DOGNESS (INTERNATIONAL) CORPORATION
CONSOLIDATED BALANCE SHEETS
(All amounts in USD)
As of December 31, 2025 | As of June 30, 2025 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable-third-party, net | ||||||||
| Accounts receivable-related party | ||||||||
| Inventories, net | ||||||||
| Due from a related party | ||||||||
| Prepayments and other current assets | ||||||||
| Total current assets | ||||||||
| NON-CURRENT ASSETS | ||||||||
| Property, plant and equipment, net | ||||||||
| Intangible assets, net | ||||||||
| Long-term investments in equity investees | ||||||||
| Operating lease right-of-use lease assets | ||||||||
| Deferred tax assets | ||||||||
| Total non-current assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Short-term bank loans | $ | $ | ||||||
| Current portion of long-term bank loans | ||||||||
| Accounts payable | ||||||||
| Accounts payable - related party | ||||||||
| Due to a related party | ||||||||
| Contract liabilities | ||||||||
| Taxes payable | ||||||||
| Operating lease liabilities, current | ||||||||
| Accrued expenses and other current liabilities | ||||||||
| Total current liabilities | ||||||||
| NON-CURRENT LIABILITIES | ||||||||
| Long-term bank loans | ||||||||
| Operating lease liabilities, non-current | ||||||||
| Total non-current liabilities | ||||||||
| TOTAL LIABILITIES | ||||||||
| Commitments and Contingencies (Note 13) | ||||||||
| EQUITY | ||||||||
| Class A Common shares, par value, shares authorized; and issued and outstanding as of December 31, 2025 and June 30, 2025, respectively | ||||||||
| Class B Common shares, par value, shares authorized; issued and outstanding as of December 31, 2025 and June 30, 2025 | ||||||||
| Statutory reserve | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Equity attributable to owners of the Company | ||||||||
| Non-controlling interest | ||||||||
| Total equity | ||||||||
| TOTAL LIABILITIES AND EQUITY | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| F-1 |
DOGNESS (INTERNATIONAL) CORPORATION
STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
(All amounts in USD)
(Unaudited)
For the Six Months Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Revenue | $ | $ | ||||||
| Cost of revenue | ||||||||
| Gross Profit | ||||||||
| Operating expenses: | ||||||||
| Selling expenses | ||||||||
| General and administrative expenses | ||||||||
| Research and development expenses | ||||||||
| Impairment of investment in equity investee | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other income (expense): | ||||||||
| Interest income, net | ||||||||
| Foreign exchange transaction (loss) gain | ( | ) | ||||||
| Other (expenses) income, net | ( | ) | ||||||
| Rental income from related parties, net | ||||||||
| Total other income, net | ||||||||
| Loss before income tax | ( | ) | ( | ) | ||||
| Income tax benefit | ( | ) | ( | ) | ||||
| Net loss | ( | ) | ( | ) | ||||
| Less: net income attributable to non-controlling interest | ||||||||
| Net loss attributable to Dogness (International) Corporation | ( | ) | ( | ) | ||||
| Other comprehensive loss | ||||||||
| Foreign currency translation adjustments | ( | ) | ||||||
| Comprehensive loss | ( | ) | ( | ) | ||||
| Less: comprehensive income attributable to non-controlling interest | ||||||||
| Comprehensive loss attributable to Dogness (International) Corporation | $ | ( | ) | $ | ( | ) | ||
| Loss per share | ||||||||
| Basic and diluted | $ | ) | $ | ) | ||||
| Weighted Average Shares Outstanding | ||||||||
| Basic and diluted | ||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| F-2 |
DOGNESS (INTERNATIONAL) CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED DECEMBER 31, 2025 AND 2024
(All amounts in USD)
(Unaudited)
| Common Stock | Statutory | Retained | Accumulated Other Comprehensive | Non- controlling | ||||||||||||||||||||||||||||||||
| Class A | Amount | Class B | Amount | Reserves | Earnings | Loss | Interest | Total | ||||||||||||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | |||||||||||||||||||||||||
| Share-based compensation | - | |||||||||||||||||||||||||||||||||||
| Issuance shares for warrants exercised | - | |||||||||||||||||||||||||||||||||||
| Net loss for the period | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | - | - | ||||||||||||||||||||||||||||||||||
| Balance at December 31, 2025 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | |||||||||||||||||||||||||
| Common Stock | Statutory | Retained | Accumulated Other Comprehensive | Non- controlling | ||||||||||||||||||||||||||||||||
| Class A | Amount | Class B | Amount | Reserves | Earnings | Loss | Interest | Total | ||||||||||||||||||||||||||||
| Balance at June 30, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | |||||||||||||||||||||||||
| Options granted for services | - | - | ||||||||||||||||||||||||||||||||||
| Share-based compensation | - | - | ||||||||||||||||||||||||||||||||||
| Net loss for the period | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | |||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| F-3 |
DOGNESS (INTERNATIONAL) CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(All amounts in USD)
(Unaudited)
For the Six Months Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile loss income to net cash (used in) provided by operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Share-based compensation | ||||||||
| Change in inventory reserve | ||||||||
| Loss from disposal of property, plant and equipment | ||||||||
| Reversal of allowance for credit losses | ( | ) | ( | ) | ||||
| Impairment of long-term investment | ||||||||
| Deferred tax benefit | ( | ) | ( | ) | ||||
| Amortization of right-of-use lease assets | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable-third parties | ( | ) | ( | ) | ||||
| Accounts receivable-related party | ||||||||
| Inventories | ( | ) | ( | ) | ||||
Due from a related party | ( | ) | ( | ) | ||||
| Prepayments and other current assets | ( | ) | ( | ) | ||||
| Advances to supplier-related party | ||||||||
| Accounts payable | ( | ) | ||||||
| Accounts payable-related party | ||||||||
| Accrued expenses and other current liabilities | ( | ) | ||||||
| Contract liabilities | ( | ) | ||||||
| Operating lease liabilities | ||||||||
| Taxes payable | ( | ) | ||||||
| Net cash (used in) provided by operating activities | ( | ) | ||||||
| Cash flows from investing activities: | ||||||||
| Purchase of property, plant and equipment | ( | ) | ( | ) | ||||
| Proceeds from disposition of property, plant and equipment | ||||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from short-term bank loans | ||||||||
| Repayment of short-term bank loans | ( | ) | ( | ) | ||||
| Repayment of long-term bank loans | ( | ) | ( | ) | ||||
| Proceeds from (repayment of) related party loans | ( | ) | ||||||
| Net cash used in financing activities | ( | ) | ( | ) | ||||
| Effect of exchange rate changes on cash and restricted cash | ( | ) | ||||||
| Net decrease in cash and cash equivalents | ( | ) | ( | ) | ||||
| Cash and cash equivalents, beginning of period | ||||||||
| Cash and cash equivalents, end of period | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Non-Cash Investing Activities | ||||||||
| Liabilities incurred for purchase of property and equipment | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| F-4 |
DOGNESS (INTERNATIONAL) CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in USD)
(Unaudited)
NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS
Dogness
(International) Corporation (“Dogness” or the “Company”), is a company limited by shares established under the
laws of the
Reorganization
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 (Hong Kong) 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
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 unaudited consolidated financial statements.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Principles of Consolidation
The accompanying unaudited consolidated financial statements have been prepared in accordance with the U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six months ended December 31, 2025 and 2024 are not necessarily indicative of the results that may be expected for the full year. The information included in this interim report should be read in conjunction with the financial statements and notes thereto included in the Company’s annual financial statements in form 20-F for the fiscal year ended June 30, 2025 as filed with the SEC on October 17, 2025.
| F-5 |
DOGNESS (INTERNATIONAL) CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in USD)
(Unaudited)
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
The Company’s unaudited consolidated financial statements reflect the operating results of the following entities:
| Name of Entity | Date of Incorporation | Place of Incorporation | % of Ownership | Principal Activities | ||||||
| Dogness (International) Corporation (“Dogness” or the “Company”) | Parent,
| % | ||||||||
| Dogness (Hongkong) Pet’s Products Co., Limited (“HK Dogness”) | % | |||||||||
| Jiasheng Enterprise (Hong Kong) Co., Limited (“HK Jiasheng”) | % | |||||||||
| Dogness Intelligence Technology (Dongguan) Co., Ltd. (“Dongguan Dogness”) | % | |||||||||
| Dongguan Jiasheng Enterprise Co., Ltd. (“Dongguan Jiasheng”) | % | |||||||||
| Zhangzhou Meijia Metal Product Co., Ltd (“Meijia”) | % | |||||||||
| Dogness Overseas Ltd (“Dogness Overseas”) | % | |||||||||
| Dogness Group LLC (“Dogness Group”) | % | | ||||||||
| Dogness Pet Culture (Dongguan) Co. Ltd. (“Dogness Culture”) * | % | |||||||||
| * |
| F-6 |
DOGNESS (INTERNATIONAL) CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in USD)
(Unaudited)
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Non-controlling interests
As
of December 31, 2025, non-controlling interests represent
Use of Estimates
In preparing the unaudited 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 revenue and expenses during the reporting period. These estimates are based on information as of the date of the unaudited 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, right-of-use assets (including lease liabilities) and equipment, intangible assets, the recoverability of long-lived assets, provision necessary for contingent liabilities, and realization of deferred tax assets. Actual results could differ from those estimates.
Cash and Cash Equivalents
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.
Inventories, net
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 inventory is recognized as a provision for diminution in the value of inventories.
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 inventory.
Prepayments and Other Current Assets
Prepayments and other current assets primarily consist of advances to suppliers for purchasing of raw materials that have not been received, prepaid service fee, security deposits. These advances are interest free, unsecured and short-term in nature and are reviewed periodically to determine whether their carrying value has become impaired.
| F-7 |
DOGNESS (INTERNATIONAL) CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in USD)
(Unaudited)
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Long-term Investments in Equity Investees
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.
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.
Fair Value of Financial Instruments
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:
| ● | Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. |
| ● | 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. |
| ● | Level 3 - inputs to the valuation methodology are unobservable. |
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 expenses and other current liabilities, current portion of lease liabilities, 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.
| F-8 |
DOGNESS (INTERNATIONAL) CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in USD)
(Unaudited)
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Long-lived assets impairment
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 are below the asset’s carrying value, then the asset is deemed to be impaired and written down to its fair value.
Rental income
Rental revenue are recognized as earned in accordance with the terms of the respective lease agreement on a straight-line basis. Promotional discounts are recognized as a reduction to rental income over the promotional period. Late charges, administrative fees, and other fees are recognized as income when earned. Management reviews the tenant’s payment history and financial condition periodically in determining, in its judgment, whether any accrued rental income and unbilled rent receivable balances applicable to each specific property is collectable.
Revenue Recognition
The Company follows ASC 606 Revenue from Contract with Customers (“ASC606”) in revenue recognition. 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.
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 not 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.
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.
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 six months ended December 31, 2025 and 2024, the Company did not provide any sales incentives to its customers.
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.
| F-9 |
DOGNESS (INTERNATIONAL) CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in USD)
(Unaudited)
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Revenue Recognition (continued)
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 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.
The Company also generates revenue by providing ribbon dyeing service and pet grooming services to customers. The Company utilizes its manufacturing capability and color dyeing technology to provide dyeing solutions to customers and apply dyes or pigments on ribbons made of textile materials such as fibers, yarns and fabrics to achieve customer desired color fastness and quality. The Company recognizes revenue at the point when dyeing solutions and related services are rendered, products after dyeing are delivered and accepted by the customers. The revenue from pet grooming services is recognized when the services are rendered.
Contract Assets and Liabilities
Payment terms are established on the Company’s pre-established credit requirements based upon an evaluation of customers’ credit quality. Contract assets are recognized as 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.
As of December 31, 2025 and June 30, 2025, 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.
Disaggregation of Revenue
The Company disaggregates its revenue from contracts by product and service 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 revenue for the six months ended December 31, 2025, and 2024 is disclosed in Note 11.
Research and Development Costs
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.
| F-10 |
DOGNESS (INTERNATIONAL) CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in USD)
(Unaudited)
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Income Tax
The Company accounts for current income taxes in accordance with the laws of the relevant tax authorities. Income taxes are accounted for using the asset and liability approach. Under this approach, income tax expense is recognized for the amount of taxes payable or refundable for the current year. Deferred income taxes assets and liabilities are recognized when temporary differences exist between the tax bases of assets and liabilities and their reported amounts in unaudited 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.
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.
Value Added Tax (“VAT”)
Since significant amount 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.
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 EPS 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.
| F-11 |
DOGNESS (INTERNATIONAL) CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in USD)
(Unaudited)
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
The Company follows the provisions of ASC 718, “Compensation - Stock Compensation,” which establishes the accounting for employee share-based awards. For employee share-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.
Foreign Currency Translation
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, and Dogness Culture are determined using RMB, the local currency, as the functional currency, while Dogness Overseas and Dogness Group use U.S Dollar as their functional currency.
Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the consolidated balance sheet date. Non-monetary assets and liabilities are translated using the historical rate on the date of the transaction. All exchange gains or losses arising from translation of these foreign currency transactions are included in net income (loss) for the year.
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 comprehensive income (loss).
The following table outlines the currency exchange rates that were used in the unaudited consolidated financial statements:
For the Six Months Ended December 31,2025 | For the Six Months Ended December 31,2024 | As of June 30, 2025 | ||||||||||
| Year-end spot rate | $1=RMB | $1=RMB | $1=RMB | |||||||||
| Average rate | $1=RMB | $1=RMB | $1=RMB |
Comprehensive Loss
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.
| F-12 |
DOGNESS (INTERNATIONAL) CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in USD)
(Unaudited)
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Related Party Transactions
Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or common significant influence. Related parties may be individuals or corporate entities. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. Related party transactions are measured at the amounts agreed upon by the parties.
Statement of Cash Flows
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.
Recent Accounting Pronouncements
The Company considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued.
In December 2023, the FASB issued ASU 2023-09, which is an update to Topic 740, Income Taxes. The amendments in this update related to the rate reconciliation and income taxes paid disclosures improve the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. The amendments allow investors to better assess, in their capital allocation decisions, how an entity’s worldwide operations and related tax risks and tax planning and operational opportunities affect its income tax rate and prospects for future cash flows. The other amendments in this Update improve the effectiveness and comparability of disclosures by (1) adding disclosures of pretax income (or loss) and income tax expense (or benefit) to be consistent with U.S. Securities and Exchange Commission (SEC) Regulation S-X 210.4-08(h), Rules of General Application—General Notes to Financial Statements: Income Tax Expense, and (2) removing disclosures that no longer are considered cost beneficial or relevant. For public business entities, the amendments in this Update are effective for annual periods beginning after December 15, 2024. For entities other than public business entities, the amendments are effective for annual periods beginning after December 15, 2025. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. The amendments in this Update should be applied on a prospective basis. Retrospective application is permitted. The Company is in the process of evaluating the impact of the new guidance on its consolidated financial statements.
In May 2025, the FASB issued ASU 2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity. ASU 2025-03 clarifies the guidance to determine the accounting acquirer in a business combination that is effected primarily by exchanging equity interests, when the legal acquiree is a variable interest entity (“VIE”) that meets the definition of a business. ASU 2025-03 requires entities to consider the same factors in ASC 805, Business Combinations, required for determining which entity is the accounting acquirer in other acquisition transactions. ASU 2025-03 is effective for the Company’s annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods, with early adoption permitted. ASU 2025-03 is required to be applied on a prospective basis to any acquisition transaction that occurs after the initial application date. The Company is currently evaluating the potential impact of adopting this guidance on its financial statements.
| F-13 |
DOGNESS (INTERNATIONAL) CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in USD)
(Unaudited)
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Recent Accounting Pronouncements (continued)
In May 2025, the FASB issued ASU 2025-04, Compensation—Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606). ASU 2025-04 revises the definition of the term performance condition for share-based consideration payable to a customer to incorporate conditions that are based on the volume or monetary amount of a customer’s purchases or potential purchases. ASU 2025-04 also eliminates the policy election to account for forfeitures as they occur for awards with service conditions. ASU 2025-04 also clarifies that ASC 606 variable consideration guidance does not apply to share-based payments to customers; instead, vesting probability should be assessed solely under ASC 718, Compensation—Stock Compensation. ASU 2025-04 is effective for the Company’s annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods, with early adoption permitted. ASU 2025-04 may be applied on either a modified retrospective basis or on a retrospective basis. The Company is currently evaluating the potential impact of adopting this guidance on its financial statements.
In July 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-05, Measurement of Credit Losses for Accounts Receivable and Contract Assets. ASU 2025-05 amends ASC 326, Financial Instruments—Credit Losses, and introduces a practical expedient available for all entities and an accounting policy election available for all entities, other than public business entities, that elect the practical expedient. These changes apply to the estimation of expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under ASC 606, Revenue Recognition. Under the practical expedient, entities may assume that current conditions as of the balance sheet date remain unchanged for the remaining life of the asset when developing reasonable and supportable forecasts. This simplifies the estimation process for short-term financial assets. ASU 2025-05 is effective for the Company’s annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with early adoption permitted. ASU 2025-05 should be applied on a prospective basis. The Company is currently evaluating the potential impact of adopting this guidance on its financial statements.
In September 2025, the FASB issued ASU 2025-06, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software to modernize the accounting for internal-use software costs, primarily by simplifying the requirements to capitalize software development costs. This update is effective beginning with the Group’s 2028 fiscal year annual reporting period, with early adoption permitted. The Company is currently evaluating the impact that the adoption of this standard will have on its consolidated financial statements.
In December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities to establish authoritative guidance on the accounting for government grants received by business entities. This update is effective beginning with the Group’s 2029 fiscal year annual reporting period, with early adoption permitted. The Company is currently evaluating the impact that the adoption of this standard will have on its consolidated financial statements.
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvement. ASU 2025-11 is intended to improve the navigability of required interim disclosures and clarify when that guidance is applicable, and also to provide additional guidance on what disclosures should be provided in interim reporting periods. ASU 2025-11 is effective for public business entities for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2025-11 on its financial statements and related disclosures.
| F-14 |
DOGNESS (INTERNATIONAL) CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in USD)
(Unaudited)
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Recent Accounting Pronouncements (continued)
In December 2025, the FASB issued ASU 2025-12, Codification Improvements. ASU 2025-12 makes thirty-three incremental improvements to generally accepted accounting principles. ASU 2025-12 is effective for all entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. The Company is currently evaluating the impact of ASU 2025-12 on its financial statements and related disclosures.
Except for the above-mentioned pronouncements, there are no new recent issued accounting standards that will have material impact on the consolidated financial statements
NOTE 3 – INVENTORIES, NET
Inventories consisted of the following:
As of December 31, 2025 | As of June 30, 2025 | |||||||
| Raw materials | $ | $ | ||||||
| Work in process | ||||||||
| Finished goods | ||||||||
| Less: inventory allowance | ( | ) | ( | ) | ||||
| Inventory, net | $ | $ | ||||||
Inventory includes raw materials, work in progress, and finished goods. Finished goods include direct material costs, direct labor costs, and manufacturing overhead. For the six months ended December 31, 2025, the Company abandoned nearly all inventories in its United States warehouse in connection with the disposal of the warehouse at the end of fiscal year 2025.
Inventory allowance movement is as follows:
For the Six Months Ended December 31, 2025 | As of June 30, 2025 | |||||||
| Beginning balance | $ | $ | ||||||
| Provision | ||||||||
| Write-off | ( | ) | ||||||
| Foreign currency translation adjustments | ||||||||
| Ending balance | $ | $ | ||||||
| F-15 |
DOGNESS (INTERNATIONAL) CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in USD)
(Unaudited)
NOTE 4 –PREPAYMENTS AND OTHER CURRENT ASSETS
Prepayments and other current assets consisted of the following:
As of December 31, 2025 | As of June 30, 2025 | |||||||
| Security deposits | $ | $ | ||||||
| Others | ||||||||
| Prepayments and other assets current portion | $ | $ | ||||||
NOTE 5 – LONG TERM INVESTMENT, NET
| Equity investment using the measurement alternative | ||||
| Balance as of June 30, 2024 | $ | |||
| Additions | ||||
| Foreign currency translation adjustments | ||||
| Balance as of Jun 30, 2025 | ||||
| Impairment | ( | ) | ||
| Foreign currency translation adjustments | ||||
| Balance as of December 31, 2025 | $ | |||
Equity investments using the measurement alternative include the following items:
| (1) | In
November 2018, the Company entered into an equity investment agreement to invest $ |
| (2) | In
November 2018, the Company entered into an equity investment agreement to invest $ |
| (3) | On
May 17, 2025, the Company entered into an equity investment to acquire a |
As of December 31, 2025, the Company believes there was no material market environment change or any other factor that indicating the fair value of above other investments was less than carrying value, hence, the Company concluded there is no impairment of the above other investments.
| F-16 |
DOGNESS (INTERNATIONAL) CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in USD)
NOTE 6 – BANK LOANS
Bank loans consisted of the following:
As of December 31, 2025 | As of June 30, 2025 | |||||||
| Dongguan Rural Commercial Bank (1) | $ | $ | ||||||
| Total | ||||||||
| Less: short-term loans | ( | ) | ( | ) | ||||
| Less: current portion of long-term loans | ( | ) | ( | ) | ||||
| Long-term loans | $ | $ | ||||||
| (1) |
Interest
expenses for the above-mentioned loans amounted to $
.
The repayment schedule for the Company’s bank loans is as follows:
| Twelve months ending December 31, | Repayment | |||
| 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| Total | $ | |||
| F-17 |
DOGNESS (INTERNATIONAL) CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in USD)
(Unaudited)
NOTE 7 – TAXES
(a) Corporate Income Taxes (“CIT”)
The following table reconciles the statutory rate to the Company’s effective tax:
| For the Six Months Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Loss before income tax | $ | ( | ) | $ | ( | ) | ||
| Income tax benefit computed based on PRC statutory rate | ( | ) | ( | ) | ||||
| Effect of rate differential for Hong Kong and other outside PRC entities | ||||||||
| Effect of PRC preferential tax rate | ||||||||
| Change in valuation allowance | ||||||||
| Permanent difference | ||||||||
| Effective tax | $ | ( | ) | $ | ( | ) | ||
The provision for income tax consists of the following:
| For the Six Months Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Current income tax expense | $ | $ | ||||||
| Deferred income tax benefit | ( | ) | ( | ) | ||||
| Total income tax benefit | $ | ( | ) | $ | ( | ) | ||
The Company’s deferred tax assets consist of the following:
As of December 31, 2025 | As of June 30, 2025 | |||||||
| Deferred tax assets: | ||||||||
| Net operating losses | $ | $ | ||||||
| Assets impairment reserve | ||||||||
| Others | ( | ) | ( | ) | ||||
| Valuation allowance | ( | ) | ( | ) | ||||
| Deferred tax assets, net | $ | $ | ||||||
| F-18 |
DOGNESS (INTERNATIONAL) CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in USD)
(Unaudited)
NOTE 7 – TAXES (continued)
(b) Taxes Payable
The Company’s taxes payable consist of the following:
As of December 31, 2025 | As of June 30, 2025 | |||||||
| Corporate income tax payable | $ | $ | ||||||
| Other tax payable | ||||||||
| Total taxes payable | $ | $ | ||||||
The Company may be subject to challenges from various PRC taxing authorities regarding the amounts of taxes due, although the Company’s management believes the Company has paid or accrued for all taxes owed by the Company. According to PRC taxation regulation and administrative practice and procedures, the statute of limitation on tax authority’s audit or examination of previously filed tax returns expires three years from the date they were filed. The Company also obtained a written statement from the local tax authority that no additional taxes are due as of June 30, 2025. The Company continues to discuss with the local tax authority to try to settle the remaining tax liabilities as soon as practicable, mostly related to its unpaid income tax and business tax.
Due to uncertainties associated with the status of examinations, including the protocols of finalizing audits by the relevant tax authorities, there is a high degree of uncertainty regarding the future cash outflows associated with the interest and penalties on these unpaid tax balances. The final outcome of this tax uncertainty is dependent upon various matters including tax examinations, interpretation of tax laws or expiration of status of limitation.
NOTE 8 – RELATED PARTY TRANSACTIONS
The relationship of related parties is summarized as follow:
| Name of Related Party | Relationship with the Company | |
| Silong Chen | ||
| Junqiang Chen | ||
| Linsun Smart Technology Co., Ltd (“Linsun”) | ||
| Dogness Network Technology Co., Ltd (“Dogness Network”) |
(1) Due from a related party
Amount due from a related party consist primarily of rental receivables from the following:
As of December 31, 2025 | As of June 30, 2025 | |||||||
| Linsun | $ | $ | ||||||
| F-19 |
DOGNESS (INTERNATIONAL) CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in USD)
(Unaudited)
NOTE 8 – RELATED PARTY TRANSACTIONS (continued)
(2) Due to a related party
Amount due to a related party consists of the following:
As of December 31, 2025 | As of June 30, 2025 | |||||||
| Mr. Silong Chen | $ | $ | ||||||
Mr. Silong Chen periodically provides working capital advances to support the Company’s operations as needed. These advances are non-interest bearing and repayable on demand.
(3) Loan guarantee provided by related parties
In connection with the Company’s bank loans, Mr. Silong Chen pledged his personal assets as collateral and signed guarantee agreements to provide a guarantee for the Company’s bank loans.
(4) Accounts receivable- related party
Accounts receivable- related party consisted of the following:
As of December 31, 2025 | As of June 30, 2025 | |||||||
| Dogness Network | $ | $ | ||||||
On
January 30, 2026, Dogness Network entered into liquidation procedure due to continuous losses. Therefore, the Company accounts receivable
of $
(5) Account payable- related party
Account payable- related party consisted of the following:
As of December 31, 2025 | As of June 30, 2025 | |||||||
| Linsun | $ | $ | ||||||
(6) Purchase from a related party
During
the six months ended December 31, 2025 and 2024, the Company purchased certain pet product components and parts, such as smart pet water
and food feeding devices, from Linsun. Total purchases from Linsun amounted to $
(7) Lease arrangement with a related party
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
| F-20 |
DOGNESS (INTERNATIONAL) CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in USD)
(Unaudited)
NOTE 9 – EQUITY
Common Shares
Dogness was established under the laws of BVI on July 11, 2016. The original authorized number of common shares was shares with par value of $ 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 shares with par value of $ each, of which 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.
On October 22, 2022, Shareholders of the Company held a meeting and approved a change to the maximum number of shares that the Company is authorized to issue from made up of two classes with a par value of $ each being Class A Shares and Class B Shares to made up of two classes with a par value of $ each, being Class A shares and Class B shares.
On November 6, 2023, the Company announced (i) a share consolidation of the Company’s issued and outstanding Class A common shares at the ratio of one-for-twenty and (ii) an amendment of the Company’s Memorandum and Articles of Association to change its authorized shares from Class A Shares with $ par value per share and Class B common shares with $ par value per share to an unlimited number of authorized Class A common shares and Class B common shares, each without par value. On November 15, 2023, the Company paid cash to certain minor shareholders and cancelled shares due to share consolidation reconciliation. All historical share and per share amounts in these financial statements have been retroactively adjusted to reflect the share consolidation.
As of December 31, 2025, the Company had an aggregate of common shares , consisting of Class A and Class B common shares; respectively. As of June 30, 2025, the Company had an aggregate of common shares outstanding, consisting of Class A and Class B common shares; respectively.
Common Shares Issued for Service
On
June 16, 2025, the Company signed a consulting agreement with a consultant for strategic business and marketing consulting services for
a period from July 2, 2025 to December 16, 2025 (the “Service period”). Pursuant to the agreement, the Company shall pay
Class A common shares to the consultant. The related share-based compensation expense would be recognized over the Service period.
These shares were measured at $
On
January 26, 2023, the Board adopted resolutions to grant total Class A common shares to Mr. Silong Chen, the Chief Executive Officer
of the Company as part of the annual salary. These shares shall be issued equally on January 26, 2023, 2024 and 2025. On January 26,
2023, the Company issued Class A common shares to Mr. Silong Chen as the first tranche of the salary shares, and further issued
Class A common shares on March 7, 2025. These shares were measured at $
The
Company recorded $
| F-21 |
DOGNESS (INTERNATIONAL) CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in USD)
(Unaudited)
NOTE 9 – EQUITY (continued)
Common Shares Issued for Long-term Investments in Equity Investees
On
May 17, 2025, in connection with acquisition of
Warrants
In
July 2021, the Company issued warrants in connection with an equity financing to purchase
In
connection with acquisition of
As
of December 31, 2025,
Options
On January 26, 2023, the Board adopted resolutions to issue incentive stock options of total to Mr. Silong Chen under the Company’s 2018 Stock Incentive Plan as part of compensations. These options shall be vested equally on January 26, 2023, 2024 and 2025 with exercise price of $ per share.
The
aggregate fair value of the options granted to Mr. Silong Chen was $
The Company recorded $ and $ stock-based compensation expense related to vested options for the six months ended December 31, 2025 and 2024, respectively.
| F-22 |
DOGNESS (INTERNATIONAL) CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in USD)
(Unaudited)
NOTE 9 – EQUITY (continued)
Options (continued)
Number of Options | Weighted Average Exercise Price | Weighted Average Remaining Life in Years | ||||||||||
| Outstanding June 30, 2024 | $ | |||||||||||
| Exercisable, June 30, 2024 | $ | |||||||||||
| Granted | $ | - | ||||||||||
| Exercised | $ | - | ||||||||||
| Outstanding June 30, 2025 | $ | |||||||||||
| Exercisable, June 30, 2025 | $ | |||||||||||
| Granted | $ | - | ||||||||||
| Exercised | $ | - | ||||||||||
| Outstanding December 31, 2025 | $ | |||||||||||
| Exercisable, December 31, 2025 | $ | |||||||||||
Statutory Reserve
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”).
For the six months ended December 31, 2025 and 2024, potential shares of common stock from the unexercised warrants and unexercised options are excluded from diluted net loss per share as such amounts are anti-dilutive.
For the Six Months Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Loss attributable to the Company | $ | ( | ) | $ | ( | ) | ||
| Weighted average number of common shares outstanding – Basic | ||||||||
| Dilutive securities -unexercised warrants and options | ||||||||
| Weighted average number of common shares outstanding – diluted | ||||||||
| Loss per share – Basic | $ | ( | ) | $ | ( | ) | ||
| Loss per share – Diluted | $ | ( | ) | $ | ( | ) | ||
| F-23 |
DOGNESS (INTERNATIONAL) CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in USD)
(Unaudited)
NOTE 11 – SEGMENT
The
Company uses the “management approach” in determining its operating segments. The management approach considers the internal
organization and reporting used by the Group’s Chief Operating Decision Maker (“CODM”) for making strategic decisions,
assessing performance, and allocating resources. The Company’s CODM has been identified as the Chief Executive Officer of the Group.
The Company determined it operates as one consolidated segment and therefore has
Revenue by product category
The summary of total revenue by product category consisted of the following:
For the Six Months Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Product | ||||||||
| Traditional pet products | $ | $ | ||||||
| Intelligent pet products | ||||||||
| Climbing hooks and others | ||||||||
| Total | $ | $ | ||||||
Revenue by geographic location
Geographic information about the revenue, which are classified based on customers, is set out as follows:
| For the Six Months Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Geographic location | ||||||||
| Sales to international markets | $ | $ | ||||||
| Sales to China domestic market | ||||||||
| Total | $ | $ | ||||||
| F-24 |
DOGNESS (INTERNATIONAL) CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in USD)
(Unaudited)
NOTE 12 – CONCENTRATIONS AND CREDIT RISK
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 effect the remittance.
As
of December 31, 2025 and June 30, 2025, $
As
of December 31, 2025, three third-party customers accounted for
As
of December 31, 2025, a third-party supplier accounted for
For
the six months ended December 31, 2025 and 2024, export sales accounted for
For
the six months ended December 31, 2025, a third party supplier accounted for
NOTE 13– COMMITMENTS AND CONTINGENCIES
Contingencies
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
| F-25 |
DOGNESS (INTERNATIONAL) CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in USD)
(Unaudited)
NOTE 13– COMMITMENTS AND CONTINGENCIES (continued)
Capital Investment Obligation
Zhangzhou Meijia Metal Product Ltd.
Meijia
was incorporated under the laws of the People’s Republic of China with a total registered capital of RMB
Subsequently
to December 31, 2025, the Company further made additional capital contribution RMB
Capital Expenditure Commitment
Our
capital expenditures are incurred primarily in connection with the Company build new manufacturing and operating facilities, which include
warehouse, workshops, office building, security gate, employee apartment building, electrical transformer station and exhibition hall
in prior years, as well as leasehold improvements for executive accommodation facilities and research and development center infrastructure
in current period. The future minimum capital expenditure commitment on these projects was $
NOTE 14– SUBSEQUENT EVENTS
The Company has evaluated the impact of events that have occurred subsequent to December 31, 2025, through the issuance date of the unaudited consolidated financial statements and concluded that no subsequent events have occurred that would require recognition in the unaudited consolidated financial statements or disclosure in the notes to the unaudited consolidated financial statements.
| F-26 |