></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="width: 71%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Paycheck Protection Program Loan (PPP) Loan</font></td>
<td style="width: 2%"> </td>
<td style="border-bottom: black 1.5pt solid; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 1.5pt solid; width: 11%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">73,300</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="border-bottom: black 1.5pt solid; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 1.5pt solid; width: 11%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Total</b></font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">73,300</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On May 11, 2020, Dogness Group, applied for
and received funding for a loan totaling $73,300 under the U.S. Small Business Administration (“SBA”) Paycheck Protection
Program (“PPP”), which is part of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”),
enacted on March 27, 2020. Under the terms of the SBA PPP loan, up to 100% of the principal and accrued interest may be forgiven
if certain criteria are met and the loan proceeds are used for qualifying expenses such as payroll costs, benefits, rent, and utilities
as described in the CARES Act. The interest rate on this loan is 1% per annum and any portion of the principal and accrued interest
that is not forgiven is required to be repaid by May 11, 2022. </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Interest expenses for the above-mentioned loans
amounted to $239,326, $209,842 and $546,681 for the years ended June 30, 2020, 2019 and 2018, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>NOTE 10 – TAXES</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>(a) Corporate Income Taxes (“CIT”)</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Under the Enterprise Income Tax (“EIT”)
Law of PRC, domestic enterprises and Foreign Investment Enterprises (“FIEs”) 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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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 the local economy. The corporate income taxes for the fiscal year 2020, 2019 and 2018 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 $Nil, $3,003 and $545,805 for the years ended June 30, 2020, 2019 and 2018, respectively. The benefit of the tax holidays
on net income per share (basic and diluted) was $Nil, $0.00 and $0.03 respectively. As of June 30, 2020, all of the Company’s
tax returns of its PRC Subsidiaries and U.S subsidiary remain open for statutory examination by relevant tax authorities.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The following table reconciles the statutory
rate to the Company’s effective tax rate:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td>
<td> </td>
<td colspan="10" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>For the years ended June 30,</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2020</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2019</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2018</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>%</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>%</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>%</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 58%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Hong Kong Statutory income tax rate</font></td>
<td style="width: 2%"> </td>
<td style="width: 1%"> </td>
<td style="width: 11%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">16.5</font></td>
<td style="width: 1%"> </td>
<td style="width: 2%"> </td>
<td style="width: 1%"> </td>
<td style="width: 10%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">16.5</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 10%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">16.5</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Income not generated in Hong Kong</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(16.8</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(8.9</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(15.3</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">China statutory income tax rate</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">25.0</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">25.0</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">25.0</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Effect of PRC preferential tax rate and tax holidays</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(9.4</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(10.0</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(8.3</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Non-deductible permanent difference</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1.0</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0.7</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(1.8</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Change in valuation allowance</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(19.6</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Research and development tax credit</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1.3</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(2.0</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(0.9</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 10pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Effective tax rate</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(2.0</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">21.3</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">15.2</font></td>
<td> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The provision for income tax consists of the
following:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td>
<td> </td>
<td colspan="10" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>For the years ended June 30,</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2020</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2019</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2018</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 58%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Current income tax provision</font></td>
<td style="width: 2%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 11%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">25,423</font></td>
<td style="width: 1%"> </td>
<td style="width: 2%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 10%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">614,622</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 10%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">938,119</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Deferred income tax provision (benefit)</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">139,114</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(234,326</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(12,747</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Total income tax expense</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">164,537</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">380,296</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">925,372</font></td>
<td> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The components of deferred tax assets as of
June 30, 2020 and 2019 consist of the following:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>June 30, 2020</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>June 30, 2019</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Deferred tax assets:</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="width: 69%; padding-left: 10pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Net operating losses</font></td>
<td style="width: 2%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 12%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,515,308</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 12%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">234,319</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-left: 10pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Assets impairment reserve</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">233,759</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">21,137</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 10pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Valuation allowance</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(1,633,837</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Deferred tax assets, net</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">115,230</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">255,456</font></td>
<td> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>(b) Taxes Payable</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company’s taxes payable consists
of the following:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>June 30, 2020</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>June 30, 2019</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td>
<td> </td>
<td colspan="2" style="text-align: justify"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: justify"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 70%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Corporate income tax payable</font></td>
<td style="width: 2%"> </td>
<td style="width: 1%"> </td>
<td style="width: 12%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,813,014</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 11%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,907,079</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Other tax payable</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,397</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,018</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Total taxes payable</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,814,411</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,909,097</font></td>
<td> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt/107% Times New Roman, Times, Serif; margin: 0">As of June 30, 2020 and 2019, the Company had accrued tax liabilities
of approximately $2.8 million and $2.9 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. Local tax authorities
have not made a determination as of June 30, 2020. Therefore, there was no interest and penalty accrued as of June 30, 2020 because
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 2021 but
cannot guarantee such settlement will ultimately occur. </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>NOTE 11 – COMMITMENTS AND CONTINGENCIES</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Contingencies</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Capital Investment Obligation</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Dogness Intelligence Technology Co., Ltd.</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On July 6, 2018, a new entity called Dogness
Intelligence Technology Co., Ltd. (“Intelligence Guangzhou”), 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 ($11.3 million).
The Company’s subsidiary, Dongguan Jiasheng, is required 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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Zhangzhou Meijia Metal Product Ltd.</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Meijia was incorporated under the laws of the
People’s Republic of China with a total registered capital of RMB 60.0 million ($8.5 million). As of June 30, 2019, RMB 30
million ($4.2 million) capital contribution has been made. During the year ended June 30, 2020, the Company made additional capital
contribution of RMB 10.9 million ($1.6 million) in Meijia. Subsequently, between July and September 2020, the Company made additional
capital contributions of RMB 1.3 million ($0.2 million).</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As of the date of this report, pursuant to
the articles of incorporation of Meijia, the Company is obligated to contribute the remaining RMB 17.8 million ($2.5 million) capital
investment into Meijia before December 30, 2025 whenever the Company has available funds.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Dongguan Jiasheng Enterprise Ltd.</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Dongguan Jiasheng was incorporated under the
laws of the People’s Republic of China with a total registered capital of RMB 50.0 million ($7.1 million). As of June 20,
2019, RMB 10 million ($1.4 million) capital contribution has been made. During the year ended June 30, 2020, the Company made additional
capital contribution of RMB 29 million ($4.2 million) in Dongguan Jiasheng. Subsequently, in July and August 2020, the Company
made additional capital contributions of RMB 11.0 million ($1.6 million).</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As of the date of this report, pursuant to
the articles of incorporation of Dongguan Jiasheng, the Company made all capital contributions.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i> </i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Dogness Network</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As disclosed in Note 3 above, the Company is
required to invest RMB 8.0 million (approximately $1.1 million) in exchange for 10% ownership interest in Dogness Network. As of
June 30, 2020, the Company made capital contribution of RMB 4.4 million (approximately $0.6 million) to Dogness Network. Subsequently,
in August 2020, the Company made additional capital contribution of RMB 1.6 million ($0.2 million). As of the date of this report,
the Company is obligated to make additional capital contribution of RMB 2.0 million ($0.3 million) to Dogness Network before December
31, 2020.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Capital Expenditure Commitment on the CIP</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/107% Times New Roman, Times, Serif; margin: 0">In connection with the Company’s construction-in-progress
projects on Meijia and Dongguan Jiasheng, from July 2020 to September 2020, the Company made payments of RMB 31.5 million ($4.4
million) on these projects. As a result, the future minimum capital expenditure commitment on these CIP projects has decreased
from approximately $22.3 million as of June 30, 2020 to approximately $17.9 million as of the date of this report (see Note 6).</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>NOTE 12 – RELATED PARTY TRANSACTIONS</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The relationship of related parties is summarized
as follow:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr>
<td style="border-bottom: black 1.5pt solid; vertical-align: bottom; width: 40%"><font style="font: 10pt Times New Roman, Times, Serif"><b>Name of Related Party</b></font></td>
<td style="width: 2%; text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid; vertical-align: bottom; width: 58%; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Relationship to the Company</b></font></td></tr>
<tr style="background-color: white">
<td style="vertical-align: top"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td></tr>
<tr>
<td style="vertical-align: top"><font style="font: 10pt Times New Roman, Times, Serif">Silong Chen</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: top"><font style="font: 10pt Times New Roman, Times, Serif">Chief Executive Officer; Chairman of the Board of Directors</font></td></tr>
<tr>
<td style="vertical-align: top"><font style="font: 10pt Times New Roman, Times, Serif">Junqiang Chen and Caiyuan He</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: top"><font style="font: 10pt Times New Roman, Times, Serif">Relatives of Mr. Silong Chen</font></td></tr>
<tr>
<td style="vertical-align: top"><font style="font: 10pt Times New Roman, Times, Serif">Linsun Smart Technology Co., Ltd (“Linsun”)</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: top"><font style="font: 10pt Times New Roman, Times, Serif">Equity investee -10% of the ownership</font></td></tr>
<tr>
<td style="vertical-align: top"><font style="font: 10pt Times New Roman, Times, Serif">Dogness Network Technology Co., Ltd (“Dogness Network”)</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: top"><font style="font: 10pt Times New Roman, Times, Serif">Equity Investee - 13% of the ownership</font></td></tr>
<tr>
<td style="vertical-align: top"><font style="font: 10pt Times New Roman, Times, Serif">Guangdong Dogness Biotechnology Co., Ltd.</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: top"><font style="font: 10pt Times New Roman, Times, Serif">Relate to one of the Company’s shareholders</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%">
<tr>
<td style="width: 21px"><font style="font: 10pt Times New Roman, Times, Serif"><b>(1)</b></font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Due to related party</b></font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As of June 30, 2020 and 2019, due to related
parties consist of the following: </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td>
<td> </td>
<td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>As of June 30,</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2020</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2019</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 70%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Mr. Silong Chen</font></td>
<td style="width: 2%"> </td>
<td style="border-bottom: black 1.5pt solid; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 1.5pt solid; width: 12%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">25,462</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="border-bottom: black 1.5pt solid; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 1.5pt solid; width: 11%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td style="width: 1%"> </td></tr>
<tr>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Mr. Silong Chen periodically provides working
capital loans to support the Company’s operations when needed. Such advance was non-interest bearing and due on demand.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%">
<tr>
<td style="width: 21px"><font style="font: 10pt Times New Roman, Times, Serif"><b>(2)</b></font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Loan guarantee provided by related parties</b></font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In connection with the Company’s bank
borrowings, Mr. Silong Chen pledged his personal assets as collateral and signed guarantee agreements to provide guarantee to the
Company’s short-term bank loans. Related parties, Mr. Junqiang Chen and Ms. Caiyuan He, the relatives of Mr. Silong Chen,
also jointly provided guarantee to the Company’s borrowings from ICBC bank (See Note 9).</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%">
<tr>
<td style="width: 21px"><font style="font: 10pt Times New Roman, Times, Serif"><b>(3)</b></font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Sales to related parties</b></font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Revenue from related parties consisted of
the following:</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td>
<td> </td>
<td colspan="10" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>For the years ended June 30,</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: black 1.5pt solid; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Name</b></font></td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2020</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2019</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2018</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 58%"><font style="font: 10pt Times New Roman, Times, Serif">Linsun</font></td>
<td style="width: 2%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 11%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">72,987</font></td>
<td style="width: 1%"> </td>
<td style="width: 2%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 10%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">185,126</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 10%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font: 10pt Times New Roman, Times, Serif">Dogness Network</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">836,664</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">143,441</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font: 10pt Times New Roman, Times, Serif">Total</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">909,651</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">328,567</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Cost of revenue associated with the sales to
these two related parties amounted to $633,132, $202,606 and Nil for the years ended June 30, 2020, 2019 and 2018, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%">
<tr>
<td style="width: 21px"><font style="font: 10pt Times New Roman, Times, Serif"><b>(4)</b></font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Accounts receivable from related parties</b></font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Accounts receivable from related parties consisted
of the following:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td>
<td> </td>
<td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>As of June 30,</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Accounts receivable - related parties:</font></td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2020</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2019</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 70%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">-Linsun</font></td>
<td style="width: 2%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 12%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 11%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">92,563</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">-<b>Dogness Network</b></font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">559,465</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">152,201</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Total</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">559,465</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">244,764</font></td>
<td> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As of June 30, 2020, total accounts receivable
from these two related parties amounted to $559,465, among which $434,098 has been collected as of the date of this report.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%">
<tr>
<td style="width: 21px"><font style="font: 10pt Times New Roman, Times, Serif"><b>(5)</b></font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Accounts payable to related parties</b></font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Accounts payables to related parties consisted
of the following</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td>
<td> </td>
<td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>As of June 30,</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Accounts payable - related parties:</font></td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2020</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2019</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 70%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">-Linsun</font></td>
<td style="width: 2%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 12%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">301,555</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 11%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">-Dogness Network</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">3,660</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Total</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">305,215</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%">
<tr>
<td style="width: 21px"><font style="font: 10pt Times New Roman, Times, Serif"><b>(6)</b></font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Purchase from related parties</b></font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">During the year ended June 30, 2020, the Company
also purchased certain pet product components and parts, such as smart pet water and food feeding devices, from Linsun and Dogness
Network. Total purchases from Linsun and Dogness Network amounted to $2,191,458 and $3,362 in fiscal 2020, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">During the year ended June 30, 2020, the Company
also purchased total of $205,328 pet shampoo from Guangdong Dogness Biotechnology Co., Ltd., an entity related to one of the Company’s
shareholders.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%">
<tr>
<td style="width: 21px"><font style="font: 10pt Times New Roman, Times, Serif"><b>(7)</b></font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Lease arrangement with related party</b></font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On January 2, 2020, Dongguan Jiasheng signed
a lease agreement with Linsun, which enabled Linsun to lease part of Dongguan Jiasheng’s new production facilities of approximately
8,460 square meters for ten years. Annual lease payment from Linsun amounted to approximately $230,000 and is subject to 15% increase
every three years. For the year ended June 30, 2020, the Company recorded rent income of $89,411 as other income through leasing
the manufacturing facilities to Linsun.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>NOTE 14 – EARNINGS (LOSS) PER SHARE</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">For the years ended June 30, 2020, potential
shares of common stock from the unexercised options and <font style="letter-spacing: -0.05pt">unexercised options are </font>excluded
from diluted net (loss) per share as such amounts are anti-dilutive.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; 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. 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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="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: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The following table presents a reconciliation
of basic and diluted net income (loss) per share:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td>
<td> </td>
<td colspan="10" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>For the years ended June 30,</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2020</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2019</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2018</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 58%"><font style="font: 10pt Times New Roman, Times, Serif">Net income (loss) attributable to the Company</font></td>
<td style="width: 2%"> </td>
<td style="border-bottom: black 1.5pt solid; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 1.5pt solid; width: 11%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(8,441,559</font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td style="width: 2%"> </td>
<td style="border-bottom: black 1.5pt solid; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 1.5pt solid; width: 10%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,421,781</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="border-bottom: black 1.5pt solid; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 1.5pt solid; width: 10%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">4,603,708</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font: 10pt Times New Roman, Times, Serif">Weighted average number of common shares outstanding - Basic</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">25,913,631</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">25,913,631</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">20,800,670</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font: 10pt Times New Roman, Times, Serif">Dilutive securities -unexercised warrants and options</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">27,975</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">9,280</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font: 10pt Times New Roman, Times, Serif">Weighted average number of common shares outstanding – diluted</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">25,913,631</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">25,941,606</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">20,809,950</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font: 10pt Times New Roman, Times, Serif">Earnings (loss) per share - Basic</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(0.33</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0.05</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0.22</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font: 10pt Times New Roman, Times, Serif">Earnings (loss) per share – Diluted</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(0.33</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0.05</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0.22</font></td>
<td> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>NOTE 16 – SEGMENT</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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, as well as intelligent pet products. 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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><u>Geographic information</u></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The summary of total revenues by geographic
market for the years ended June 30, 2020, 2019 and 2018 was as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td>
<td> </td>
<td colspan="10" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>For the year ended June 30,</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2020</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2019</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2018</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 58%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Mainland China</font></td>
<td style="width: 2%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 11%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">9,772,130</font></td>
<td style="width: 1%"> </td>
<td style="width: 2%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 10%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">15,082,443</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 10%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">14,865,940</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">United States</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">4,918,400</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">5,522,008</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">10,168,945</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Europe</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,699,231</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,510,190</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,994,085</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Australia</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">564,550</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">216,993</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">223,463</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Canada</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">482,057</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">950,353</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">128,320</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Central and South America</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">98,628</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">231,426</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">106,098</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Japan and other Asian countries and regions</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,636,362</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,703,102</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,637,444</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Total</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">19,171,358</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">26,216,515</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">30,135,295</font></td>
<td> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><u>Revenue by product categories</u></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The summary of total revenues by product categories
for the years ended June 30, 2020, 2019 and 2018 was as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td>
<td> </td>
<td colspan="10" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>For the years ended June 30,</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2020</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2019</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2018</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 58%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Pet leashes</font></td>
<td style="width: 2%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 11%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">4,009,167</font></td>
<td style="width: 1%"> </td>
<td style="width: 2%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 10%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">6,266,952</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 10%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">7,102,233</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Pet collars</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">3,142,731</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">6,188,672</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">10,684,908</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Pet harnesses</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,415,411</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">3,587,128</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">4,980,771</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Retractable dog leashes</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">643,010</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,771,805</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,650,932</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Intelligent pet products</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">4,328,918</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,103,523</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">59,719</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Gift suspender</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,979,365</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">4,058,229</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">3,481,500</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Other pet accessories</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,019,080</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,024,742</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,175,232</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Climbing hooks</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,633,676</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">215,464</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Total</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">19,171,358</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">26,216,515</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">30,135,295</font></td>
<td> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>NOTE 17 – SUBSEQUENT EVENTS</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Bank loans</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In July 2020, the Company repaid RMB 18 million
($2.5 million) loans to Bank of Communications and RMB 12 million ($1.7 million) loans to ICBC upon maturity (see Note 9).</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On July 17, 2020, the Company entered into
multiple loan agreements with Dongguan Rural Commercial Bank to borrow an aggregate of RMB 50 million ($7.1 million) loans to support
the construction of the Company’s current CIP projects. The loans have terms of eight years with a maturity date on July
16, 2028. 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. The Company pledged the land use right of approximately $1.3 million and buildings
of approximately $4.0 million from Meijia as collaterals to secure total loans of RMB 30 million ($4.3 million). Mr. Silong Chen,
the CEO of the Company, pledged personal property as collateral to secure the remaining loans of RMB 20 million ($2.8 million).
Dongguan Dogness, Meijia and Mr. Silong Chen also provided guarantee for the loans. As of the report date, the Company had received
the total amount of RMB 50 million ($7.1 million) from the above loans.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Lease arrangements with related
parties and a subsidiary</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On August 1, 2020, Dongguan Jiasheng signed
a lease agreement with Dogness Network to lease approximately 520 square meters of Dongguan Jiasheng’s office space to Dogness
Network for ten years. The lease has an annual rent of approximately $34,000 and is subject to a 15% increase every three years.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On August 01, 2020, Dogness Jiasheng signed
a lease agreement with Guangdong Dogness Technology Co. Ltd. to lease 50 square meters of Dongguan Jiasheng’s office space
for ten years. The lease has an annual rent of approximately $8,400.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On August 01, 2020, Dogness Jiasheng signed
a lease agreement with Dogness Culture to lease Dongguan Jiasheng’s conference room and warehouse from August 1, 2020 to
April 3, 2027. The lease rent has an annual rent of $34,000 and is subject to a 15% increase every three years.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Impact of COVID-19</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company’s business operations are affected by the
recent and ongoing outbreak of the coronavirus disease 2019 (COVID-19). The COVID-19 outbreak is causing lockdowns, travel restrictions,
and closures of businesses. The Company’s business has been negatively impacted by the COVID-19 coronavirus outbreak to certain
extent. In late January, 2020 to the middle of February 2020, the company had to temporarily suspend manufacturing activities due
to government restrictions. During the temporary business closure period, the company’s employees had very limited access
to manufacturing facilities, and as a result, the company experienced difficulty delivering products to customers on a timely basis.
In addition, due to the COVID-19 outbreak, some of the Company’s customers or suppliers may experience financial distress,
delay or default on payments, reduce the scale of business, or suffer disruptions in business due to the outbreak. Any increased
difficulty in collecting accounts receivable, delayed raw materials supply, bankruptcy of small and medium businesses, or early
termination of agreements due to deterioration in economic conditions could negatively impact the results of the Company’s
operations. Although the Company resumed its normal business operations in late March 2020, its export sales to international markets
were reduced. Based on assessment of current economic environment, customer demand and sales trend, and the negative impact from
the prolonged COVID-19 outbreak and spread, there is an uncertainty that the Company’s revenue and operating cash flows may
be significantly lower than expected for fiscal year 2021.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Basis of Presentation and Principles of
Consolidation</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 5.65pt 0 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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. Dogness Culture and Dogness Group. All inter-company balances and transactions have been
eliminated upon consolidation.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company’s consolidated financial
statements reflect the operating results of the following entities:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr>
<td style="border-bottom: black 1.5pt solid; vertical-align: bottom"><font style="font: 8pt Times New Roman, Times, Serif">Name of Entity</font></td>
<td style="text-align: justify"> </td>
<td style="border-bottom: black 1.5pt solid; vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Date of Incorporation</font></td>
<td style="vertical-align: bottom; text-align: center"> </td>
<td style="border-bottom: black 1.5pt solid; vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Place of Incorporation</font></td>
<td style="vertical-align: bottom; text-align: center"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">% of Ownership</font></td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom; text-align: center"> </td>
<td style="border-bottom: black 1.5pt solid; vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Principal Activities</font></td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; width: 29%"><font style="font: 8pt Times New Roman, Times, Serif">Dogness (International) Corporation (“Dogness” or the “Company”)</font></td>
<td style="width: 2%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 17%; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">July 11, 2016</font></td>
<td style="width: 2%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 19%; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">BVI</font></td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 8%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">Parent, 100</font></td>
<td style="vertical-align: bottom; width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">%</font></td>
<td style="width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 19%; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Holding Company</font></td></tr>
<tr style="background-color: white">
<td style="vertical-align: top"><font style="font: 8pt Times New Roman, Times, Serif">Dogness (Hongkong) Pet’s Products Co., Limited (“HK Dogness”)</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">March 10, 2009</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Hong Kong</font></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">100</font></td>
<td style="vertical-align: bottom"><font style="font: 8pt Times New Roman, Times, Serif">%</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Trading</font></td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top"><font style="font: 8pt Times New Roman, Times, Serif">Jiasheng Enterprise (Hong Kong) Co., Limited (“HK Jiasheng”)</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">July 12, 2007</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Hong Kong</font></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">100</font></td>
<td style="vertical-align: bottom"><font style="font: 8pt Times New Roman, Times, Serif">%</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Trading</font></td></tr>
<tr style="background-color: white">
<td style="vertical-align: top"><font style="font: 8pt Times New Roman, Times, Serif">Dogness Intelligence Technology (Dongguan) Co., Ltd. (“Dongguan Dogness”)</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">October 26, 2016</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Dongguan, China</font></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">100</font></td>
<td style="vertical-align: bottom"><font style="font: 8pt Times New Roman, Times, Serif">%</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Holding Company</font></td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: bottom"><font style="font: 8pt Times New Roman, Times, Serif">Dongguan Jiasheng Enterprise Co., Ltd. (“Dongguan Jiasheng”)</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">May 15, 2009</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Dongguan, China</font></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">100</font></td>
<td style="vertical-align: bottom"><font style="font: 8pt Times New Roman, Times, Serif">%</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Development and manufacturing of pet leash products</font></td></tr>
<tr style="background-color: white">
<td style="vertical-align: top"><font style="font: 8pt Times New Roman, Times, Serif">Zhangzhou Meijia Metal Product Co., Ltd (“Meijia”)</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">July 9,2009</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Zhangzhou, China</font></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">100</font></td>
<td style="vertical-align: bottom"><font style="font: 8pt Times New Roman, Times, Serif">%</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Manufacturing of pet leash products</font></td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top"><font style="font: 8pt Times New Roman, Times, Serif">Dogness Overseas Ltd (“Dogness Overseas”)</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">February 8, 2018</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">BVI</font></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">100</font></td>
<td style="vertical-align: bottom"><font style="font: 8pt Times New Roman, Times, Serif">%</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Holding Company</font></td></tr>
<tr style="background-color: white">
<td style="vertical-align: top"><font style="font: 8pt Times New Roman, Times, Serif">Dogness Group LLC (“Dogness Group”)</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">January 23, 2018</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Delaware, United States</font></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">100</font></td>
<td style="vertical-align: bottom"><font style="font: 8pt Times New Roman, Times, Serif">%</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Pet products trading</font></td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top"><font style="font: 8pt Times New Roman, Times, Serif">Dogness Intelligence Technology Co., Ltd. (“Intelligence Guangzhou”)</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">July 6, 2018</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Guangzhou, China</font></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">58</font></td>
<td style="vertical-align: bottom"><font style="font: 8pt Times New Roman, Times, Serif">%</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Research and manufacturing of intelligent pet products</font></td></tr>
<tr style="background-color: white">
<td style="vertical-align: top"><font style="font: 8pt Times New Roman, Times, Serif">Dogness Japan Co. Ltd. (“Dogness Japan”)</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">February 5, 2019</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Osaka, Japan</font></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">51</font></td>
<td style="vertical-align: bottom"><font style="font: 8pt Times New Roman, Times, Serif">%</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Pet products trading</font></td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top"><font style="font: 8pt Times New Roman, Times, Serif">Dogness Pet Culture (Dongguan) Co. Ltd. (Dogness Culture)</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">December 14, 2018</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Dongguan, China</font></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">51.2</font></td>
<td style="vertical-align: bottom"><font style="font: 8pt Times New Roman, Times, Serif">%</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Developing and expanding pet food market</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Use of Estimates</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Cash</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Accounts Receivable, net</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/107% Times New Roman, Times, Serif; margin: 0">Accounts receivable are presented net of allowance for doubtful
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 $23,982 and $128,106 as of June
30, 2020 and 2019, respectively. For the years ended June 30, 2020, 2019 and 2018, $856,383, $Nil and $Nil delinquent accounts
receivable were directly written off, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Inventories, net</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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. As of June 30, 2020 and 2019, for certain obsolete, slow-moving and damaged fabric and leather raw materials
and metal components or parts used in the manufacturing the Company’s pet leash and other pet products, the Company
recorded inventory reserve of $1,158,551 and $Nil, respectively.<b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Property, plant and Equipment, net</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Property, plant and equipment are stated at
cost less accumulated depreciation and amortization. The straight-line depreciation method is used to compute depreciation over
the estimated useful lives of the assets, as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="background-color: white">
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Useful life</font></td></tr>
<tr style="background-color: #CCEEFF">
<td style="width: 48%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Buildings</font></td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 51%; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">10-50 years</font></td></tr>
<tr style="background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Leasehold improvement</font></td>
<td style="text-align: justify"> </td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Lesser of useful life and lease term</font></td></tr>
<tr style="background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Machinery equipment</font></td>
<td style="text-align: justify"> </td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">5-10 years</font></td></tr>
<tr style="background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Transportation vehicles</font></td>
<td style="text-align: justify"> </td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">5 years</font></td></tr>
<tr style="background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Office equipment and furniture</font></td>
<td style="text-align: justify"> </td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">5 years</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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 that 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 operations and other comprehensive income (loss) in other income or expenses.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Intangible Assets, net</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.”</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Intangible assets are stated at cost less accumulated
amortization. Customized software systems 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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Long-lived assets impairment</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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. During the year ended
June 30, 2020, the Company disposed approximately $1.2 million outdated and fully depreciated equipment and machinery (see Note
6). Given the Company’s net loss position in fiscal 2020, the Company further assessed that the expected future cash flow
generated from certain machinery and equipment used to manufacture the Company’s low-end traditional pet products would not
recover their carrying value, as a result, the Company recorded an additional impairment of $281,680 on these fixed assets for
the year ended June 30, 2020.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Fair Value of Financial Instruments</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr>
<td style="width: 24px; text-align: justify"> </td>
<td style="vertical-align: top; width: 24px"><font style="font: 10pt Times New Roman, Times, Serif">●</font></td>
<td style="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>
<td style="text-align: justify"> </td>
<td style="vertical-align: top"> </td>
<td style="text-align: justify"> </td></tr>
<tr>
<td style="text-align: justify"> </td>
<td style="vertical-align: top"><font style="font: 10pt Times New Roman, Times, Serif">●</font></td>
<td style="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>
<td style="text-align: justify"> </td>
<td style="vertical-align: top"> </td>
<td style="text-align: justify"> </td></tr>
<tr>
<td style="text-align: justify"> </td>
<td style="vertical-align: top"><font style="font: 10pt Times New Roman, Times, Serif">●</font></td>
<td style="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: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Unless otherwise disclosed, the fair value
of the Company’s financial instruments including cash, short-term investments, accounts receivable, inventories, 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. </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Revenue Recognition</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">To determine revenue recognition for contracts
with customers, the Company performs the following five steps: (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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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. For the years ended June 30, 2020, 2019 and 2018,
the Company did not provide any sales incentives to its customers.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Contract Assets and Liabilities</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i> </i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As of June 30, 2020 and 2019, 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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i> </i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Disaggregation of Revenues</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/107% Times New Roman, Times, Serif; margin: 0">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, 2020,
2019 and 2018 are disclosed in Note 16 of this consolidation financial statements.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Research and development costs</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Income Taxes</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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, 2020, 2019 and 2018. As of June 30, 2020, all of the Company’s
tax returns of its PRC Subsidiaries and U.S subsidiary remain open for statutory examination by relevant tax authorities.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Value added tax (“VAT”)</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Earnings (loss) per Share</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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 (loss) 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. For the years ended June 30, 2020, given the Company’s
net loss position, potential shares of common stock from the <font style="letter-spacing: -0.05pt">unexercised options are </font>excluded
from diluted net (loss) per share as such amounts are anti-dilutive. 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. For the years ended June 30, 2020, 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 (See Note 14).</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Share-Based compensation</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Comprehensive income (loss)</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Comprehensive income (loss) consists of two
components, net income (loss) 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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Concentrations and Credit Risk</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As of June 30, 2020, and 2019, $879,040 and
$1,773,713 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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As of June 30, 2020, four customers aggregately accounted
for 73% of the Company’s total accounts receivable, with related party customer Guangdong Dogness Network accounted
for 23%, and three third party customers accounted for 20%, 17% and 13% of the Company’s total accounts receivable,
respectively. As of June 30, 2019, two customers accounted for 25% and 18% of the Company’s total accounts receivable,
respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">For the years ended June 30, 2020, 2019 and
2018, export sales accounted for 49%, 42.5% and 50.2% of the Company’s total revenue, respectively. For the year ended June
30, 2020, three customers accounted for 27.6%, 6.5% and 4.4% 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, 2018, three customers accounted for 24.9%, 14.0% and 7.4% of the Company’s total revenue, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/107% Times New Roman, Times, Serif; margin: 0">For the year ended June 30, 2020, two suppliers accounted
for 35.1% of the Company’s total raw materials purchases, with related party supplier Linsun and a third party
supplier accounted for 23.3% and 11.8% of the Company’s total raw material purchases, respectively. For the
years ended June 30, 2019 and 2018, no single supplier accounted for more than 10% of the Company’s total raw material purchases.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Recent Accounting Pronouncements</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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, Accounting
Standards Update 2019-04, Accounting Standards Update 2019-05. In January 2020, the FASB issued ASU 2020-2, “Financial Instruments
– Credit Losses (Topic 326) and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin
No. 119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No. 2016-02, Leases (Topic 842), February
2020” (“ASU 2020-02”). ASU 2020-02 added and amended SEC paragraphs in the Accounting Standards Codification
to reflect the issuance of SEC Staff Accounting Bulletin No. 119, related to the new credit losses standard, and comments by the
SEC staff related to the revised effective date of the new standard. 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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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 all 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 does not expect this guidance will have a material impact on its
consolidated financial statements.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In December 2019, the FASB issued ASU No. 2019-12,
Income Taxes (Topic 740)—Simplifying the Accounting for Income Taxes. ASU 2019-12 is intended to simplify accounting for
income taxes. It removes certain exceptions to the general principles in Topic 740 and amends existing guidance to improve consistent
application. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020 and interim periods within those fiscal
years, with early adoption permitted. The Company does not expect adoption of the new guidance to have a significant impact on
our financial statements.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In January 2020, the FASB issued ASU 2020-01,
Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging
(Topic 815) (“ASU 2020-01”), which is intended to clarify the interaction of the accounting for equity securities under
Topic 321 and investments accounted for under the equity method of accounting in Topic 323 and the accounting for certain forward
contracts and purchased options accounted for under Topic 815. ASU 2020-01 is effective for the Company beginning January 1, 2021.
The Company is currently evaluating the effect of adopting this ASU on the Group’s financial statements.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Inventories consisted of the following:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td>
<td> </td>
<td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>As of June 30,</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2020</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2019</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 70%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Raw materials</font></td>
<td style="width: 2%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 12%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">140,745</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 11%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">795,047</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Work in process</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">677,301</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,136,582</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Finished goods</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">3,201,205</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">3,431,102</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">4,019,251</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">5,362,731</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Less: inventory allowance</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(1,158,551</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Inventory, net</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,860,700</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">5,362,731</font></td>
<td> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Net intangible assets consisted of the following:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td>
<td> </td>
<td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>As of June 30,</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2020</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2019</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 70%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Software</font></td>
<td style="width: 2%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 12%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">212,478</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 11%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">199,984</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Land use right</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,147,318</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,212,619</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Less: accumulated amortization</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(254,993</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(185,805</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Intangible assets, net</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,104,803</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,226,798</font></td>
<td> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Short-term loans consisted of the following: </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td>
<td> </td>
<td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>As of June 30,</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2020</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2019</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Bank of Communications of China (“BCC”):</b></font></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="width: 70%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Effective interest rate at 5.655%(1)</font></td>
<td style="width: 2%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 12%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,545,200</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 11%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,914,000</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Industrial and Commercial Bank of China (“ICBC”):</b></font></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Effective interest rate at 5.655% (2)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,696,800</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Cathay Bank</b></font></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Effective interest rate at 4.25% (3)</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">900,000</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Total</b></font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">5,142,000</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,914,000</font></td>
<td> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr>
<td style="vertical-align: top; width: 3%"><font style="font: 10pt Times New Roman, Times, Serif">(1)</font></td>
<td style="width: 97%">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On August 17, 2018, Dongguan Jiasheng entered
into a line of credit agreement with BCC Dongguan Branch to allow the Company to borrow RMB 30 million ($4.2 million) for one year
with a maturity date on August 13, 2019. The Company had drawn down RMB 20 million ($2.9 million) of the loan to purchase raw materials
on August 21, 2018. On August 20, 2019, the Company repaid the loan upon maturity.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In August 2019, the Company entered into two
loan agreements with BCC Dongguan Branch to borrow total of RMB 18 million ($2.5 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. The Company’s subsidiary Meijia pledged its land use right of approximately $2.1 million and
buildings of approximately $8.2 million as collaterals to secure these loans (see Note 6 and Note 7). In addition, Mr. Silong
Chen, the CEO of the Company, provided personal guarantee for the loans. The Company fully repaid the loans in July 2020 upon maturity.</p></td></tr>
<tr>
<td style="vertical-align: top"> </td>
<td style="text-align: justify"> </td></tr>
<tr>
<td style="vertical-align: top"><font style="font: 10pt Times New Roman, Times, Serif">(2)</font></td>
<td>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On August 9, 2019, Dongguan Jiasheng entered
into a loan agreement with ICBC to borrow RMB 12 million ($1.7 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, pledged his personal assets as the collateral to secure this loan. Related parties, Mr. Junqiang Chen
and Ms. Caiyuan He, the relatives of Mr. Silong Chen, and Dongguan Dogness also provided the joint guarantee to this loan. The
Company fully repaid the loan in July 2020 upon maturity.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p></td></tr>
<tr>
<td style="vertical-align: top"><font style="font: 10pt Times New Roman, Times, Serif">(3)</font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">On February 6, 2020, one of the Company’s U.S. subsidiary Dogness Group, obtained a line of credit from Cathay Bank, pursuant to which, Dogness Group has the availability to borrow a maximum $1.2 million out of this line of credit for two years at the U.S. prime rate. The loan is guaranteed by the fixed assets of Dogness Group. The purpose of this loan is to expand the business operation and increase the marketing and sales activities in the United States and other international markets. During the year ended June 30, 2020, Dogness Group borrowed total of $945,000 and made repayment of $45,000. As of June 30, 2020, the outstanding balance was $900,000, which was recorded as current liabilities because Dogness Group plans to repay this loan within one year.</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The following table reconciles the statutory
rate to the Company’s effective tax rate:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td>
<td> </td>
<td colspan="10" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>For the years ended June 30,</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2020</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2019</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2018</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>%</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>%</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>%</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 58%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Hong Kong Statutory income tax rate</font></td>
<td style="width: 2%"> </td>
<td style="width: 1%"> </td>
<td style="width: 11%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">16.5</font></td>
<td style="width: 1%"> </td>
<td style="width: 2%"> </td>
<td style="width: 1%"> </td>
<td style="width: 10%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">16.5</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 10%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">16.5</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Income not generated in Hong Kong</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(16.8</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(8.9</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(15.3</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">China statutory income tax rate</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">25.0</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">25.0</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">25.0</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Effect of PRC preferential tax rate and tax holidays</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(9.4</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(10.0</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(8.3</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Non-deductible permanent difference</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1.0</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0.7</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(1.8</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Change in valuation allowance</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(19.6</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Research and development tax credit</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1.3</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(2.0</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(0.9</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 10pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Effective tax rate</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(2.0</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">21.3</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">15.2</font></td>
<td> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The provision for income tax consists of the
following:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td>
<td> </td>
<td colspan="10" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>For the years ended June 30,</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2020</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2019</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2018</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 58%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Current income tax provision</font></td>
<td style="width: 2%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 11%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">25,423</font></td>
<td style="width: 1%"> </td>
<td style="width: 2%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 10%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">614,622</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 10%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">938,119</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Deferred income tax provision (benefit)</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">139,114</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(234,326</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(12,747</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Total income tax expense</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">164,537</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">380,296</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">925,372</font></td>
<td> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The components of deferred tax assets as of
June 30, 2020 and 2019 consist of the following:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>June 30, 2020</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>June 30, 2019</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Deferred tax assets:</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="width: 69%; padding-left: 10pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Net operating losses</font></td>
<td style="width: 2%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 12%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,515,308</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 12%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">234,319</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-left: 10pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Assets impairment reserve</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">233,759</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">21,137</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 10pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Valuation allowance</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(1,633,837</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Deferred tax assets, net</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">115,230</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">255,456</font></td>
<td> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company’s taxes payable consists
of the following:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>June 30, 2020</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>June 30, 2019</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td>
<td> </td>
<td colspan="2" style="text-align: justify"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: justify"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 70%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Corporate income tax payable</font></td>
<td style="width: 2%"> </td>
<td style="width: 1%"> </td>
<td style="width: 12%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,813,014</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 11%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,907,079</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Other tax payable</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,397</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,018</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Total taxes payable</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,814,411</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,909,097</font></td>
<td> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The following table presents a reconciliation
of basic and diluted net income (loss) per share:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td>
<td> </td>
<td colspan="10" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>For the years ended June 30,</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2020</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2019</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2018</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 58%"><font style="font: 10pt Times New Roman, Times, Serif">Net income (loss) attributable to the Company</font></td>
<td style="width: 2%"> </td>
<td style="border-bottom: black 1.5pt solid; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 1.5pt solid; width: 11%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(8,441,559</font></td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td style="width: 2%"> </td>
<td style="border-bottom: black 1.5pt solid; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 1.5pt solid; width: 10%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,421,781</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="border-bottom: black 1.5pt solid; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 1.5pt solid; width: 10%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">4,603,708</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font: 10pt Times New Roman, Times, Serif">Weighted average number of common shares outstanding - Basic</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">25,913,631</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">25,913,631</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">20,800,670</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font: 10pt Times New Roman, Times, Serif">Dilutive securities -unexercised warrants and options</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">27,975</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">9,280</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font: 10pt Times New Roman, Times, Serif">Weighted average number of common shares outstanding – diluted</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">25,913,631</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">25,941,606</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">20,809,950</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font: 10pt Times New Roman, Times, Serif">Earnings (loss) per share - Basic</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(0.33</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0.05</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0.22</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font: 10pt Times New Roman, Times, Serif">Earnings (loss) per share – Diluted</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(0.33</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0.05</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0.22</font></td>
<td> </td></tr>
</table>
3551968
11073200
28233035
2476305
5409144
2860700
5362731
1471612
1527397
11627458
25922624
43533512
35516368
2104803
2226798
63551261
69023927
5142000
2914000
705223
543158
152299
179306
2814411
2909097
1452408
1526862
10769734
8072423
53221610
52827145
191716
191716
3216071
11657630
-5787965
-3894300
63551261
69023927
16786510
18000708
16779988
9430005
12134587
2391370
6015901
3958355
5746812
673131
580379
1528062
8790435
6193363
11106837
639570
5941224
-8715467
23498
-6410
113348
1143904
-412144
343079
1783474
5529080
-8372388
380296
925372
164537
503528
-381773
214171
26216515
30135295
19171358
9772130
15082443
14865940
4918400
5522008
10168945
1699231
2510190
1994085
564550
216993
223463
482057
950353
128320
98628
231426
106098
1636362
1703102
2637444
4009167
6266952
7102233
3142731
6188672
10684908
1415411
3587128
4980771
643010
1771805
2650932
1019080
2024742
1175232
4328918
2103523
59719
2979365
4058229
3481500
1633676
215464
1466522
1219892
2264957
4863
14106
-1165044
-209015
-12747
84046
-55189
1462024
-1621042
1356110
1235858
-1214601
4475109
805370
224171
205428
-317716
-2784131
-52719
-198827
-22153
577877
753832
-8868
436233
751752
-36955
-1268951
3514385
-2212271
3157281
11030538
837508
2079731
-1622638
-44260971
-2457921
2932000
4921600
5211000
2900000
20000000
18000000
2500000
4691200
6121240
2889000
30000000
4400000
12000000
1700000
18000000
2500000
-25629
-1387864
50466
-1648119
47612781
3041584
74284
34393
33131
1266873
2550152
1504596
7085235
-4535083
5580639
-1283279
4625
-1285556
345329
328567
909651
72987
836664
143441
185126
10913631
10913631
50200285
21827
50178458
54600000
682254
341127
341127
682254
394465
394465
136710
595818
136710
595818
-18603
-95366
614669
117486
1046360
995131
1131200
12500000
177750
8000000
3000000
424200
4107550
51507928
60951504
30000
51827
51827
1625306
52144891
52827145
5756706
10263198
11657630
-122022
-1884751
-3894300
7357141
60739532
67151
164367
191716
51827
53221610
191716
3216071
-5787965
117486
614669
13572260
2413172
8606966
22300000
157500000
17900000
31500000
4400000
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Prepayment</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
559465
244764
434098
559465
92563
152201
5.00
25913631
20800670
25913631
25941606
20809950
25913631
0.05
0.22
-0.33
0.05
0.22
-0.33
2101403
1654629
2336229
1143707
287244
1.00
1.00
0.58
0.42
0.51
0.49
1.00
0.512
0.488
616878
-23961
15560
23982
128106
1916840
5164380
12400000
1800000
559465
434098
10700000
10000000
7100000
71000000
10400000
73600000
118100000
16700000
5120000
730000
78824
40078
75094
212478
199984
254993
185805
75710
75710
67799
62147
2900000
4200000
30000000
1700000
12000000
945000
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>NOTE 13 – EQUITY</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Common Shares</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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 the Company’s 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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Initial Public Offering</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 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 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: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As of June 30, 2020 and 2019, 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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Public Offering Warrants</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; 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: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 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: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As of June 30, 2020, 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: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Statutory Reserve</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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 $Nil, $27,349
and $97,216 to statutory reserves during the years ended June 30, 2020, 2019 and 2018 in accordance with PRC GAAP, respectively.
The restricted amounts as determined by the PRC statutory laws totaled $191,716 and $191,716 as of June 30, 2020 and 2019, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Noncontrolling interests</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As of June 30, 2020, noncontrolling interests
represent 42.0%, 49.0% and 48.8% noncontrolling shareholders’ interests in Intelligence Guangzhou, Dogness Japan and Dogness
Culture, 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 operations 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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Long-term Investments in Equity Investees</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i> </i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On July 1, 2018, the Company adopted Accounting
Standards Codification (“ASC”) 321 “Investments—Equity Securities” (“ASC 321”). In accordance
with ASC 321, equity securities over 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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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. In July 2018, the Company entered into an equity investment agreement with Nanjing Rootaya to invest
RMB 1.25 million ($177,750) for 10% of the ownership interest in Nanjing Rootaya, with the remaining 90% of the ownership interest
owned by three unrelated shareholders.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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 smart
pet products. In November 2018, the Company entered into an equity investment agreement with Dogness Network to invest RMB
8.0 million ($1,131,200) 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, 2020, the Company made capital contribution of RMB 4.4 million ($622,160).
Subsequently, in August 2020, the Company made additional capital contribution of RMB 1.6 million ($0.2 million). As of the date
of this report, the Company is obligated to make the remaining capital contribution of RMB 2.0 million ($0.3 million) before December
31,2020.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 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 ($424,200) for 13% of the ownership
interest in Linsun,with the remaining 87% of the ownership interest owned by three unrelated shareholders.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; 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 using
the measurement alternative in accordance with ASC 321. </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="background-color: white">As of
June 30, 2020, based on the financial condition and operating performance of </font>Nanjing Rootaya, <font style="background-color: white">it reported
significant net loss and working capital deficit, </font>and is unable to generate positive cash flow in the foreseeable future<font style="background-color: white">.
As a result, a full impairment loss of $177,750 has been applied against this investment, which was reflected
in the consolidated statements of operations and comprehensive income (loss) for the year ended June 30, 2020. </font>For
the Company’s investments in Dogness Network and Linsun, no material impairment indicator was noted as of June 30, 2020 because
their operation results indicated net income and cash inflows.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt/107% Times New Roman, Times, Serif; margin: 0">As of June 30, 2020 and 2019, the Company’s long-term
investments in equity investees amounted to $1,046,360 and $995,131, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Foreign Currency Translation</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company’s principal country of operations
is the PRC. The financial position and results of the operations of HK Dogness<font style="letter-spacing: -0.05pt">,</font> HK
Jiasheng, Dongguan Dogness, Dongguan Jiasheng, Meijia, Intelligence Guangzhou and Dogness Culture are <font style="letter-spacing: -0.05pt">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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 (loss) included in consolidated statements of changes in equity. Gains and losses from foreign currency
transactions are included in the consolidated statement of operations and comprehensive income (loss).</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The following table outlines the currency exchange
rates that were used in creating the consolidated financial statements in this report:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="background-color: white">
<td> </td>
<td style="text-align: center"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>June 30, 2020</b></font></td>
<td style="text-align: center"> </td>
<td colspan="3" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>June 30, 2019</b></font></td>
<td style="text-align: center"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>June 30, 2018</b></font></td>
<td style="text-align: center"> </td></tr>
<tr style="background-color: #CCE9FF">
<td style="width: 23%"><font style="font: 10pt Times New Roman, Times, Serif">Year-end spot rate</font></td>
<td style="width: 2%; text-align: justify"> </td>
<td style="width: 15%; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">US$1=RMB 7.0721</font></td>
<td style="width: 14%; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">US$1=JPY 107.5</font></td>
<td style="width: 1%; text-align: center"> </td>
<td style="width: 14%; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">US$1=RMB 6.8657</font></td>
<td style="width: 1%; text-align: center"> </td>
<td style="width: 14%; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">US$1=JPY 107.5</font></td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 14%; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">US$1=RMB 6.6181</font></td>
<td style="width: 1%; text-align: center"> </td></tr>
<tr>
<td style="background-color: white; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Average rate</font></td>
<td style="background-color: white; text-align: justify"> </td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">US$1=RMB 7.0323</font></td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">US$1=JPY 107.5</font></td>
<td style="background-color: white; text-align: center"> </td>
<td style="background-color: white; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">US$1=RMB 6.8226</font></td>
<td style="background-color: white; text-align: center"> </td>
<td style="background-color: white; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">US$1=JPY 111.1</font></td>
<td style="background-color: white; text-align: justify"> </td>
<td style="background-color: white; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">US$1=RMB 6.5020</font></td>
<td style="background-color: white; text-align: center"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Reclassifications</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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 (loss) and cash flows.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As of June 30, 2020, future minimum capital
expenditures on the Company’s construction-in-progress projects are estimated as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Capital expenditure<br />
commitment<br />
on Meijia</font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Capital expenditure<br />
commitment<br />
on Dongguan Jiasheng</font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Total</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 44%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">2021</font></td>
<td style="width: 2%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 16%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">65,044</font></td>
<td style="width: 1%"> </td>
<td style="width: 2%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 19%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">5,796,736</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 10%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">5,861,780</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">2022</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">4,468,240</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">4,468,240</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">2023</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">4,240,090</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">4,240,090</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">2024</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">3,966,619</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">3,966,619</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">2025</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">3,804,450</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">3,804,450</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Total</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">65,044</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">22,276,135</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">22,341,179</font></td>
<td> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">  </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Capital expenditure commitment<br />
on Meijia</font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Capital expenditure commitment<br />
on Dongguan Jiasheng</font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Total</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 44%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">2021</font></td>
<td style="width: 2%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 16%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">25,452</font></td>
<td style="width: 1%"> </td>
<td style="width: 2%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 19%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,383,448</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 10%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,408,900</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">2022</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">4,468,240</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">4,468,240</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">2023</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">4,240,090</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">4,240,090</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">2024</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">3,966,619</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">3,966,619</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">2025</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">3,804,450</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">3,804,450</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Total</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">25,452</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">17,862,847</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">17,888,299</font></td>
<td> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Estimated future amortization expense is as
follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="border-bottom: black 1.5pt solid; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Year ending June 30,</font></td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Amortization expense</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 79%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">2021</font></td>
<td style="width: 2%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 17%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">75,710</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">2022</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">75,710</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">2023</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">67,799</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">2024</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">62,147</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Thereafter</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,823,437</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Total</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,104,803</font></td>
<td> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The summary of total revenues by product categories
for the years ended June 30, 2020, 2019 and 2018 was as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td>
<td> </td>
<td colspan="10" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>For the years ended June 30,</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2020</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2019</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2018</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 58%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Pet leashes</font></td>
<td style="width: 2%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 11%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">4,009,167</font></td>
<td style="width: 1%"> </td>
<td style="width: 2%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 10%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">6,266,952</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 10%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">7,102,233</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Pet collars</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">3,142,731</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">6,188,672</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">10,684,908</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Pet harnesses</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,415,411</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">3,587,128</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">4,980,771</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Retractable dog leashes</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">643,010</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,771,805</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,650,932</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Intelligent pet products</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">4,328,918</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,103,523</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">59,719</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Gift suspender</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,979,365</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">4,058,229</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">3,481,500</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Other pet accessories</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,019,080</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,024,742</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,175,232</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Climbing hooks</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,633,676</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">215,464</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Total</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">19,171,358</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">26,216,515</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">30,135,295</font></td>
<td> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The summary of total revenues by geographic
market for the years ended June 30, 2020, 2019 and 2018 was as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td>
<td> </td>
<td colspan="10" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>For the year ended June 30,</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2020</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2019</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2018</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 58%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Mainland China</font></td>
<td style="width: 2%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 11%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">9,772,130</font></td>
<td style="width: 1%"> </td>
<td style="width: 2%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 10%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">15,082,443</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 10%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">14,865,940</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">United States</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">4,918,400</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">5,522,008</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">10,168,945</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Europe</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,699,231</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,510,190</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,994,085</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Australia</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">564,550</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">216,993</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">223,463</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Canada</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">482,057</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">950,353</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">128,320</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Central and South America</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">98,628</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">231,426</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">106,098</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Japan and other Asian countries and regions</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,636,362</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,703,102</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,637,444</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Total</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">19,171,358</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">26,216,515</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">30,135,295</font></td>
<td> </td></tr>
</table>
-19224
-98635
136710
595818
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company’s consolidated financial
statements reflect the operating results of the following entities:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr>
<td style="border-bottom: black 1.5pt solid; vertical-align: bottom"><font style="font: 8pt Times New Roman, Times, Serif">Name of Entity</font></td>
<td style="text-align: justify"> </td>
<td style="border-bottom: black 1.5pt solid; vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Date of Incorporation</font></td>
<td style="vertical-align: bottom; text-align: center"> </td>
<td style="border-bottom: black 1.5pt solid; vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Place of Incorporation</font></td>
<td style="vertical-align: bottom; text-align: center"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">% of Ownership</font></td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom; text-align: center"> </td>
<td style="border-bottom: black 1.5pt solid; vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Principal Activities</font></td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top; width: 29%"><font style="font: 8pt Times New Roman, Times, Serif">Dogness (International) Corporation (“Dogness” or the “Company”)</font></td>
<td style="width: 2%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 17%; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">July 11, 2016</font></td>
<td style="width: 2%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 19%; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">BVI</font></td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 8%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">Parent, 100</font></td>
<td style="vertical-align: bottom; width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">%</font></td>
<td style="width: 1%; text-align: justify"> </td>
<td style="vertical-align: bottom; width: 19%; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Holding Company</font></td></tr>
<tr style="background-color: white">
<td style="vertical-align: top"><font style="font: 8pt Times New Roman, Times, Serif">Dogness (Hongkong) Pet’s Products Co., Limited (“HK Dogness”)</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">March 10, 2009</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Hong Kong</font></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">100</font></td>
<td style="vertical-align: bottom"><font style="font: 8pt Times New Roman, Times, Serif">%</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Trading</font></td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top"><font style="font: 8pt Times New Roman, Times, Serif">Jiasheng Enterprise (Hong Kong) Co., Limited (“HK Jiasheng”)</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">July 12, 2007</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Hong Kong</font></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">100</font></td>
<td style="vertical-align: bottom"><font style="font: 8pt Times New Roman, Times, Serif">%</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Trading</font></td></tr>
<tr style="background-color: white">
<td style="vertical-align: top"><font style="font: 8pt Times New Roman, Times, Serif">Dogness Intelligence Technology (Dongguan) Co., Ltd. (“Dongguan Dogness”)</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">October 26, 2016</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Dongguan, China</font></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">100</font></td>
<td style="vertical-align: bottom"><font style="font: 8pt Times New Roman, Times, Serif">%</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Holding Company</font></td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: bottom"><font style="font: 8pt Times New Roman, Times, Serif">Dongguan Jiasheng Enterprise Co., Ltd. (“Dongguan Jiasheng”)</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">May 15, 2009</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Dongguan, China</font></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">100</font></td>
<td style="vertical-align: bottom"><font style="font: 8pt Times New Roman, Times, Serif">%</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Development and manufacturing of pet leash products</font></td></tr>
<tr style="background-color: white">
<td style="vertical-align: top"><font style="font: 8pt Times New Roman, Times, Serif">Zhangzhou Meijia Metal Product Co., Ltd (“Meijia”)</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">July 9,2009</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Zhangzhou, China</font></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">100</font></td>
<td style="vertical-align: bottom"><font style="font: 8pt Times New Roman, Times, Serif">%</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Manufacturing of pet leash products</font></td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top"><font style="font: 8pt Times New Roman, Times, Serif">Dogness Overseas Ltd (“Dogness Overseas”)</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">February 8, 2018</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">BVI</font></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">100</font></td>
<td style="vertical-align: bottom"><font style="font: 8pt Times New Roman, Times, Serif">%</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Holding Company</font></td></tr>
<tr style="background-color: white">
<td style="vertical-align: top"><font style="font: 8pt Times New Roman, Times, Serif">Dogness Group LLC (“Dogness Group”)</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">January 23, 2018</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Delaware, United States</font></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">100</font></td>
<td style="vertical-align: bottom"><font style="font: 8pt Times New Roman, Times, Serif">%</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Pet products trading</font></td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top"><font style="font: 8pt Times New Roman, Times, Serif">Dogness Intelligence Technology Co., Ltd. (“Intelligence Guangzhou”)</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">July 6, 2018</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Guangzhou, China</font></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">58</font></td>
<td style="vertical-align: bottom"><font style="font: 8pt Times New Roman, Times, Serif">%</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Research and manufacturing of intelligent pet products</font></td></tr>
<tr style="background-color: white">
<td style="vertical-align: top"><font style="font: 8pt Times New Roman, Times, Serif">Dogness Japan Co. Ltd. (“Dogness Japan”)</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">February 5, 2019</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Osaka, Japan</font></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">51</font></td>
<td style="vertical-align: bottom"><font style="font: 8pt Times New Roman, Times, Serif">%</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Pet products trading</font></td></tr>
<tr style="background-color: #CCEEFF">
<td style="vertical-align: top"><font style="font: 8pt Times New Roman, Times, Serif">Dogness Pet Culture (Dongguan) Co. Ltd. (Dogness Culture)</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">December 14, 2018</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Dongguan, China</font></td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">51.2</font></td>
<td style="vertical-align: bottom"><font style="font: 8pt Times New Roman, Times, Serif">%</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Developing and expanding pet food market</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The straight-line depreciation method is used
to compute depreciation over the estimated useful lives of the assets, as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="background-color: white">
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Useful life</font></td></tr>
<tr style="background-color: #CCEEFF">
<td style="width: 48%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Buildings</font></td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 51%; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">10-50 years</font></td></tr>
<tr style="background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Leasehold improvement</font></td>
<td style="text-align: justify"> </td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">Lesser of useful life and lease term</font></td></tr>
<tr style="background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Machinery equipment</font></td>
<td style="text-align: justify"> </td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">5-10 years</font></td></tr>
<tr style="background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Transportation vehicles</font></td>
<td style="text-align: justify"> </td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">5 years</font></td></tr>
<tr style="background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Office equipment and furniture</font></td>
<td style="text-align: justify"> </td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">5 years</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Property, plant and equipment stated at cost
less accumulated depreciation consisted of the following:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td>
<td> </td>
<td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>As of June 30,</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2020</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2019</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 70%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Buildings</font></td>
<td style="width: 2%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 12%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">25,532,908</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 11%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">9,492,699</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Machinery and equipment</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">6,698,443</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">9,543,080</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Office equipment and furniture</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">765,597</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">676,748</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Automobiles</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">810,156</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">765,214</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Leasehold improvements</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">5,028,382</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">5,126,219</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Construction-in-progress (“CIP”) (1)</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">10,647,107</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">15,787,348</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Total</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">49,482,593</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">41,391,308</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Less: accumulated depreciation</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(5,668,986</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(5,874,940</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-left: 10pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">     Impairment of fixed assets</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(280,095</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Property, plant and equipment, net</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">43,533,512</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">35,516,368</font></td>
<td> </td></tr>
</table>
281680
0.73
0.25
0.20
0.18
0.49
0.425
0.502
0.281
0.249
0.276
0.135
0.140
0.065
0.056
0.074
0.044
0.92
0.17
0.13
0.233
0.118
0.10
0.10
0.23
0.351
4019251
5362731
3201205
3431102
677301
1136582
140745
795047
2147318
2900000
8178279
900000
2147318
2212619
1823437
209842
546681
239438
0.05655
0.05655
0.0425
2019-08-13
2100000
8200000
1200000
328567
909651
2191458
3362
205328
54600000
50200000
P3Y
6.25
500000
500000
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.
191716
191716
27975
9280
120000
160000
360000
160000
1.50
1.50
1.50
1.50
1.50
1.50
1.50
60000
50000
50000
5000
120000
220000
10000
6667
73337
P7M
P10M
P15M
P2Y
P3Y
P2Y
440840
1385500
284300
Black-Scholes pricing model
Black-Scholes pricing model
5.0
5.0
2.90
0.0184
0.0194
0.0185
1.50
1.50
1.50
0.695
0.747
0.770
P2M8D
86663
P1Y29D
1.50
1.50
1.50
P1Y9M22D
P1Y2M19D
P2Y1M20D
P1Y1M20D
P1Y2M19D
P4M6D
P1Y1M20D
P2M8D
1
5123898
1300000
4000000
-16250610
28737530
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1158551
1387698
1179814
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4400000
31500000
22300000
22300000
25532908
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5126219
49482593
41391308
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25913631
25913631
25913631
0001707303
20-F
2020-06-30
false
--06-30
No
No
Yes
Yes
true
false
Non-accelerated Filer
false
16844631
9069000
FY
2020
true
false
false
-587768
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12043333
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99771
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: -0.05pt"><b>NOTE
2 – GOING CONCERN</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="letter-spacing: -0.05pt"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As reflected in the Company’s consolidated
financial statements, for the year ended June 30, 2020, the Company’s revenue decreased by approximately $7.0 million due
to reduced sales orders as affected by the intense China-U.S. trade and tariff dispute, which became more fragile due to the outbreak
and spread of the COVID-19 pandemic. As a result, the Company suffered a net loss of approximately $8.5 million. In addition, the
Company’s working capital decreased significantly by approximately $17.0 million from approximately $17.9 million as of June
30, 2019 to only approximately $0.9 million as of June 30, 2020 because of large capital expenditures on the Company’s construction-in-progress
projects during the year. As of June 30, 2020, the Company still had future minimum capital expenditure commitment on its construction-in-progress
projects of approximately $5.9 million within the next twelve months. Furthermore, the outbreak and spread of the COVID-19 throughout
China and worldwide has caused significant volatility in the PRC and international markets. There is significant uncertainty around
the breadth and duration of business disruptions related to COVID-19, as well as its impact on the PRC and international economies.
To reduce the spread of the COVID-19, the Chinese government has employed measures including city lockdowns, quarantines, travel
restrictions, suspension of business activities and school closures. Due to difficulties and challenges resulting from the COVID-19
outbreak, the Company temporarily closed its facilities and operations until middle of February 2020. During this temporary business
closure period, there was limited support from the Company’s employees, delayed access to raw material supplies, reduced
customer sales orders, and the Company’s inability to promote the sales to customers on a timely basis. Based on assessment
of current economic environment, customer demand and sales trend, and the negative impact from COVID-19 outbreak and spread, there
is an uncertainty that the Company’s revenue and operating cash flows may be significantly lower than expected for fiscal
year 2021 and the Company may not be able to fund its capital expenditure on its CIP projects as planned. The above-mentioned facts
raised substantial doubt about the Company’s ability to continue as a going concern for the next 12 months from the date
of this filing.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> <b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 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, remaining
cash from its 2017 IPO proceeds, renewal of bank borrowings and equity financing, if necessary, to ensure sufficient working capital. </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As of June 30, 2020, the Company had cash of
approximately $1.3 million, the Company also had short-term investments of approximately $3.6 million using the 2017 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 $2.5 million, of which approximately
$2.2 million or 89% has been subsequently collected back during July to September 2020 (including $1.8 million accounts receivable
collected from third party customers and $0.4 million accounts received collected from related party customers), and become available
for use as working capital.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As of June 30, 2020, the Company had outstanding
bank loans of approximately $5.2 million from PRC banks. Management expects that it will be able to renew all of its existing bank
loans upon their maturity based on past experience and the Company’s good credit history. In addition to the current borrowings,
subsequently in July 2020, the Company repaid total bank loans of RMB 30 million ($4.4 million) to the banks upon maturity, while
at the same time, secured another RMB 50 million (approximately $7.1 million) long-term loan from Dongguan Rural Commercial Bank
to support the construction of the Company’s current CIP projects. (see Note 17).</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Currently, the Company is working to improve
its liquidity and capital source mainly through cash flow from its operations, remaining cash from its 2017 IPO proceeds,
renewal of bank borrowings and equity financing. In order to fully implement its business plan and sustain continued growth, the
Company may also seek equity financing from outside investors. At the present time, however, the Company does not have commitments
of funds from any potential investors. No assurance can be given that additional financing, if required, would be available on
favorable terms or at all.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Based on above reasons, there is a substantial
doubt about the Company’s ability to continue as a going concern for the next 12 months from the date of this filing.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>NOTE 8 – LEASES</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company has several operating leases for
manufacturing facilities and offices. The Company’s lease agreements do not contain any material residual value guarantees
or material restrictive covenants. Rent expense for the years ended June 30, 2020, 2019 and 2018 was $562,894, $640,626 and $391,784,
respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Effective July 1, 2019, the Company adopted
the new lease accounting standard using a modified retrospective transition method which allowed the Company not to recast comparative
periods presented in its consolidated financial statements. In addition, the Company elected the package of practical expedients,
which allowed the Company to not reassess whether any existing contracts contain a lease, to not reassess historical lease classification
as operating or finance leases, and to not reassess initial direct costs. The Company has not elected the practical expedient to
use hindsight to determine the lease term for its leases at transition. The Company combines the lease and non-lease components
in determining the ROU assets and related lease obligation. Adoption of this standard resulted in the recording of operating lease
ROU assets and corresponding operating lease liabilities as disclosed below and had no impact on accumulated deficit as of June
30, 2020. ROU assets and related lease obligations are recognized at commencement date based on the present value of remaining
lease payments over the lease term. </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Supplemental balance sheet information related
to operating leases was as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>June 30,<br />
2020</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 83%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Right-of-use assets, net</font></td>
<td style="width: 2%"> </td>
<td style="border-bottom: black 1.5pt solid; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 1.5pt solid; width: 13%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">5,123,898</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Operating lease liabilities - current</font></td>
<td> </td>
<td><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">172,716</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Operating lease liabilities - non-current</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,200,299</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Total operating lease liabilities</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,373,015</font></td>
<td> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The weighted average remaining lease terms
and discount rates for all of operating leases were as follows as of June 30, 2020:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Remaining lease term and discount rate:</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="width: 83%; padding-left: 0.75pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Weighted average remaining lease term (years)</font></td>
<td style="width: 2%"> </td>
<td style="width: 1%"> </td>
<td style="width: 13%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">15.32</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-left: 0.75pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Weighted average discount rate</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">5.79</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">%</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The following is a schedule of maturities of
lease liabilities as of June 30,2020:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Twelve months ending June 30,</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="width: 83%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">2021</font></td>
<td style="width: 2%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 13%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">245,750</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">2022</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">238,264</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">2023</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">225,079</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">2024</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">241,088</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">2025</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">241,499</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Thereafter</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">471,069</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Total future minimum lease payments</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,662,749</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Less: imputed interest</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">289,734</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Total</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,373,015</font></td>
<td> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Accounts receivable from related parties consisted
of the following:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td>
<td> </td>
<td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>As of June 30,</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Accounts receivable - related parties:</font></td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2020</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2019</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 70%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">-Linsun</font></td>
<td style="width: 2%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 12%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 11%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">92,563</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">-<b>Dogness Network</b></font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">559,465</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">152,201</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Total</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">559,465</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">244,764</font></td>
<td> </td></tr>
</table>
90077
-5356
755472
23982
128106
40012
90077
755472
-1983
-3213
280095
231100000
32700000
5861780
65044
5796736
1408900
25452
1383448
3804450
3804450
3804450
3804450
3966619
3966619
3966619
3966619
4240090
4240090
4240090
4240090
4468240
4468240
4468240
4468240
640626
391784
562894
89411
34000
8400
34000
P15Y3M26D
0.0579
245750
238264
225079
241088
241499
471069
1373015
1662749
289734
73300
50000000
7100000
1.00
The interest rate on this loan is 1% per annum and any portion of the principal and accrued interest that is not forgiven is required to be repaid by May 11, 2022.
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.
45000
50000000
7100000
900000
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Leases</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company adopted ASU No. 2016-02—Leases
(Topic 842) since July 1, 2019, using a modified retrospective transition method permitted under ASU No. 2018-11. This transition
approach provides a method for recording existing leases only at the date of adoption and does not require previously reported
balances to be adjusted. In addition, we elected the package of practical expedients permitted under the transition guidance within
the new standard, which among other things, allowed us to carry forward the historical lease classification. Adoption of the new
standard resulted in the recording of additional lease assets and lease liabilities of approximately $5.1 million and $1.4 million,
respectively, as of June 30, 2020. The standard did not materially impact our consolidated net earnings and cash flows.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Allowance for doubtful accounts movement is
as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>June 30,</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2020</b></p></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>June 30,</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2019</b></p></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 70%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Beginning balance</font></td>
<td style="width: 2%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 12%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">128,106</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 11%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">40,012</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Additions</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">755,472</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">90,077</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Write-off</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(856,383</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Foreign currency translation adjustments</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(3,213</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(1,983</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Ending balance</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">23,982</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">128,106</font></td>
<td> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Supplemental balance sheet information related
to operating leases was as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>June 30,<br />
2020</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 83%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Right-of-use assets, net</font></td>
<td style="width: 2%"> </td>
<td style="border-bottom: black 1.5pt solid; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 1.5pt solid; width: 13%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">5,123,898</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Operating lease liabilities - current</font></td>
<td> </td>
<td><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">172,716</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Operating lease liabilities - non-current</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,200,299</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Total operating lease liabilities</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,373,015</font></td>
<td> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The weighted average remaining lease terms
and discount rates for all of operating leases were as follows as of June 30, 2020:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Remaining lease term and discount rate:</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="width: 83%; padding-left: 0.75pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Weighted average remaining lease term (years)</font></td>
<td style="width: 2%"> </td>
<td style="width: 1%"> </td>
<td style="width: 13%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">15.32</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-left: 0.75pt; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Weighted average discount rate</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">5.79</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">%</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The following is a schedule of maturities of
lease liabilities as of June 30,2020:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Twelve months ending June 30,</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="width: 83%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">2021</font></td>
<td style="width: 2%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 13%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">245,750</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">2022</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">238,264</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">2023</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">225,079</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">2024</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">241,088</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">2025</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">241,499</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Thereafter</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">471,069</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Total future minimum lease payments</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,662,749</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Less: imputed interest</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">289,734</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Total</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,373,015</font></td>
<td> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Long-term loan consisted of the following: </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td>
<td> </td>
<td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>As of June 30,</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2020</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2019</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Southwestern National Bank</b></font></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="width: 71%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Paycheck Protection Program Loan (PPP) Loan</font></td>
<td style="width: 2%"> </td>
<td style="border-bottom: black 1.5pt solid; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 1.5pt solid; width: 11%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">73,300</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="border-bottom: black 1.5pt solid; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 1.5pt solid; width: 11%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Total</b></font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">73,300</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As of June 30, 2020 and 2019, due to related
parties consist of the following: </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td>
<td> </td>
<td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>As of June 30,</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2020</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2019</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 70%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Mr. Silong Chen</font></td>
<td style="width: 2%"> </td>
<td style="border-bottom: black 1.5pt solid; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 1.5pt solid; width: 12%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">25,462</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="border-bottom: black 1.5pt solid; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 1.5pt solid; width: 11%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td style="width: 1%"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Revenue from related parties consisted of
the following:</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td>
<td> </td>
<td colspan="10" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>For the years ended June 30,</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: black 1.5pt solid; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>Name</b></font></td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2020</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2019</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2018</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 58%"><font style="font: 10pt Times New Roman, Times, Serif">Linsun</font></td>
<td style="width: 2%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 11%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">72,987</font></td>
<td style="width: 1%"> </td>
<td style="width: 2%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 10%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">185,126</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 10%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font: 10pt Times New Roman, Times, Serif">Dogness Network</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">836,664</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">143,441</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font: 10pt Times New Roman, Times, Serif">Total</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">909,651</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">328,567</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Accounts payables to related parties consisted
of the following</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td>
<td> </td>
<td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>As of June 30,</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Accounts payable - related parties:</font></td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2020</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2019</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 70%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">-Linsun</font></td>
<td style="width: 2%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 12%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">301,555</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 11%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">-Dogness Network</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">3,660</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Total</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">305,215</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td></tr>
</table>
856383
British Virgin Islands
2016-07-11
2018-12-14
50200000
1.00
600000
1600000
4200000
200000
11300000
80000000
10000000
1400000
670000
4880000
46400000
6800000
60000000
8500000
30000000
4200000
10900000
1300000
17800000
2500000
50000000
7100000
10000000
1400000
29000000
11000000
1600000
3000000
400000
4400000
1600000
200000
2000000
300000
250000
-7000000
17000000
17900000
900000
5900000
1300000
2500000
0.89
5200000
50000000
7100000
0.0175
0.0395
536345
517359
243661
856383
P10Y
P50Y
0.20
0.10
0.58
0.10
0.90
0.13
1.00
0.10
0.10
0.13
-622160
4400000
1600000
200000
2000000
300000
177750
1200000
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.
879040
1773713
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
2018-12-14
BVI
Hong Kong
Hong Kong
Dongguan, China
Dongguan, China
Zhangzhou, China
BVI
Delaware, United States
Guangzhou, China
Osaka, Japan
Dongguan, China
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
0.58
0.51
0.512
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
Developing and expanding pet food market
P10Y
P50Y
P5Y
P10Y
P5Y
P5Y
Lesser of useful life and lease term
7.0721
7.0323
6.8657
6.6181
107.5
107.5
6.8226
6.5020
107.5
111.1
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 ("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.
3003
545805
0.00
0.03
-0.168
-0.089
-0.153
0.100
0.083
0.094
0.007
-0.018
0.010
-0.196
0.020
0.009
-0.013
0.213
0.152
-0.020
614622
938119
25423
-234326
-12747
139114
1515308
234319
1633837
115230
255456
2813014
2907079
1397
2018
2814411
2909097
8000000
1100000
0.42
0.49
0.488
8640
520
50
P10Y
230000
Annual lease payment from Linsun amounted to approximately $230,000 and is subject to 15% increase every three years.
15% increase every three years.
15% increase every three years.
Equity investee -10% of the ownership
Equity Investee - 13% of the ownership
Relate to one of the Company's shareholders
Chief Executive Officer; Chairman of the Board of Directors
Relatives of Mr. Silong Chen
856383
115230
255456
27349
97216
1403178
4603708
4603708
1421781
-8536925
-8441559
-18603
-95366
1421781
4603708
-8441559
140000
413337
160000
140000
4300000
30000000
20000000
2800000
50893259
60834018
-97216
-27349
97216
27349
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Statement of Cash Flows</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Risks and Uncertainties</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/107% Times New Roman, Times, Serif; margin: 0">The Company’s business, financial condition and results
of operations may also be negatively impacted by risks related to natural disasters, extreme weather conditions, health epidemics
and other catastrophic incidents, which could significantly disrupt the Company’s operations. The COVID-19 outbreak and spread
have led to a prolonged global economy downturn. The Company’s results of operations and financial condition will depend
on future developments, including the duration and spread of the outbreak and the impact on the Company’s customers, which
are still uncertain and cannot be reasonably estimated at this point of time (see Note 17).</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The following table outlines the currency exchange
rates that were used in creating the consolidated financial statements in this report:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="background-color: white">
<td> </td>
<td style="text-align: center"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>June 30, 2020</b></font></td>
<td style="text-align: center"> </td>
<td colspan="3" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>June 30, 2019</b></font></td>
<td style="text-align: center"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>June 30, 2018</b></font></td>
<td style="text-align: center"> </td></tr>
<tr style="background-color: #CCE9FF">
<td style="width: 23%"><font style="font: 10pt Times New Roman, Times, Serif">Year-end spot rate</font></td>
<td style="width: 2%; text-align: justify"> </td>
<td style="width: 15%; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">US$1=RMB 7.0721</font></td>
<td style="width: 14%; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">US$1=JPY 107.5</font></td>
<td style="width: 1%; text-align: center"> </td>
<td style="width: 14%; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">US$1=RMB 6.8657</font></td>
<td style="width: 1%; text-align: center"> </td>
<td style="width: 14%; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">US$1=JPY 107.5</font></td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 14%; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">US$1=RMB 6.6181</font></td>
<td style="width: 1%; text-align: center"> </td></tr>
<tr>
<td style="background-color: white; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Average rate</font></td>
<td style="background-color: white; text-align: justify"> </td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">US$1=RMB 7.0323</font></td>
<td style="text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">US$1=JPY 107.5</font></td>
<td style="background-color: white; text-align: center"> </td>
<td style="background-color: white; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">US$1=RMB 6.8226</font></td>
<td style="background-color: white; text-align: center"> </td>
<td style="background-color: white; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">US$1=JPY 111.1</font></td>
<td style="background-color: white; text-align: justify"> </td>
<td style="background-color: white; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif">US$1=RMB 6.5020</font></td>
<td style="background-color: white; text-align: center"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Accounts receivable consisted of the following:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td>
<td> </td>
<td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>As of June 30,</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2020</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>2019</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 70%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Accounts receivable from third-party customers</font></td>
<td style="width: 2%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 12%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,940,822</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 11%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">5,292,486</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Less: allowance for doubtful accounts</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(23,982</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(128,106</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Total accounts receivable from third-party customers, net</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1,916,840</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">5,164,380</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Add: accounts receivable - related parties</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">559,465</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">244,764</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Total accounts receivable, net</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2,476,305</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">5,409,144</font></td>
<td> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The relationship of related parties is summarized
as follow:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr>
<td style="border-bottom: black 1.5pt solid; vertical-align: bottom; width: 40%"><font style="font: 10pt Times New Roman, Times, Serif"><b>Name of Related Party</b></font></td>
<td style="width: 2%; text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid; vertical-align: bottom; width: 58%; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Relationship to the Company</b></font></td></tr>
<tr style="background-color: white">
<td style="vertical-align: top"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td></tr>
<tr>
<td style="vertical-align: top"><font style="font: 10pt Times New Roman, Times, Serif">Silong Chen</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: top"><font style="font: 10pt Times New Roman, Times, Serif">Chief Executive Officer; Chairman of the Board of Directors</font></td></tr>
<tr>
<td style="vertical-align: top"><font style="font: 10pt Times New Roman, Times, Serif">Junqiang Chen and Caiyuan He</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: top"><font style="font: 10pt Times New Roman, Times, Serif">Relatives of Mr. Silong Chen</font></td></tr>
<tr>
<td style="vertical-align: top"><font style="font: 10pt Times New Roman, Times, Serif">Linsun Smart Technology Co., Ltd (“Linsun”)</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: top"><font style="font: 10pt Times New Roman, Times, Serif">Equity investee -10% of the ownership</font></td></tr>
<tr>
<td style="vertical-align: top"><font style="font: 10pt Times New Roman, Times, Serif">Dogness Network Technology Co., Ltd (“Dogness Network”)</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: top"><font style="font: 10pt Times New Roman, Times, Serif">Equity Investee - 13% of the ownership</font></td></tr>
<tr>
<td style="vertical-align: top"><font style="font: 10pt Times New Roman, Times, Serif">Guangdong Dogness Biotechnology Co., Ltd.</font></td>
<td style="text-align: justify"> </td>
<td style="vertical-align: top"><font style="font: 10pt Times New Roman, Times, Serif">Relate to one of the Company’s shareholders</font></td></tr>
</table>
2200000
1800000
400000
87893
103922
-172108
143972
1036304
233759
21137
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Short-term Investments</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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 3.95% 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 operations and comprehensive income (loss) over the contractual term of these investments.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company had short-term investments of
$3,551,968, $11,073,200 and $28,233,035 as of June 30, 2020, 2019 and 2018, respectively. The Company recorded interest income
of $243,661, $536,345 and $517,359 for the years ended June 30, 2020, 2019 and 2018, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>NOTE 15 – OPTIONS</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; 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: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On July 30, 2019, the Company negotiated 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. As of June 30, 2020, no options were exercised by
TJ Capital and 73,337 options were vested.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">  </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The aggregate fair value of the options granted
to Dr. Yunhao Chen, the CFO, 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. As of June 30,
2020, all of 120,000 options were vested and no options were exercised by the CFO.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.
On October 31, 2019, Mr. Silong Chen voluntarily waived the remaining unvested 140,000 options.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The aggregate fair value of the options granted
to Mr. Silong Chen 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. As of June 30, 2020, no options were
exercised by the CEO and 220,000 options were vested.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company recorded $394,465, $682,254 and
$341,127 stock-based compensation expense for the years ended June 30, 2020, 2019 and 2018, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As of June 30, 2020, the Company had 413,337
outstanding vested stock options with a weighted average remaining term over 0.19 years and 86,663 unvested stock options with
a weighted average remaining term over 1.08 years. The following table summarized the Company’s stock option activity:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Number of<br />
Options</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Weighted Average<br />
Exercise Price</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Weighted Average Remaining Life in Years</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 57%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Outstanding, June 30, 2018</font></td>
<td style="width: 1%"> </td>
<td style="border-bottom: black 2.25pt double; width: 1%"> </td>
<td style="border-bottom: black 2.25pt double; width: 10%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">640,000</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="border-bottom: black 2.25pt double; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; width: 10%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1.50</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="border-bottom: black 2.25pt double; width: 1%"> </td>
<td style="border-bottom: black 2.25pt double; width: 14%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1.81</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Exercisable, June 30, 2018</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">90,000</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1.50</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2.14</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Granted</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td>
<td> </td>
<td><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Cancelled</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(160,000</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Exercised</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Outstanding June 30, 2019</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">480,000</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1.50</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1.22</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Exercisable, June 30, 2019</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">270,000</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1.50</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1.14</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Granted</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">160,000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Cancelled</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(140,000</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Exercised</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Outstanding June 30, 2020</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">500,000</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1.50</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0.35</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Exercisable, June 30, 2020</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">413,337</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1.50</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0.19</font></td>
<td> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The following table summarized the Company’s
stock option activity:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="text-align: center"> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Number of<br />
Options</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Weighted Average<br />
Exercise Price</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font: 10pt Times New Roman, Times, Serif"><b>Weighted Average Remaining Life in Years</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 57%; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Outstanding, June 30, 2018</font></td>
<td style="width: 1%"> </td>
<td style="border-bottom: black 2.25pt double; width: 1%"> </td>
<td style="border-bottom: black 2.25pt double; width: 10%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">640,000</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="border-bottom: black 2.25pt double; width: 1%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; width: 10%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1.50</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="border-bottom: black 2.25pt double; width: 1%"> </td>
<td style="border-bottom: black 2.25pt double; width: 14%; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1.81</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Exercisable, June 30, 2018</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">90,000</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1.50</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">2.14</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Granted</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td>
<td> </td>
<td><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Cancelled</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(160,000</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Exercised</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Outstanding June 30, 2019</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">480,000</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1.50</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1.22</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Exercisable, June 30, 2019</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">270,000</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1.50</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1.14</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Granted</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">160,000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Cancelled</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">(140,000</font></td>
<td><font style="font: 10pt Times New Roman, Times, Serif">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Exercised</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">-</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Outstanding June 30, 2020</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">500,000</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1.50</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0.35</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Exercisable, June 30, 2020</font></td>
<td> </td>
<td style="border-bottom: black 2.25pt double"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">413,337</font></td>
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<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">1.50</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 10pt Times New Roman, Times, Serif">0.19</font></td>
<td> </td></tr>
</table>
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Dogness (International) Corp
On August 17, 2018, Dongguan Jiasheng entered into a line of credit agreement with BCC Dongguan Branch to allow the Company to borrow RMB 30 million ($4.2 million) for one year with a maturity date on August 13, 2019. The Company had drawn down RMB 20 million ($2.9 million) of the loan to purchase raw materials on August 21, 2018. On August 20, 2019, the Company repaid the loan upon maturity.In August 2019, the Company entered into two loan agreements with BCC Dongguan Branch to borrow total of RMB 18 million ($2.5 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. The Company's subsidiary Meijia pledged its land use right of approximately $2.1 million and buildings of approximately $8.2 million as collaterals to secure these loans (see Note 6 and Note 7). In addition, Mr. Silong Chen, the CEO of the Company, provided personal guarantee for the loans. The Company fully repaid the loans in July 2020 upon maturity.
On August 9, 2019, Dongguan Jiasheng entered into a loan agreement with ICBC to borrow RMB 12 million ($1.7 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, pledged his personal assets as the collateral to secure this loan. Related parties, Mr. Junqiang Chen and Ms. Caiyuan He, the relatives of Mr. Silong Chen, and Dongguan Dogness also provided the joint guarantee to this loan. The Company fully repaid the loan in July 2020 upon maturity.
On February 6, 2020, one of the Company's U.S. subsidiary Dogness Group, obtained a line of credit from Cathay Bank, pursuant to which, Dogness Group has the availability to borrow a maximum $1.2 million out of this line of credit for two years at the U.S. prime rate. The loan is guaranteed by the fixed assets of Dogness Group. The purpose of this loan is to expand the business operation and increase the marketing and sales activities in the United States and other international markets. During the year ended June 30, 2020, Dogness Group borrowed total of $945,000 and made repayment of $45,000. As of June 30, 2020, the outstanding balance was $900,000, which was recorded as current liabilities because Dogness Group plans to repay this loan within one year.
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 ($10.0 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 to bring Meijia manufacturing facility into use was originally estimated to be completed at a cost of RMB 110 million ($15.6 million). The actual costs have been adjusted based on additional works required for waterproofing, sewage pipeline and hazardous waste leakage prevention. As a result, total actual costs incurred as of June 30, 2020, amounted to RMB 118.1 million ($16.7 million). As of June 30, 2020, the Company had future capital expenditure commitment of approximately RMB 460,000 ($65,044). Meijia plant started test operations in August 2019, and has started normal production since December 2019 upon passing the final inspection conducted by the local government. The Company expects that the Meijia plant will reach its designed production capacity by June 2021. In addition, the Company's subsidiary Dongguan Jiasheng is also working on a capital project which expanded from the original plan of building a warehouse, to build new manufacturing and operating facilities, which including workshops, office building, security gate, employee apartment building, electrical transformer station and exhibition hall, etc. The original budgeted cost for the construction of the main bodies of the warehouse, employee dormitory, office building and manufacturing facilities amounted to RMB 75 million ($10.6 million). The budget was later adjusted and revised to RMB 231.1 million ($32.7 million) to add costs associated with interior and exterior decoration, parking lots construction, and road and landscaping on top of the original budget. During the year ended June 30, 2020, the Company has spent RMB 73.6 million ($10.4 million) and completed the construction of the main body of the warehouse, employee dormitory, office building and has set up the new manufacturing facilities. As of June 30, 2020, the Company still had future minimum capital expenditure commitment of RMB 157.5 million ($22.3 million) on the decoration of the second floor of the office building, construction of the stone wall and parking lots, and improvement of the landscaping, which is expected to be invested into the CIP project within the next five years whenever the Company has available fund. The project is expected to be fully completed by 2025.