Document and Entity Information
Document and Entity Information | 6 Months Ended |
Dec. 31, 2020 | |
Cover [Abstract] | |
Entity Registrant Name | Dogness (International) Corp |
Entity Central Index Key | 0001707303 |
Document Type | 6-K |
Document Period End Date | Dec. 31, 2020 |
Amendment Flag | false |
Current Fiscal Year End Date | --06-30 |
Document Fiscal Period Focus | Q2 |
Document Fiscal Year Focus | 2020 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) | Dec. 31, 2020 | Jun. 30, 2020 |
CURRENT ASSETS | ||
Cash | $ 1,351,532 | $ 1,266,873 |
Short-term investments | 933,910 | 3,551,968 |
Accounts receivable from third-party customers, net | 3,303,159 | 1,916,840 |
Accounts receivable from a related party | 497,974 | 559,465 |
Inventories, net | 4,768,037 | 2,860,700 |
Prepayments and other current assets | 1,453,973 | 1,471,612 |
Advance to suppliers - related party | 29,240 | |
Total current assets | 12,337,825 | 11,627,458 |
Property, plant and equipment, net | 53,495,926 | 43,533,512 |
Right-of-use lease assets, net | 5,308,717 | 5,123,898 |
Intangible assets, net | 2,238,206 | 2,104,803 |
Long-term investments in equity investees | 1,377,900 | 1,046,360 |
Deferred tax assets | 128,969 | 115,230 |
TOTAL ASSETS | 74,887,543 | 63,551,261 |
CURRENT LIABILITIES | ||
Short-term bank loans | 910,000 | 5,142,000 |
Current portion of long term bank loans | 623,669 | |
Accounts payable | 904,135 | 705,223 |
Accounts payable - related parties | 3,963 | 305,215 |
Due to related parties | 2,035,922 | 25,462 |
Advances from customers | 177,314 | 152,299 |
Taxes payable | 3,613,007 | 2,814,411 |
Accrued expenses and other current liabilities | 1,659,472 | 1,452,408 |
Operating lease liabilities, current | 164,694 | 172,716 |
Total current liabilities | 10,092,176 | 10,769,734 |
Long term bank loans | 7,027,723 | 73,300 |
Operating lease liabilities, non-current | 1,197,195 | 1,200,299 |
TOTAL LIABILITIES | 18,317,094 | 12,043,333 |
Commitments | ||
EQUITY | ||
Additional paid-in capital | 53,292,689 | 53,221,610 |
Statutory reserve | 194,401 | 191,716 |
Retained earnings | 4,052,634 | 3,216,071 |
Accumulated other comprehensive loss | (1,666,480) | (5,787,965) |
Total Dogness (International) Corporation stockholders' equity | 55,925,071 | 50,893,259 |
Noncontrolling interest | 645,378 | 614,669 |
Total equity | 56,570,449 | 51,507,928 |
TOTAL LIABILITIES AND EQUITY | 74,887,543 | 63,551,261 |
Common Class A [Member] | ||
EQUITY | ||
Common stock, $0.002 par value, 100,000,000 shares authorized, 25,913,631 issued and outstanding | 33,689 | 33,689 |
Class B Common Shares [Member] | ||
EQUITY | ||
Common stock, $0.002 par value, 100,000,000 shares authorized, 25,913,631 issued and outstanding | $ 18,138 | $ 18,138 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Dec. 31, 2020 | Jun. 30, 2020 | Apr. 26, 2017 | Jul. 11, 2016 |
Statement of Financial Position [Abstract] | ||||
Common stock, par or stated value per share | $ 0.002 | $ 0.002 | $ 0.002 | $ 0.002 |
Common stock, shares authorized | 100,000,000 | 100,000,000 | 100,000,000 | 15,000,000 |
Common stock, shares issued | 25,913,631 | 25,913,631 | 15,000,000 | |
Common stock, shares outstanding | 25,913,631 | 25,913,631 | 15,000,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) - USD ($) | 6 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Income Statement [Abstract] | ||
Revenues - third party customers | $ 11,697,156 | $ 10,887,822 |
Revenues - related parties | 548,351 | 588,733 |
Total Revenues | 12,245,507 | 11,476,555 |
Cost of revenues - third party customers | (7,170,811) | (7,344,048) |
Cost of revenues - related parties | (285,258) | (351,601) |
Total cost of revenues | (7,456,069) | (7,695,649) |
Gross Profit | 4,789,438 | 3,780,906 |
Operating expenses: | ||
Selling expenses | 1,000,340 | 933,861 |
General and administrative expenses | 2,186,886 | 2,936,038 |
Research and development expenses | 254,924 | 148,528 |
Total operating expenses | 3,442,150 | 4,018,427 |
Income (loss) from operations | 1,347,288 | (237,521) |
Other expenses: | ||
Interest expense, net | (111,690) | (125,384) |
Foreign exchange transaction gain (loss) | (119,082) | 46,905 |
Other income (expenses), net | 158,565 | (3,766) |
Gain from disposition of a subsidiary | 5,104 | |
Total other expense, net | (67,103) | (82,245) |
Income (loss) before income taxes | 1,280,185 | (319,766) |
Provision for income taxes | 530,679 | 104,730 |
Net income (loss) | 749,506 | (424,496) |
Less: net loss attributable to noncontrolling interest | (89,742) | (41,402) |
Net income (loss) attributable to Dogness (International) Corporation | 839,248 | (383,094) |
Other comprehensive income (loss): | ||
Foreign currency translation gain (loss) | 4,171,436 | (826,508) |
Comprehensive income (loss) | 4,920,942 | (1,251,004) |
Less: comprehensive loss attributable to noncontrolling interest | (39,791) | (48,046) |
Comprehensive income (loss) attributable to Dogness (International) Corporation | $ 4,960,733 | $ (1,202,958) |
Earnings (Loss) Per share | ||
Basic | $ 0.03 | $ (0.01) |
Diluted | $ 0.03 | $ (0.01) |
Weighted Average Shares Outstanding | ||
Basic | 25,913,631 | 25,913,631 |
Diluted | 25,931,146 | 25,913,631 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - USD ($) | Common Stock [Member] | Additional Paid in Capital [Member] | Statutory Reserves [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Loss [Member] | Non-controlling Interest [Member] | Total |
Balance at Jun. 30, 2019 | $ 51,827 | $ 52,827,145 | $ 191,716 | $ 11,657,630 | $ (3,894,300) | $ 117,486 | $ 60,951,504 |
Balance, shares at Jun. 30, 2019 | 25,913,631 | ||||||
Net income (loss) for the period | (383,094) | (41,402) | (424,496) | ||||
Options granted for services | 323,386 | 323,386 | |||||
Foreign currency translation gain (loss) | (819,864) | (6,644) | (826,508) | ||||
Balance at Dec. 31, 2019 | $ 51,827 | 53,150,531 | 191,716 | 11,274,536 | (4,714,164) | 69,440 | 60,023,886 |
Balance, shares at Dec. 31, 2019 | 25,913,631 | ||||||
Balance at Jun. 30, 2020 | $ 51,827 | 53,221,610 | 191,716 | 3,216,071 | (5,787,965) | 614,669 | 51,507,928 |
Balance, shares at Jun. 30, 2020 | 25,913,631 | ||||||
Net income (loss) for the period | 839,248 | (89,742) | 749,506 | ||||
Options granted for services | 71,079 | 71,079 | |||||
Capital contribution made by noncontrolling shareholders | 101,913 | 101,913 | |||||
Disposition of a subsidiary | (31,413) | (31,413) | |||||
Statutory reserve | 2,685 | (2,685) | |||||
Foreign currency translation gain (loss) | 4,121,485 | 49,951 | 4,171,436 | ||||
Balance at Dec. 31, 2020 | $ 51,827 | $ 53,292,689 | $ 194,401 | $ 4,052,634 | $ (1,666,480) | $ 645,378 | $ 56,570,449 |
Balance, shares at Dec. 31, 2020 | 25,913,631 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | Jun. 30, 2020 | |
Cash flows from operating activities: | |||
Net income (loss) | $ 749,506 | $ (424,496) | |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||
Depreciation and amortization | 1,278,716 | 1,241,048 | |
Share-based compensation for services | 71,079 | 323,386 | |
Loss from disposition of fixed assets | 1,627 | 34,420 | $ (120,000) |
Gain from disposition of a subsidiary | (5,104) | ||
Change in inventory reserve | (750,145) | 77,338 | |
Change in bad debt allowance | (15,358) | 205,829 | |
Deferred tax benefit | (13,740) | (58,936) | |
Unrealized foreign exchange loss | 97,719 | 168,416 | |
Amortization of the Right-of-use assets | 200,108 | 301,090 | |
Changes in operating assets and liabilities: | |||
Accounts receivable | (1,274,020) | 548,482 | |
Accounts receivable - related parties | 103,981 | (216,231) | |
Inventories | (928,376) | (980,685) | |
Prepayments and other current assets | 151,064 | (207,510) | |
Prepayments - related party | (28,209) | ||
Accounts payables | (27,636) | 164,206 | |
Accounts payables - related parties | (314,991) | 619,068 | |
Accrued expenses and other current liabilities | 109,793 | (203,790) | |
Advance from customers | 13,306 | 64,412 | |
Operating lease liabilities | (73,603) | (57,218) | |
Taxes payable | 545,767 | 166,354 | |
Net cash provided by (used in) operating activities | (108,516) | 1,765,183 | |
Cash flows from investing activities: | |||
Purchase of property, plant and equipment | (680,780) | (225,789) | |
Capital expenditures on construction-in-progress | (6,671,861) | (7,346,106) | |
Proceeds from disposition of fixed assets | 5,847 | ||
Purchase of intangible assets - Land use rights | (18,509) | ||
Long-term investments in equity investees | (236,320) | (244,704) | |
Proceeds upon maturity of short-term investments | 2,809,254 | 3,585,204 | |
Proceeds from disposition of a subsidiary | 31,092 | ||
Net cash used in investing activities | (4,748,615) | (4,244,057) | |
Cash flows from financing activities: | |||
Capital contribution made by noncontrolling shareholders | 101,913 | ||
Proceeds from short-term bank loans | 73,271 | 4,268,100 | |
Proceeds from long-term bank loans | 7,385,000 | ||
Repayment of short-term bank loans | (4,494,271) | (2,845,400) | |
Repayment of long-term bank loans | (74,196) | ||
Proceeds from (repayment of) related party loans | 1,937,517 | (82,870) | |
Net cash provided by financing activities | 4,929,234 | 1,339,830 | |
Effect of exchange rate changes on cash | 12,556 | (14,588) | |
Net increase (decrease) in cash | 84,659 | (1,153,632) | |
Cash, beginning of period | 1,266,873 | 2,550,152 | 2,550,152 |
Cash, end of period | 1,351,532 | 1,396,520 | $ 1,266,873 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | |||
Cash paid for income tax | 9,538 | ||
Cash paid for interest | 209,694 | 104,040 | |
Non-Cash Investing Activities | |||
Right-of-assets obtained in exchange for operating lease obligations | 1,562,206 | 1,619,732 | |
Transfer from construction-in-progress to fixed assets | 53,780 | ||
Additions to construction-in-progress through accounts payable | 165,051 | 1,395,707 | |
Transfer from prepayments to construction-in-progress | $ 112,998 |
Organization and Description of
Organization and Description of Business | 6 Months Ended |
Dec. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Description of Business | 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 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. 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 (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. 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. 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.” 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. 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. 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. On February 5, 2019, Dogness Japan Co. Ltd. (“Dogness Japan”) was incorporated in Japan. The Company invested $150,000 for 51% ownership interest in Dogness Japan, with the remaining 49% owned by an unrelated individual. Due to the negative impact of COVID-19 and because no material revenue was generated since its inception, on November 28, 2020, the Board approved to the sale of the Company’s 51% ownership interest to the remaining shareholder of Dogness Japan for cash consideration of JPY3.4 million ($31,092). The disposition transaction was consummated on November 28, 2020. Immediate before the disposition, Dogness Japan’s total assets were $98,752, accounting for only 0.1% of the Company’s consolidated total assets; and total liabilities were approximately $34,644, accounting for only 0.2% of the Company’s consolidated total liabilities. No revenue was reported for the six months ended December 31, 2020. Management determined that this disposition did not represent a strategic shift and had no significant effect on the Company’s operations and financial results; therefore, no discontinued operations were presented. The Company recorded a gain of $5,104 from the disposition of Dogness Japan, as included in the unaudited condensed consolidated financial statements for the six months ended December 31, 2020. 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, by which Dongguan Dogness acquired 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 $0.78 million) on April 16, 2020 along with other two shareholders’ capital contributions of RMB 4.88 million (approximately $0.75 million). Dogness Culture mainly focuses on developing and expanding pet food market in China in the near future. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation The accompanying unaudited condensed 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, 2020 and 2019 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 Management’s Discussion and Analysis of Financial Condition and Results of Operations and 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, 2020 as filed with the SEC on October 30, 2020. The Company’s 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”) July 11, 2016 BVI Parent, 100 % Holding Company Dogness (Hongkong) Pet’s Products Co., Limited (“HK Dogness”) March 10, 2009 Hong Kong 100 % Trading Jiasheng Enterprise (Hong Kong) Co., Limited (“HK Jiasheng”) July 12, 2007 Hong Kong 100 % Trading Dogness Intelligence Technology (Dongguan) Co., Ltd. (“Dongguan Dogness”) October 26, 2016 Dongguan, China 100 % Holding Company Dongguan Jiasheng Enterprise Co., Ltd. (“Dongguan Jiasheng”) May 15, 2009 Dongguan, China 100 % Development and manufacturing of pet leash products Zhangzhou Meijia Metal Product Co., Ltd (“Meijia”) July 9,2009 Zhangzhou, China 100 % Manufacturing of pet leash products Dogness Overseas Ltd (“Dogness Overseas”) February 8, 2018 BVI 100 % Holding Company Dogness Group LLC (“Dogness Group”) January 23, 2018 Delaware, United States 100 % Pet products trading Dogness Intelligence Technology Co., Ltd. (“Intelligence Guangzhou”) July 6, 2018 Guangzhou, China 58 % Research and manufacturing of intelligent pet products Dogness Japan Co. Ltd. (“Dogness Japan”) February 5, 2019 Osaka, Japan 51 % Developing and expanding pet food market, disposed on November 28, 2020 Dogness Pet Culture (Dongguan) Co. Ltd. (“Dogness Culture”) December 14, 2018 Dongguan, China 51.2 % Developing and expanding pet food market Noncontrolling interests As of December 31, 2020, noncontrolling interests represent 42.0% and 48.8% noncontrolling shareholders’ interests in Intelligence Guangzhou 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 unaudited condensed consolidated statements of operations and comprehensive income (loss) as an allocation of the total income or loss between noncontrolling interest holders and the shareholders of the Company. Use of Estimates In preparing the unaudited condensed 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, and realization of deferred tax assets. Actual results could differ from those estimates. Cash 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. Short-term Investments 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 funds 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 unaudited condensed consolidated statements of operations and comprehensive income (loss) over the contractual term of these investments. The Company had short-term investments of $933,910 and $3,551,968 as of December 31, 2020 and June 30, 2020, respectively. The Company recorded interest income of $34,789 and $147,971 for the six months ended December 31, 2020 and 2019, respectively. Accounts Receivable, net 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 unaudited condensed consolidated statements of operations 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 $10,047 and $23,982 as of December 31, 2020 and June 30, 2020, respectively. 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 inventories 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 inventories. As of December 31, 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 inventory reserve of $1,158,551. During the six months ended December 31, 2020, the Company disposed approximately $0.7 million of these obsolete and damaged inventory. As a result, inventory reserve has been written down to $475,935 as of December 31, 2020. Prepayment 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. No impairment was recorded as of December 31, 2020 and June 30, 2020, as the Company considers all of the prepayment to be fully realizable. Property, Plant and Equipment, net 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: Useful life Buildings 10-50 years Leasehold improvement Lesser of useful life and lease term Machinery equipment 5-10 years Transportation vehicles 5 years Office equipment and furniture 5 years 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 unaudited condensed consolidated statements of operations and other comprehensive income (loss) in other income or expenses. Construction-in-Progress (“CIP”) Construction-in-progress represents property and buildings under construction and consists of construction expenditures, equipment procurement, and other direct costs attributable to the construction. Construction-in-progress is not depreciated. Upon completion and ready for intended use, construction-in-progress is reclassified to the appropriate category within property, plant and equipment. Interest expense on outstanding debt is capitalized during the period of significant capital asset construction. Capitalized interest on construction-in-progress is included within property, plant and equipment and is amortized over the life of the related assets. Intangible Assets, net 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.” 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. 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. 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. 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 ($1,224,800) 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 ($673,640). During six months ended December 31, 2020, the Company made additional capital contribution of RMB 1.6 million ($244,960). As of the date of this filing, the Company intends to make the remaining capital contribution of RMB 2.0 million ($306,200) before June 30, 2021. 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 ($459,300) for 13% of the ownership interest in Linsun, with the remaining 87% of the ownership interest owned by three unrelated shareholders. 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. 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. As of June 30, 2020, based on the financial condition and operating performance of Nanjing Rootaya, a full impairment loss of $177,750 was applied against this investment. For the Company’s investments in Dogness Network and Linsun, no material impairment indicator was noted as of June 30, 2020 and December 30, 2020 because their operation results indicated net income and cash inflows. As of December 31, 2020 and June 30, 2020, the Company’s long-term investments in equity investees amounted to $1,377,900 and $1,046,360, respectively. 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. The Company believes that the carrying amount of long-term loans approximates fair value at December 31, 2020 and June 30, 2020 based on the terms of the borrowings and current market rates as the rates of the borrowings are reflective of the current market rates. 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 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 six months period ended June 30, 2020. No impairment was recorded for the six months ended December 30, 2020. Leases 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 July 1, 2019. The standard did not materially impact our consolidated net earnings and cash flows. Revenue Recognition 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. 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 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, 2020 and 2019, 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. 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. During the six months ended December 31, 2020, the Company started to provide ribbon dyeing service 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 Company earned service fees of approximately $482,376 for the six months ended December 31, 2020. Contract Assets and Liabilities 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. As of December 31, 2020 and June 30, 2020, 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 Revenues 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 revenues for the six months ended December 31, 2020 and 2019 are disclosed in Note 16 of this unaudited condensed consolidation financial statements. 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. Income Taxes 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 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. 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. As of December 31, 2020, the Company had income tax payable of approximately $3.6 million, primarily related to the unpaid income tax in China. Based on statutory surcharge for overdue tax payment, the Company recorded surcharge of $527,110 as part of the income tax provision as reflected in the consolidated statements of operations and comprehensive income (loss) for the six months ended December 31, 2020. The Company expects to settle the income tax liabilities in fiscal 2021 when the 2020 annual income tax return is assessed by the local tax authority. As of December 31, 2020, all of the Company’s tax returns of its PRC Subsidiaries, Hong Kong subsidiaries, and U.S subsidiary remain open for statutory examination by relevant tax authorities. Value added tax (“VAT”) 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. 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. Earnings (loss) per Share 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 six months ended December 31, 2020, 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 six months ended December 31, 2019, 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 six months ended December 31, 2020 and 2019, 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). Share-Based compensation 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 at the grant date based on the fair value of the award and is recognized as expense based on the contractual term or a shorter expected term. 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, 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. 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 unaudited condensed 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 unaudited condensed consolidated statements of changes in equity. Gains and losses from foreign currency transactions are included in the unaudited condensed consolidated statement of operations and comprehensive income (loss). The following table outlines the currency exchange rates that were used in creating the unaudited condensed consolidated financial statements: Six months ended December 31, 2020 Six months ended December 31, 2019 June 30, 2020 Period End spot rate US$1=RMB 6.5326 US$1=JPY 103.2 US$1=RMB 6.9680 US$1=JPY 108.6 US$1=RMB 7.0721 US$1=JPY 107.5 Average rate US$1=RMB 6.7715 US$1=JPY 105.3 US$1=RMB 7.0289 US$1=JPY 108.0 US$1=RMB 7.0323 US$1=JPY 107.5 Comprehensive income (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. 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 R |
Liquidity
Liquidity | 6 Months Ended |
Dec. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Liquidity | NOTE 3 – LIQUIDITY As reflected in the unaudited condensed consolidated financial statement, the Company had cash used in operating activities of $108,516 for the six months ended December 31, 2020. As of December 31, 2020, the Company had future minimum capital expenditure commitment on its construction-in-progress projects of approximately $5.8 million within the next twelve months and additional $12.0 million for the next five years. In addition, the Company had unpaid tax liabilities of $3.6 million as of December 31, 2020, which may be required to be settled with local tax authority in the near future. Furthermore, the ongoing outbreak of COVID-19 may continue to negatively impact the Company’s business operations. A resurgence could negatively affect the Company’s ability to fulfill customer sales orders and collect customer payments timely, or disrupt the Company’s supply chain. As a result, there is a possibility that the Company’s revenue and cash flows may underperform in the next 12 months. 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. For the six months ended December 31, 2020, the Company’s revenue increased by approximately $0.8 million as compared to the six months ended December 31, 2019. As a result, the Company reported a net income of approximately $0.7 million for the six months ended December 31, 2020. In addition, the Company’s working capital increased by approximately $1.4 million from approximately $0.9 million as of June 30, 2020 to approximately $2.3 million as of December 31, 2020. As of December 31, 2020, the Company had cash of approximately $1.4 million. The Company also had short-term investments of approximately $0.9 million using the 2017 remaining IPO proceeds to purchase interest-bearing short-term investments 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 had total outstanding accounts receivable of approximately $3.8 million, of which approximately $3.4 million or 90.4% has been subsequently collected back during January to April 2021 (including $3.2 million accounts receivable collected from third party customers and $0.2 million accounts received collected from related party customers), and become available for use as working capital. As of December 31, 2020, the Company had outstanding bank loans of approximately $8.6 million from PRC banks (including $910,000 short-term bank loans, approximately $0.6 million current portion of long-term bank loans and approximately $7 million long-term bank loans), among which approximately $1.5 million will be paid within next 12 months. 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. The Company also borrowed approximately $2.0 million from related party as working capital and such borrowing is interest free and due on demand. On January 20, 2021, the Company sold 3,455,130 Class A common shares in a registered offering at the price of $2.15 per common share and raised net proceeds of approximately $6.6 million. In addition, warrants to purchase an aggregate of 1,727,565 common shares for $2.70 per share were issued to the investors and warrants to purchase an aggregate of 276,410 common shares for $2.70 per share were issued as commission to the placement agent in the offering. If fully exercised, the Company would receive aggregate gross proceeds from the warrants of approximately $5.4 million. The Company currently plans to fund its operations mainly through cash flow from its operations, remaining cash from its 2017 IPO proceeds, January 2021 equity financing, renewal of bank borrowings, borrowing from related parties and additional equity financing from outside investors, if necessary, to ensure sufficient working capital. However, no assurance can be given that additional financing, if required. Based on the current operating plan, management believes that the above-mentioned measures collectively will provide sufficient liquidity for the Company to meet its future liquidity and capital requirement for at least 12 months from the date the unaudited condensed consolidated financial statements are released. |
Accounts Receivable, Net
Accounts Receivable, Net | 6 Months Ended |
Dec. 31, 2020 | |
Receivables [Abstract] | |
Accounts Receivable, Net | NOTE 4 – ACCOUNTS RECEIVABLE, NET Accounts receivable consisted of the following: As of December 31, As of June 30, 2020 2020 (Unaudited) Accounts receivable from third-party customers $ 3,313,206 $ 1,940,822 Less: allowance for doubtful accounts (10,047 ) (23,982 ) Total accounts receivable from third-party customers, net 3,303,159 1,916,840 Add: accounts receivable - related parties 497,974 559,465 Total accounts receivable, net $ 3,801,133 $ 2,476,305 For the six months ended December 31, 2020 and 2019, the Company recorded a bad debt recovery of $15,358 and a bad debt provision of $205,829, respectively. Allowance for doubtful accounts amounted to $10,047 and $23,982 as of December 31, 2020 and June 30, 2020, respectively. For the six months ended December 31, 2020 and 2019, delinquent account balances of $nil and $205,829 were written off against the allowance for doubtful accounts after management has determined that the likelihood of collection of such receivables became remote. Approximately RMB 21.2 million ($3.2 million) or 98% of the accounts receivable balance as of December 31, 2020 from third-party customers has been collected as of April 2021. In connection with the Company’s long-term investments in equity investees as disclosed in Note 2, the Company sold certain intelligence pet products to related parties Linsun and Dogness Network. The outstanding accounts receivable from these related parties amounted to $497,974 as of December 31, 2020, of which $181,409 has been collected as of April 2021and the remaining balance is expected to be collected by June 2021 (see Note 12). Allowance for doubtful accounts movement is as follows: As of December 31, As of June 30, 2020 2020 (Unaudited) Beginning balance $ 23,982 $ 128,106 Additions - 755,472 Recovery (15,358 ) - Write-off - (856,383 ) Foreign currency translation adjustments 1,423 (3,213 ) Ending balance $ 10,047 $ 23,982 |
Inventories, Net
Inventories, Net | 6 Months Ended |
Dec. 31, 2020 | |
Inventory Disclosure [Abstract] | |
Inventories, Net | NOTE 5 – INVENTORIES, NET Inventories consisted of the following: As of December 31, As of June 30, 2020 2020 (Unaudited) Raw materials $ 391,935 $ 140,745 Work in process 999,049 677,301 Finished goods 3,852,988 3,201,205 5,243,972 4,019,251 Less: inventory allowance (475,935 ) (1,158,551 ) Inventory, net $ 4,768,037 $ 2,860,700 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, 2020 and 2019, the Company recorded inventory reserve of $nil and $77,338, respectively. During the six months ended December 31, 2020, the Company disposed approximately $0.7 million obsolete and damaged inventory. As a result, inventory reserve has been written down from $1,158,551 as of June 30, 2020 to $475,935 as of December 31, 2020. |
Property, Plant and Equipment,
Property, Plant and Equipment, Net | 6 Months Ended |
Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment, Net | NOTE 6 – PROPERTY, PLANT AND EQUIPMENT, NET Property, plant and equipment stated at cost less accumulated depreciation consisted of the following: As of December 31, As of June 30, 2020 2020 (Unaudited) Buildings $ 27,802,475 $ 25,532,908 Machinery and equipment 7,423,963 6,698,443 Office equipment and furniture 1,345,745 765,597 Automobiles 870,806 810,156 Leasehold improvements 5,377,917 5,028,382 Construction-in-progress (“CIP”) (1) 18,391,993 10,647,107 Total 61,212,899 49,482,593 Less: Accumulated depreciation (7,413,701 ) (5,668,986 ) Impairment of fixed assets (303,272 ) (280,095 ) Property, plant and equipment, net $ 53,495,926 $ 43,533,512 During the year ended June 30, 2020, the Company disposed approximately $1.2 million 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 for the year ended June 30, 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. No impairment was recorded for the six months ended December 30, 2020 and 2019, respectively. Depreciation expense was $1,239,397 and $1,220,245 for the six months ended December 31, 2020 and 2019, respectively. In connection with the $7.7 million long-term bank loans borrowed from Dongguan Rural Commercial Bank, the Company’s subsidiary Meijia pledged its fixed assets of approximately $4.3 million 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). (1) 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 ($10.9 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 ($16.8 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 December 31, 2020, amounted to RMB 118.5 million ($18.1 million). As of December 31, 2020, the Company had future capital expenditure commitment of approximately RMB 80,000 ($12,248). 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. As of December 31, 2020, Meijia plant has substantially reached its designed production capacity and is expected to reach its full production capacity by June 2021. In addition, the Company’s subsidiary Dongguan Jiasheng is working on a capital project which expanded from the original plan of building a warehouse, to build new manufacturing and operating facilities, which include 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 ($11.5 million). The budget was later adjusted and revised to RMB 233.1 million ($35.7 million) to add costs associated with interior and exterior decoration, parking lots construction, and road and landscaping on top of the original budget. As of December 31, 2020, the Company has spent RMB 117.7 million ($18.0 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 December 31, 2020, the Company still had future minimum capital expenditure commitment of RMB 115.5 million ($17.7 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. The Company’s subsidiary Dogness Culture is also working on a project to decorate a pet themed retail store. Total budget is RMB 2.15 million ($0.3 million). As of December 31, 2020, the Company has spent RMB 1.1 million ($0.2 million). This project is expected to be fully completed by June 30, 2021. As of December 31, 2020, future minimum capital expenditures on the Company’s construction-in-progress projects are estimated as follows: Twelve months ending December 31, Capital expenditure Capital expenditure Capital expenditure Total 2021 $ 12,248 $ 5,615,852 $ 154,887 $ 5,782,987 2022 - 4,008,850 - 4,008,850 2023 - 3,476,038 - 3,476,038 2024 - 3,002,384 - 3,002,384 2025 - 1,573,101 - 1,573,101 Total $ 12,248 $ 17,676,225 $ 154,887 $ 17,843,360 Subsequently, from January 2021 to April 2021, the Company made payment of RMB 16.1 million ($2.4 million) on the above-mentioned construction projects. As a result, the Company’s future capital expenditure commitment on CIP has decreased from approximately $17.8 million as of December 31, 2020 to approximately $15.4 million as of the date of this report, as detailed below: Twelve months ending December 31, Capital expenditure Capital expenditure Capital expenditure Total 2021 $ - $ 3,159,927 $ 154,887 $ 3,314,814 2022 - 4,008,850 - 4,008,850 2023 - 3,476,038 - 3,476,038 2024 - 3,002,384 - 3,002,384 2025 - 1,573,101 - 1,573,101 Total $ - $ 15,220,300 $ 154,887 $ 15,375,187 The Company plans to fund these CIP projects through working capital generated from operations, bank borrowings, borrowing from related parties, the proceeds received from January 2021 equity financing, as well as other future potential capital raising activities. |
Intangible Assets, Net
Intangible Assets, Net | 6 Months Ended |
Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets, Net | NOTE 7 – INTANGIBLE ASSETS, NET Net intangible assets consisted of the following: As of December 31, As of June 30, 2020 2020 (Unaudited) Software $ 230,059 $ 212,478 Land use right 2,324,996 2,147,318 Less: accumulated amortization (316,849 ) (254,993 ) Intangible assets, net $ 2,238,206 $ 2,104,803 Amortization expense was $39,319 and $20,803 for the six months ended December 31, 2020, respectively. In connection with the $7.7 million long-term loans borrowed from Dongguan Rural Commercial Bank, the Company’s subsidiary Meijia pledged its intangible assets of $1.4 million as the collateral to secure the loans (See Note 9) Estimated future amortization expense is as follows: Twelve months ending December 31, Amortization expense 2021 $ 81,514 2022 81,514 2023 76,491 2024 65,583 Thereafter 1,933,104 Total $ 2,238,206 |
Leases
Leases | 6 Months Ended |
Dec. 31, 2020 | |
Leases [Abstract] | |
Leases | NOTE 8 – LEASES 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 six months ended December 31, 2020 and 2019 was $233,857 and $366,236, respectively. 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 December 31, 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. Supplemental balance sheet information related to operating leases was as follows: December 31, Right-of-use assets, net $ 5,308,717 Operating lease liabilities - current $ 164,694 Operating lease liabilities - non-current 1,197,195 Total operating lease liabilities $ 1,361,889 The weighted average remaining lease terms and discount rates for all of operating leases were as follows as of December 31, 2020: Remaining lease term and discount rate: Weighted average remaining lease term (years) 15.00 Weighted average discount rate 5.79 % The following is a schedule of maturities of lease liabilities as of December 31, 2020: Twelve months ending December 31, 2021 $ 237,306 2022 239,089 2023 254,103 2024 261,036 2025 262,998 Thereafter 378,977 Total future minimum lease payments 1,633,509 Less: imputed interest 271,620 Total $ 1,361,889 |
Bank Loans
Bank Loans | 6 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
Bank Loans | NOTE 9 – BANK LOANS Short-term loans consisted of the following: As of December 31, As of June 30, 2020 2020 (Unaudited) Bank of Communications of China (“BCC”): Effective interest rate at 5.655% (1) $ - $ 2,545,200 Industrial and Commercial Bank of China (“ICBC”): Effective interest rate at 5.655% (2) - 1,696,800 Cathay Bank Effective interest rate at 4.25% (3) 910,000 900,000 Total $ 910,000 $ 5,142,000 (1) In August 2019, the Company entered into two loan agreements with BCC Dongguan Branch to borrow a 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. (2) 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, 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. (3) On February 6, 2020, one of the Company’s U.S. subsidiaries, 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. As of June 30, 2020, the outstanding balance was $900,000. During the six months ended December 31, 2020, Dogness Group borrowed total of $73,271 and made repayment of $63,271. As of December 31, 2020, the outstanding balance was $910,000, which was recorded as current liabilities because Dogness Group plans to repay this loan within one year. Long-term loan consisted of the following: As of December 31, As of June 30, 2020 2020 (Unaudited) Southwestern National Bank Paycheck Protection Program (PPP) Loan $ 73,300 $ 73,300 Dongguan Rural Commercial Bank Effective interest rate at 6.15% and 6.55% 7,578,092 - Total $ 7,651,392 $ 73,300 Less: current portion of long-term loans 623,669 - Long-term loans $ 7,027,723 $ 73,300 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. In January 2021, Dogness Group received PPP loan forgiveness notice to waive the principal and accrued interest. On July 17, 2020, the Company entered into multiple loan agreements with Dongguan Rural Commercial Bank to borrow an aggregate of RMB 50 million ($7.7 million) of loans to support the working capital needs and 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 $1.4 million and buildings of approximately $4.3 million from Meijia as collateral to secure total loans of RMB 30 million ($4.6 million). Mr. Silong Chen, the CEO of the Company, pledged personal property as collateral to secure the remaining loans of RMB 20 million ($3.1million). Dongguan Dogness, Meijia and Mr. Silong Chen also provided guarantee for the loans. During the six months ended December 31, 2020, the Company repaid RMB 0.5 million ($0.1 million) with an outstanding balance of RMB 49.5 million ($7.6 million) as of December 31, 2020. Interest expenses for the above-mentioned loans amounted to $158,269 and $104,040 for the six months ended December 31, 2020 and 2019, respectively. The Company capitalized interest of $51,425 and $nil related to certain CIP projects expenditures for the six months ended December 31, 2020 and 2019, respectively. As of December 31, 2020, the Company’s short-term and long-term loans totaled approximately $8.6 million. The repayment schedule for the Company’s bank loans are as follows: Twelve months ending December 31, Repayment 2021 $ 1,533,669 2022 1,024,354 2023 4,035,655 2024 385,010 2025 411,062 2026 438,499 2027 467,770 2028 265,373 Total $ 8,561,392 |
Taxes
Taxes | 6 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Taxes | NOTE 10 – TAXES (a) Corporate Income Taxes (“CIT”) 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. 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. 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. 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 six months ended December 31, 2020 and 2019 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 corporate income taxes by $140,015 and $Nil for the six months ended December 31, 2020 and 2019, respectively. The benefit of the tax holidays on net income (loss) per share (basic and diluted) $0.00 and $Nil for the six months ended December 31, 2020 and 2019, respectively. As of December 31, 2020, all of the Company’s tax returns of its PRC Subsidiaries, Hong Kong subsidiaries and U.S subsidiary remain open for statutory examination by relevant tax authorities. The provision for income tax consists of the following: For the six months ended December 31, 2020 2019 (Unaudited) (Unaudited) Current income tax provision $ 544,419 $ 176,703 Deferred income tax benefit (13,740 ) (71,973 ) Total income tax expense $ 530,679 $ 104,730 Reconciliation of the difference between the income tax provision computed based on PRC statutory income tax rate and the Company’s actual income tax provision for the six months ended December 31, 2020 and 2019 are as follows: For the six months ended December 31, 2020 2019 (Unaudited) (Unaudited) Income tax expense computed based on PRC statutory rate $ 320,046 $ - Effect of rate differential for Hong Kong entities (8,917 ) (5,198 ) Effect of PRC preferential tax rate (140,015 ) - Research and development tax credit (28,679 ) (16,709 ) Changes in bad debt and inventory reserve (108,925 ) 32,241 Change in valuation allowance (56,940 ) - Net operating loss carryforward - 18,424 Non-deductible expenses: Stock-based compensation 10,662 48,508 Meals and entertainment 16,337 27,464 Surcharge on unpaid income tax 527,110 - Total income tax provisions $ 530,679 $ 104,730 The components of deferred tax assets as of December 31, 2020 and June 30, 2020 consist of the following: December 31, 2020 June 30, 2020 (Unaudited) Deferred tax assets: Net operating losses $ 1,572,028 $ 1,515,308 Assets impairment reserve 133,838 233,759 Valuation allowance (1,576,897 ) (1,633,837 ) Deferred tax assets, net $ 128,969 $ 115,230 (b) Taxes Payable The Company’s taxes payable consists of the following: December 31, 2020 June 30, 2020 (Unaudited) Corporate income tax payable $ 3,610,097 $ 2,813,014 Other tax payable 2,910 1,397 Total taxes payable $ 3,613,007 $ 2,814,411 As of December 31, 2020 and June 30, 2020, the Company had accrued tax liabilities of approximately $3.6 million and $2.8 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. For the six months ended December 31, 2020, the Company accrued and recorded surcharge for overdue tax payment of $527,110 associated with unpaid income tax liabilities, which was recorded as part of the income tax provision and reflected in the consolidated statements of operations and comprehensive income (loss). 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 December 31, 2020. 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. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 11 – 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. Capital Investment Obligation Dogness Intelligence Technology Co., Ltd. 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 ($12.2 million). The Company’s subsidiary, Dongguan Jiasheng, is required to contribute RMB 46.4 million ($7.1 million) as paid-in capital in exchange for 58% ownership interest in Intelligence Guangzhou. As of December 31, 2020 and as of the date of this filing, Dongguan 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. 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 60.0 million ($9.2 million). As of June 30, 2020, RMB 40.9 million ($6.3 million) capital contribution has been made. During the six months ended December 31, 2020, the Company made additional capital contribution of RMB 1.3 million ($0.2 million) in Meijia. Subsequently, between January and April 2021, the Company made additional capital contributions of RMB 0.5 million ($0.1 million). As of the date of this filing, pursuant to the articles of incorporation of Meijia, the Company is obligated to contribute the remaining RMB 17.3 million ($2.6 million) capital investment into Meijia before December 30, 2025 whenever the Company has available funds. Dongguan Jiasheng Enterprise Ltd. In December 2020, Dongguan Jiasheng amended its Article of Incorporation to increase its registered capital from RMB 50.0 million ($7.6 million) to RMB 55.0 million ($8.4 million). As of June 30, 2020, RMB 39 million ($6.0 million) capital contribution has been made. During the six months ended December 31, 2020, the Company made the remaining capital contribution of RMB 16.0 million ($2.4 million). Dogness Network As disclosed in Note 3 above, the Company is required to invest RMB 8.0 million (approximately $1.2 million) in exchange for 10% ownership interest in Dogness Network. As of December 31, 2020, the Company made capital contribution of RMB 6.0 million (approximately $0.9 million) to Dogness Network. As of the date of this filing, the Company intends to make additional capital contribution of RMB 2.0 million ($0.3 million) to Dogness Network before June 30, 2021. Capital Expenditure Commitment on the CIP In connection with the Company’s construction-in-progress projects on Meijia and Dongguan Jiasheng, from January 2021 to April 2021, the Company made payments of RMB 16.1 million ($2.4 million) on these projects. As a result, the future minimum capital expenditure commitment on these CIP projects has decreased from approximately $17.8 million as of December 31, 2020 to approximately $15.4 million as of the date of this filing (see Note 6). |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Dec. 31, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE 12 – RELATED PARTY TRANSACTIONS The relationship of related parties is summarized as follow: Name of Related Party Relationship to the Company Silong Chen Chief Executive Officer; Chairman of the Board of Directors Junqiang Chen and Caiyuan He Relatives of Mr. Silong Chen Linsun Smart Technology Co., Ltd (“Linsun”) Equity investee -10% of the ownership Dogness Network Technology Co., Ltd (“Dogness Network”) Equity Investee - 13% of the ownership Guangdong Dogness Biotechnology Co., Ltd. Relate to one of the Company’s shareholders Mark Trade (HK) Limited Shareholder of Dogness Culture (1) Due to related parties As of December 31, 2020 and June 30, 2020, due to related parties consist of the following: As of December 31, As of June 30, 2020 2020 (Unaudited) Mr. Silong Chen $ 2,027,662 $ 25,462 Mark Trade (HK) Limited 8,260 - Total $ 2,035,922 $ 25,462 Mr. Silong Chen and affiliated companies periodically provide working capital loans to support the Company’s operations when needed. Such advance was non-interest bearing and due on demand. (2) Loan guarantee provided by related parties 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). (3) Sales to related parties Revenue from related parties consisted of the following: For the six months ended December 31, Name 2020 2019 (Unaudited) (Unaudited) Linsun $ - $ 73,024 Dogness Network 548,351 515,709 Total $ 548,351 $ 588,733 Cost of revenue associated with the sales to these two related parties amounted to $285,258 and $351,601 for the six months ended December 31, 2020 and 2019, respectively. (4) Accounts receivable from a related party Accounts receivable from a related party consisted of the following: As of December 31, As of June 30, 2020 2020 (Unaudited) Accounts receivable - related party: -Dogness Network $ 497,974 $ 559,465 Total $ 497,974 $ 559,465 As of December 31, 2020, total accounts receivable from related parties amounted to $497,974, among which $181,409 has been collected as of April 2021. (5) Advances to suppliers- related party Advances to suppliers to a related party consisted of the following: As of December 31, As of June 30, 2020 2020 (Unaudited) Advances to suppliers- related party -Linsun $ 29,240 $ - Total $ 29,240 $ - (6) Accounts payable to related parties Accounts payables to related parties consisted of the following: As of December 31, As of June 30, 2020 2020 (Unaudited) Accounts payable - related parties: -Linsun $ - $ 301,555 -Dogness Network 3,963 3,660 Total $ 3,963 $ 305,215 (7) Purchase from related parties During the six months ended December 31, 2020, the Company 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 $1,004,185 and $1,295,498 in six months ended December 31, 2020 and 2019, respectively. (8) Lease arrangement with related parties 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 $240,000 and is subject to 15% increase every three years. For the six months ended December 31, 2020 and 2019, the Company recorded rent income of $119,956 and $Nil, respectively, as other income through leasing the manufacturing facilities to Linsun. On August 1, 2020, Dongguan Jiasheng signed a lease agreement with Dogness Network, which enabled Dogness Network to lease part of Dongguan Jiasheng’s new production facilities of approximately 580 square meters for ten years. Annual lease payment from Dogness Network amounted to approximately $35,000 and is subject to 15% increase every three years. For the six months ended December 31, 2020 and 2019, the Company recorded rent income of $16,099 and $Nil, respectively, as other income through leasing the manufacturing facilities to Dogness Network. |
Equity
Equity | 6 Months Ended |
Dec. 31, 2020 | |
Equity [Abstract] | |
Equity | NOTE 13 – EQUITY Common Shares 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. Initial Public Offering 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.” As of December 31, 2020 and June 30, 2020, 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. Public Offering Warrants In connection with and upon closing of the IPO on December 18, 2017, the Company agreed to issue 500,000 warrants 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). These warrants carry a term of three years from the closing of the IPO, 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. As of December 31, 2020, these underwriter warrants were expired. 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”). Appropriations to the statutory surplus reserve are required to be at least 10% of the after-tax net income determined in accordance with PRC regulations 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 $2,685 and $nil to statutory reserves during the six months ended December 31,2020 and 2019 in accordance with PRC regulations, respectively. The restricted amounts as determined by the PRC statutory laws totaled $194,401 and $191,716 as of December 31, 2020 and June 30, 2020, respectively. |
Earnings (Loss) Per Share
Earnings (Loss) Per Share | 6 Months Ended |
Dec. 31, 2020 | |
Earnings Per Share [Abstract] | |
Earnings (Loss) Per Share | NOTE 14 – EARNINGS (LOSS) PER SHARE For the six months ended December 31, 2020, 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 six months ended December 31, 2019, unexercised options to purchase 340,000 shares of common stock on a weighted average basis were not included in the calculation of diluted net loss per share as such inclusion would be anti-dilutive. For the six months ended December 31, 2019, 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. The following table presents a reconciliation of basic and diluted net income (loss) per share: For the six months ended December 31, 2020 2019 (Unaudited) (Unaudited) Net income (loss) attributable to the Company $ 839,248 $ (383,094 ) Weighted average number of common shares outstanding - Basic 25,913,631 25,913,631 Dilutive securities -unexercised warrants and options 17,515 - Weighted average number of common shares outstanding – diluted 25,931,146 25,913,631 Earnings (loss) per share - Basic $ 0.03 $ (0.01 ) Earnings (loss) per share – Diluted $ 0.03 $ (0.01 ) |
Options
Options | 6 Months Ended |
Dec. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Options | NOTE 15 – OPTIONS 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. 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. 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. 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 options may be exercised at any time following vesting for cash or on a cashless basis. 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 December 31, 2020, no options were exercised by TJ Capital and 73,337 options were vested. 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. 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 December 31, 2020, all of 120,000 options were vested and no options were exercised by the CFO. 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. 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 December 31, 2020, no options were exercised by the CEO and 220,000 options were vested. The Company recorded $71,079 and $323,386 stock-based compensation expense for the six months ended December 31, 2020 and 2019, respectively. As of December 31, 2020, the Company had 453,339 outstanding vested stock options with a weighted average remaining term over 0.15 years and 46,661 unvested stock options with a weighted average remaining term over 0.04 years. The following table summarized the Company’s stock option activity: Number of Weighted Average Weighted Average Remaining Life in Years Outstanding, June 30, 2019 480,000 $ 1.50 1.22 Exercisable, June 30, 2019 270,000 $ 1.50 1.14 Granted 160,000 - - Cancelled (140,000 ) - - Exercised - - - Outstanding June 30, 2020 500,000 $ 1.50 0.35 Exercisable, June 30, 2020 413,337 $ 1.50 0.19 Granted - - - Cancelled - Exercised - - - Outstanding December 31, 2020 500,000 $ 1.50 0.19 Exercisable, December 31, 2020 453,339 $ 1.50 0.15 |
Segment
Segment | 6 Months Ended |
Dec. 31, 2020 | |
Segment Reporting [Abstract] | |
Segment | NOTE 16 – SEGMENT 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. The management of the Company concludes that it has only one reporting segment. The Company designs, process and manufactures fashionable and high-quality leashes, collars and harnesses to complement cats’ and dogs’ appearances, as well as intelligent pet products. During the six months ended December 31, 2020, the Company started providing dyeing services to external customers. The Company’s products and service 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 and service types or geographic area; hence the Company has only one reporting segment. Geographic information The summary of total revenues by geographic market for the six months ended December 31,2020 and 2019 was as follows: For the six months ended December 31, 2020 2019 (Unaudited) (Unaudited) Mainland China $ 6,430,883 $ 6,138,185 United States 3,235,212 2,283,744 Europe 938,083 1,195,122 Australia 235,819 523,383 Canada 784,403 161,353 Central and South America 50,915 62,641 Japan and other Asian countries and regions 570,192 1,112,127 Total $ 12,245,507 $ 11,476,555 Revenue by products and services The summary of total revenues by product and service categories for the six months ended December 31,2020 and 2019 was as follows: For the six months ended December 31, 2020 2019 (Unaudited) (Unaudited) Product sales: Pet leashes $ 1,845,601 $ 2,533,043 Pet collars 2,846,833 2,764,380 Pet harnesses 791,441 1,025,927 Retractable dog leashes 106,585 427,183 Intelligent pet products 3,383,666 2,110,239 Gift suspender 1,489,852 1,661,916 Other pet accessories 529,954 511,782 Climbing hooks 769,199 442,085 Total revenue from product sales 11,763,131 11,476,555 Service: Dyeing services 482,376 - Total revenue from service 482,376 - Total revenue $ 12,245,507 $ 11,476,555 |
Subsequent Events
Subsequent Events | 6 Months Ended |
Dec. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 17 – SUBSEQUENT EVENTS Equity financing On January 20, 2021, the Company closed a securities purchase agreement with certain institutional investors for the sale of 3,455,130 Class A common shares in a registered offering at the price of $2.15 per common share. After the payment of expenses, the Company received approximately $6.6 million in net proceeds from the sale of the common shares. In addition, warrants to purchase an aggregate of 1,727,565 common shares for $2.70 per share were issued to the investors and warrants to purchase an aggregate of 276,410 common shares for $2.70 per share were issued as commission to the placement agent in the offering. If fully exercised, the Company would receive aggregate gross proceeds from the warrants of approximately $5.4 million. Exercise of stock options Pursuant to the consulting agreement signed between TJ Capital and the Company on July 30, 2019, TJ Capital opted to exercise 10,000 share options on a cashless basis. On February 18, 2021, the Company issued 6,053 common shares to TJ Capital. Consulting agreement On April 15, 2021, the Company signed a consulting agreement with Real Miracle Investments Limited (“Real Miracle’) to provide strategic business and marketing consulting services to the Company for nine months from April 15, 2021. As the consideration for the service, Real Miracle is entitled to receive 250,000 shares of the Company’s common stock within ten days upon signing the agreement. On April 28, 2021, these shares were issued to Real Miracle. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The accompanying unaudited condensed 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, 2020 and 2019 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 Management’s Discussion and Analysis of Financial Condition and Results of Operations and 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, 2020 as filed with the SEC on October 30, 2020. The Company’s 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”) July 11, 2016 BVI Parent, 100 % Holding Company Dogness (Hongkong) Pet’s Products Co., Limited (“HK Dogness”) March 10, 2009 Hong Kong 100 % Trading Jiasheng Enterprise (Hong Kong) Co., Limited (“HK Jiasheng”) July 12, 2007 Hong Kong 100 % Trading Dogness Intelligence Technology (Dongguan) Co., Ltd. (“Dongguan Dogness”) October 26, 2016 Dongguan, China 100 % Holding Company Dongguan Jiasheng Enterprise Co., Ltd. (“Dongguan Jiasheng”) May 15, 2009 Dongguan, China 100 % Development and manufacturing of pet leash products Zhangzhou Meijia Metal Product Co., Ltd (“Meijia”) July 9,2009 Zhangzhou, China 100 % Manufacturing of pet leash products Dogness Overseas Ltd (“Dogness Overseas”) February 8, 2018 BVI 100 % Holding Company Dogness Group LLC (“Dogness Group”) January 23, 2018 Delaware, United States 100 % Pet products trading Dogness Intelligence Technology Co., Ltd. (“Intelligence Guangzhou”) July 6, 2018 Guangzhou, China 58 % Research and manufacturing of intelligent pet products Dogness Japan Co. Ltd. (“Dogness Japan”) February 5, 2019 Osaka, Japan 51 % Developing and expanding pet food market, disposed on November 28, 2020 Dogness Pet Culture (Dongguan) Co. Ltd. (“Dogness Culture”) December 14, 2018 Dongguan, China 51.2 % Developing and expanding pet food market |
Noncontrolling Interests | Noncontrolling interests As of December 31, 2020, noncontrolling interests represent 42.0% and 48.8% noncontrolling shareholders’ interests in Intelligence Guangzhou 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 unaudited condensed consolidated statements of operations and comprehensive income (loss) as an allocation of the total income or loss between noncontrolling interest holders and the shareholders of the Company. |
Use of Estimates | Use of Estimates In preparing the unaudited condensed 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, and realization of deferred tax assets. Actual results could differ from those estimates. |
Cash | Cash 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. |
Short-term Investments | Short-term Investments 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 funds 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 unaudited condensed consolidated statements of operations and comprehensive income (loss) over the contractual term of these investments. The Company had short-term investments of $933,910 and $3,551,968 as of December 31, 2020 and June 30, 2020, respectively. The Company recorded interest income of $34,789 and $147,971 for the six months ended December 31, 2020 and 2019, respectively. |
Accounts Receivable, Net | Accounts Receivable, net 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 unaudited condensed consolidated statements of operations 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 $10,047 and $23,982 as of December 31, 2020 and June 30, 2020, respectively. |
Inventories, Net | 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 inventories 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 inventories. As of December 31, 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 inventory reserve of $1,158,551. During the six months ended December 31, 2020, the Company disposed approximately $0.7 million of these obsolete and damaged inventory. As a result, inventory reserve has been written down to $475,935 as of December 31, 2020. |
Prepayment | Prepayment 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. No impairment was recorded as of December 31, 2020 and June 30, 2020, as the Company considers all of the prepayment to be fully realizable. |
Property, Plant and Equipment, Net | Property, Plant and Equipment, net 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: Useful life Buildings 10-50 years Leasehold improvement Lesser of useful life and lease term Machinery equipment 5-10 years Transportation vehicles 5 years Office equipment and furniture 5 years 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 unaudited condensed consolidated statements of operations and other comprehensive income (loss) in other income or expenses. |
Construction-in-Progress ("CIP") | Construction-in-Progress (“CIP”) Construction-in-progress represents property and buildings under construction and consists of construction expenditures, equipment procurement, and other direct costs attributable to the construction. Construction-in-progress is not depreciated. Upon completion and ready for intended use, construction-in-progress is reclassified to the appropriate category within property, plant and equipment. Interest expense on outstanding debt is capitalized during the period of significant capital asset construction. Capitalized interest on construction-in-progress is included within property, plant and equipment and is amortized over the life of the related assets. |
Intangible Assets, Net | Intangible Assets, net 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.” 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. |
Long-term Investments in Equity Investees | 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. 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. 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 ($1,224,800) 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 ($673,640). During six months ended December 31, 2020, the Company made additional capital contribution of RMB 1.6 million ($244,960). As of the date of this filing, the Company intends to make the remaining capital contribution of RMB 2.0 million ($306,200) before June 30, 2021. 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 ($459,300) for 13% of the ownership interest in Linsun, with the remaining 87% of the ownership interest owned by three unrelated shareholders. 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. 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. As of June 30, 2020, based on the financial condition and operating performance of Nanjing Rootaya, a full impairment loss of $177,750 was applied against this investment. For the Company’s investments in Dogness Network and Linsun, no material impairment indicator was noted as of June 30, 2020 and December 30, 2020 because their operation results indicated net income and cash inflows. As of December 31, 2020 and June 30, 2020, the Company’s long-term investments in equity investees amounted to $1,377,900 and $1,046,360, respectively. |
Fair Value of Financial Instruments | 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. The Company believes that the carrying amount of long-term loans approximates fair value at December 31, 2020 and June 30, 2020 based on the terms of the borrowings and current market rates as the rates of the borrowings are reflective of the current market rates. |
Long-lived Assets Impairment | 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 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 six months period ended June 30, 2020. No impairment was recorded for the six months ended December 30, 2020. |
Leases | Leases 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 July 1, 2019. The standard did not materially impact our consolidated net earnings and cash flows. |
Revenue Recognition | Revenue Recognition 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. 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 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, 2020 and 2019, 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. 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. During the six months ended December 31, 2020, the Company started to provide ribbon dyeing service 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 Company earned service fees of approximately $482,376 for the six months ended December 31, 2020. Contract Assets and Liabilities 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. As of December 31, 2020 and June 30, 2020, 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 Revenues 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 revenues for the six months ended December 31, 2020 and 2019 are disclosed in Note 16 of this unaudited condensed consolidation financial statements. |
Research and Development Costs | 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. |
Income Taxes | Income Taxes 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 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. 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. As of December 31, 2020, the Company had income tax payable of approximately $3.6 million, primarily related to the unpaid income tax in China. Based on statutory surcharge for overdue tax payment, the Company recorded surcharge of $527,110 as part of the income tax provision as reflected in the consolidated statements of operations and comprehensive income (loss) for the six months ended December 31, 2020. The Company expects to settle the income tax liabilities in fiscal 2021 when the 2020 annual income tax return is assessed by the local tax authority. As of December 31, 2020, all of the Company’s tax returns of its PRC Subsidiaries, Hong Kong subsidiaries, and U.S subsidiary remain open for statutory examination by relevant tax authorities. |
Value Added Tax ("VAT") | Value added tax (“VAT”) 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. 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. |
Earnings (Loss) Per Share | Earnings (loss) per Share 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 six months ended December 31, 2020, 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 six months ended December 31, 2019, 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 six months ended December 31, 2020 and 2019, 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). |
Share-based Compensation | Share-Based compensation 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 at the grant date based on the fair value of the award and is recognized as expense based on the contractual term or a shorter expected term. |
Foreign Currency Translation | 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, 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. 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 unaudited condensed 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 unaudited condensed consolidated statements of changes in equity. Gains and losses from foreign currency transactions are included in the unaudited condensed consolidated statement of operations and comprehensive income (loss). The following table outlines the currency exchange rates that were used in creating the unaudited condensed consolidated financial statements: Six months ended December 31, 2020 Six months ended December 31, 2019 June 30, 2020 Period End spot rate US$1=RMB 6.5326 US$1=JPY 103.2 US$1=RMB 6.9680 US$1=JPY 108.6 US$1=RMB 7.0721 US$1=JPY 107.5 Average rate US$1=RMB 6.7715 US$1=JPY 105.3 US$1=RMB 7.0289 US$1=JPY 108.0 US$1=RMB 7.0323 US$1=JPY 107.5 |
Comprehensive Income (Loss) | Comprehensive income (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. |
Concentrations and Credit Risk | 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 affect the remittance. As of December 31, 2020 and June 30, 2020, $1,007,305 and $879,040 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. As of December 31, 2020, four customers accounted for 80% of the Company’s total accounts receivable, with related party customer Guangdong Dogness Network accounted for 13%, and three third party customers accounted for 28%, 27% and 12% of the Company’s total accounts receivable, respectively. 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. For the six months ended December 31, 2020 and 2019, export sales accounted for 47.5% and 46.5% of the Company’s total revenue, respectively. For the six months ended December 31,2020, three customers accounted for 31.4%, 12.4% and 6.3% of the Company’s total revenue, respectively. For the six months ended December 31, 2019, four customers accounted for 25.2%, 6.2%, 5.9% and 5.3% of the Company’s total revenue, respectively. For the six months ended December 31, 2020, two suppliers accounted for 26.1% of the Company’s total raw materials purchases, with related party supplier Linsun and a third-party supplier accounted for 15.6% and 10.5% of the Company’s total raw material purchases, respectively. For the six months ended December 31, 2019, two suppliers accounted for 33.1% of the Company’s total raw materials purchases, with related party supplier Linsun and a third-party supplier accounted for 20.9% and 12.2% of the Company’s total raw material purchases, respectively. |
Statement of Cash Flows | 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. |
Reclassifications | Reclassifications Certain prior period 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. |
Risks and Uncertainties | Risks and Uncertainties 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. 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 Company’s operations may be further affected by the ongoing outbreak of COVID-19 which in March 2020, had been declared as a pandemic by the World Health Organization. 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 resulting from the COVID-19 outbreak, including, but not limited to, the temporary closure of the Company’s factory and operations beginning in early February until to late March 2020, limited support from the Company’s employees, delayed access to raw material supplies and inability to deliver products to customers on a timely basis, the Company’s business was negatively impacted and generated lower revenue and net income during the period from February to March 2020 as compared to same period of 2019. Although the Company resumed its operations in late March 2020 and received and fulfilled increased customer sales orders in the second half of 2020, and the COVID-19 impact on the Company’s operating results and financial performance for the six months ended December 31, 2020 seems to be temporary, a resurgence could negatively affect the execution of customer contracts, the collection of customer payments, disruption of the Company’s supply chain and restriction of the Company’s sales to international market. The continued uncertainties associated with COVID 19 may cause the Company’s revenue and cash flows to underperform. The extent of the future impact of COVID-19 is still highly uncertain and cannot be predicted as of the date the Company’s interim financial statements are released. |
Recent Accounting Pronouncements | 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. Recent Adopted Accounting Pronouncements 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 were adopted on a retrospective basis and the new disclosures were adopted on a prospective basis. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements. Recent Accounting Pronouncements not yet adopted 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. As an emerging growth company, we plan to adopt this guidance effective January 1, 2023. We are currently evaluating the impact of our pending adoption of ASU 2016-13 on our consolidated financial statements. 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 the Company’s financial statements. 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 Company’s financial statements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Schedule of Entities | The Company’s 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”) July 11, 2016 BVI Parent, 100 % Holding Company Dogness (Hongkong) Pet’s Products Co., Limited (“HK Dogness”) March 10, 2009 Hong Kong 100 % Trading Jiasheng Enterprise (Hong Kong) Co., Limited (“HK Jiasheng”) July 12, 2007 Hong Kong 100 % Trading Dogness Intelligence Technology (Dongguan) Co., Ltd. (“Dongguan Dogness”) October 26, 2016 Dongguan, China 100 % Holding Company Dongguan Jiasheng Enterprise Co., Ltd. (“Dongguan Jiasheng”) May 15, 2009 Dongguan, China 100 % Development and manufacturing of pet leash products Zhangzhou Meijia Metal Product Co., Ltd (“Meijia”) July 9,2009 Zhangzhou, China 100 % Manufacturing of pet leash products Dogness Overseas Ltd (“Dogness Overseas”) February 8, 2018 BVI 100 % Holding Company Dogness Group LLC (“Dogness Group”) January 23, 2018 Delaware, United States 100 % Pet products trading Dogness Intelligence Technology Co., Ltd. (“Intelligence Guangzhou”) July 6, 2018 Guangzhou, China 58 % Research and manufacturing of intelligent pet products Dogness Japan Co. Ltd. (“Dogness Japan”) February 5, 2019 Osaka, Japan 51 % Developing and expanding pet food market, disposed on November 28, 2020 Dogness Pet Culture (Dongguan) Co. Ltd. (“Dogness Culture”) December 14, 2018 Dongguan, China 51.2 % Developing and expanding pet food market |
Schedule of Property and Equiipment Useful Life | The straight-line depreciation method is used to compute depreciation over the estimated useful lives of the assets, as follows: Useful life Buildings 10-50 years Leasehold improvement Lesser of useful life and lease term Machinery equipment 5-10 years Transportation vehicles 5 years Office equipment and furniture 5 years |
Schedule of Currency Exchange Rates | The following table outlines the currency exchange rates that were used in creating the unaudited condensed consolidated financial statements: Six months ended December 31, 2020 Six months ended December 31, 2019 June 30, 2020 Period End spot rate US$1=RMB 6.5326 US$1=JPY 103.2 US$1=RMB 6.9680 US$1=JPY 108.6 US$1=RMB 7.0721 US$1=JPY 107.5 Average rate US$1=RMB 6.7715 US$1=JPY 105.3 US$1=RMB 7.0289 US$1=JPY 108.0 US$1=RMB 7.0323 US$1=JPY 107.5 |
Accounts Receivable, Net (Table
Accounts Receivable, Net (Tables) | 6 Months Ended |
Dec. 31, 2020 | |
Receivables [Abstract] | |
Schedule of Accounts Receivable | Accounts receivable consisted of the following: As of December 31, As of June 30, 2020 2020 (Unaudited) Accounts receivable from third-party customers $ 3,313,206 $ 1,940,822 Less: allowance for doubtful accounts (10,047 ) (23,982 ) Total accounts receivable from third-party customers, net 3,303,159 1,916,840 Add: accounts receivable - related parties 497,974 559,465 Total accounts receivable, net $ 3,801,133 $ 2,476,305 |
Schedule of Allowance for Doubtful Accounts | Allowance for doubtful accounts movement is as follows: As of December 31, As of June 30, 2020 2020 (Unaudited) Beginning balance $ 23,982 $ 128,106 Additions - 755,472 Recovery (15,358 ) - Write-off - (856,383 ) Foreign currency translation adjustments 1,423 (3,213 ) Ending balance $ 10,047 $ 23,982 |
Inventories, Net (Tables)
Inventories, Net (Tables) | 6 Months Ended |
Dec. 31, 2020 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | Inventories consisted of the following: As of December 31, As of June 30, 2020 2020 (Unaudited) Raw materials $ 391,935 $ 140,745 Work in process 999,049 677,301 Finished goods 3,852,988 3,201,205 5,243,972 4,019,251 Less: inventory allowance (475,935 ) (1,158,551 ) Inventory, net $ 4,768,037 $ 2,860,700 |
Property, Plant and Equipment_2
Property, Plant and Equipment, Net (Tables) | 6 Months Ended |
Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property, Plant and Equipment, Net | Property, plant and equipment stated at cost less accumulated depreciation consisted of the following: As of December 31, As of June 30, 2020 2020 (Unaudited) Buildings $ 27,802,475 $ 25,532,908 Machinery and equipment 7,423,963 6,698,443 Office equipment and furniture 1,345,745 765,597 Automobiles 870,806 810,156 Leasehold improvements 5,377,917 5,028,382 Construction-in-progress (“CIP”) (1) 18,391,993 10,647,107 Total 61,212,899 49,482,593 Less: Accumulated depreciation (7,413,701 ) (5,668,986 ) Impairment of fixed assets (303,272 ) (280,095 ) Property, plant and equipment, net $ 53,495,926 $ 43,533,512 |
Schedule of Future Minimum Capital Expenditures | As of December 31, 2020, future minimum capital expenditures on the Company’s construction-in-progress projects are estimated as follows: Twelve months ending December 31, Capital expenditure Capital expenditure Capital expenditure Total 2021 $ 12,248 $ 5,615,852 $ 154,887 $ 5,782,987 2022 - 4,008,850 - 4,008,850 2023 - 3,476,038 - 3,476,038 2024 - 3,002,384 - 3,002,384 2025 - 1,573,101 - 1,573,101 Total $ 12,248 $ 17,676,225 $ 154,887 $ 17,843,360 Twelve months ending December 31, Capital expenditure Capital expenditure Capital expenditure Total 2021 $ - $ 3,159,927 $ 154,887 $ 3,314,814 2022 - 4,008,850 - 4,008,850 2023 - 3,476,038 - 3,476,038 2024 - 3,002,384 - 3,002,384 2025 - 1,573,101 - 1,573,101 Total $ - $ 15,220,300 $ 154,887 $ 15,375,187 |
Intangible Assets, Net (Tables)
Intangible Assets, Net (Tables) | 6 Months Ended |
Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets, Net | Net intangible assets consisted of the following: As of December 31, As of June 30, 2020 2020 (Unaudited) Software $ 230,059 $ 212,478 Land use right 2,324,996 2,147,318 Less: accumulated amortization (316,849 ) (254,993 ) Intangible assets, net $ 2,238,206 $ 2,104,803 |
Schedule of Estimated Future Amortization Expense for Intangible Assets | Estimated future amortization expense is as follows: Twelve months ending December 31, Amortization expense 2021 $ 81,514 2022 81,514 2023 76,491 2024 65,583 Thereafter 1,933,104 Total $ 2,238,206 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Dec. 31, 2020 | |
Leases [Abstract] | |
Schedule of Supplemental Balance Sheet Information | Supplemental balance sheet information related to operating leases was as follows: December 31, Right-of-use assets, net $ 5,308,717 Operating lease liabilities - current $ 164,694 Operating lease liabilities - non-current 1,197,195 Total operating lease liabilities $ 1,361,889 |
Schedule of Weighted Average Remaining Lease Terms and Discount Rates | The weighted average remaining lease terms and discount rates for all of operating leases were as follows as of December 31, 2020: Remaining lease term and discount rate: Weighted average remaining lease term (years) 15.00 Weighted average discount rate 5.79 % |
Schedule of Maturities of Lease Liabilities | The following is a schedule of maturities of lease liabilities as of December 31, 2020: Twelve months ending December 31, 2021 $ 237,306 2022 239,089 2023 254,103 2024 261,036 2025 262,998 Thereafter 378,977 Total future minimum lease payments 1,633,509 Less: imputed interest 271,620 Total $ 1,361,889 |
Bank Loans (Tables)
Bank Loans (Tables) | 6 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Short-term Bank Loans | Short-term loans consisted of the following: As of December 31, As of June 30, 2020 2020 (Unaudited) Bank of Communications of China (“BCC”): Effective interest rate at 5.655% (1) $ - $ 2,545,200 Industrial and Commercial Bank of China (“ICBC”): Effective interest rate at 5.655% (2) - 1,696,800 Cathay Bank Effective interest rate at 4.25% (3) 910,000 900,000 Total $ 910,000 $ 5,142,000 (1) In August 2019, the Company entered into two loan agreements with BCC Dongguan Branch to borrow a 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. (2) 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, 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. (3) On February 6, 2020, one of the Company’s U.S. subsidiaries, 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. |
Schedule of Long-term Loan | Long-term loan consisted of the following: As of December 31, As of June 30, 2020 2020 (Unaudited) Southwestern National Bank Paycheck Protection Program (PPP) Loan $ 73,300 $ 73,300 Dongguan Rural Commercial Bank Effective interest rate at 6.15% and 6.55% 7,578,092 - Total $ 7,651,392 $ 73,300 Less: current portion of long-term loans 623,669 - Long-term loans $ 7,027,723 $ 73,300 |
Schedule of Repayment of Bank Loans | As of December 31, 2020, the Company’s short-term and long-term loans totaled approximately $8.6 million. The repayment schedule for the Company’s bank loans are as follows: Twelve months ending December 31, Repayment 2021 $ 1,533,669 2022 1,024,354 2023 4,035,655 2024 385,010 2025 411,062 2026 438,499 2027 467,770 2028 265,373 Total $ 8,561,392 |
Taxes (Tables)
Taxes (Tables) | 6 Months Ended |
Dec. 31, 2020 | |
Schedule of Components of Income Tax Expense (Benefit) | The provision for income tax consists of the following: For the six months ended December 31, 2020 2019 (Unaudited) (Unaudited) Current income tax provision $ 544,419 $ 176,703 Deferred income tax benefit (13,740 ) (71,973 ) Total income tax expense $ 530,679 $ 104,730 |
Schedule of Deferred Tax Assets and Liabilities | The components of deferred tax assets as of December 31, 2020 and June 30, 2020 consist of the following: December 31, 2020 June 30, 2020 (Unaudited) Deferred tax assets: Net operating losses $ 1,572,028 $ 1,515,308 Assets impairment reserve 133,838 233,759 Valuation allowance (1,576,897 ) (1,633,837 ) Deferred tax assets, net $ 128,969 $ 115,230 |
Schedule of Taxes Payable | The Company’s taxes payable consists of the following: December 31, 2020 June 30, 2020 (Unaudited) Corporate income tax payable $ 3,610,097 $ 2,813,014 Other tax payable 2,910 1,397 Total taxes payable $ 3,613,007 $ 2,814,411 |
PRC Statutory [Member] | |
Schedule of Components of Income Tax Expense (Benefit) | Reconciliation of the difference between the income tax provision computed based on PRC statutory income tax rate and the Company’s actual income tax provision for the six months ended December 31, 2020 and 2019 are as follows: For the six months ended December 31, 2020 2019 (Unaudited) (Unaudited) Income tax expense computed based on PRC statutory rate $ 320,046 $ - Effect of rate differential for Hong Kong entities (8,917 ) (5,198 ) Effect of PRC preferential tax rate (140,015 ) - Research and development tax credit (28,679 ) (16,709 ) Changes in bad debt and inventory reserve (108,925 ) 32,241 Change in valuation allowance (56,940 ) - Net operating loss carryforward - 18,424 Non-deductible expenses: Stock-based compensation 10,662 48,508 Meals and entertainment 16,337 27,464 Surcharge on unpaid income tax 527,110 - Total income tax provisions $ 530,679 $ 104,730 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 6 Months Ended |
Dec. 31, 2020 | |
Related Party Transactions [Abstract] | |
Schedule of Relationship of Related Parties | The relationship of related parties is summarized as follow: Name of Related Party Relationship to the Company Silong Chen Chief Executive Officer; Chairman of the Board of Directors Junqiang Chen and Caiyuan He Relatives of Mr. Silong Chen Linsun Smart Technology Co., Ltd (“Linsun”) Equity investee -10% of the ownership Dogness Network Technology Co., Ltd (“Dogness Network”) Equity Investee - 13% of the ownership Guangdong Dogness Biotechnology Co., Ltd. Relate to one of the Company’s shareholders Mark Trade (HK) Limited Shareholder of Dogness Culture |
Schedule of Due to Related Parties | As of December 31, 2020 and June 30, 2020, due to related parties consist of the following: As of December 31, As of June 30, 2020 2020 (Unaudited) Mr. Silong Chen $ 2,027,662 $ 25,462 Mark Trade (HK) Limited 8,260 - Total $ 2,035,922 $ 25,462 |
Schedule of Revenue from Related Parties | Revenue from related parties consisted of the following: For the six months ended December 31, Name 2020 2019 (Unaudited) (Unaudited) Linsun $ - $ 73,024 Dogness Network 548,351 515,709 Total $ 548,351 $ 588,733 |
Schedule of Accounts Receivable from Related Parties | Accounts receivable from a related party consisted of the following: As of December 31, As of June 30, 2020 2020 (Unaudited) Accounts receivable - related party: -Dogness Network $ 497,974 $ 559,465 Total $ 497,974 $ 559,465 |
Schedule of Advances to Suppliers- Related Party | Advances to suppliers to a related party consisted of the following: As of December 31, As of June 30, 2020 2020 (Unaudited) Advances to suppliers- related party -Linsun $ 29,240 $ - Total $ 29,240 $ - |
Schedule of Accounts Payable to Related Parties | Accounts payables to related parties consisted of the following: As of December 31, As of June 30, 2020 2020 (Unaudited) Accounts payable - related parties: -Linsun $ - $ 301,555 -Dogness Network 3,963 3,660 Total $ 3,963 $ 305,215 |
Earnings (Loss) Per Share (Tabl
Earnings (Loss) Per Share (Tables) | 6 Months Ended |
Dec. 31, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | For the six months ended December 31, 2019, 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. The following table presents a reconciliation of basic and diluted net income (loss) per share: For the six months ended December 31, 2020 2019 (Unaudited) (Unaudited) Net income (loss) attributable to the Company $ 839,248 $ (383,094 ) Weighted average number of common shares outstanding - Basic 25,913,631 25,913,631 Dilutive securities -unexercised warrants and options 17,515 - Weighted average number of common shares outstanding – diluted 25,931,146 25,913,631 Earnings (loss) per share - Basic $ 0.03 $ (0.01 ) Earnings (loss) per share – Diluted $ 0.03 $ (0.01 ) |
Options (Tables)
Options (Tables) | 6 Months Ended |
Dec. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Stock Option Activity | The following table summarized the Company’s stock option activity: Number of Weighted Average Weighted Average Remaining Life in Years Outstanding, June 30, 2019 480,000 $ 1.50 1.22 Exercisable, June 30, 2019 270,000 $ 1.50 1.14 Granted 160,000 - - Cancelled (140,000 ) - - Exercised - - - Outstanding June 30, 2020 500,000 $ 1.50 0.35 Exercisable, June 30, 2020 413,337 $ 1.50 0.19 Granted - - - Cancelled - Exercised - - - Outstanding December 31, 2020 500,000 $ 1.50 0.19 Exercisable, December 31, 2020 453,339 $ 1.50 0.15 |
Segment (Tables)
Segment (Tables) | 6 Months Ended |
Dec. 31, 2020 | |
Segment Reporting [Abstract] | |
Schedule of Revenues by Geographic Market | The summary of total revenues by geographic market for the six months ended December 31,2020 and 2019 was as follows: For the six months ended December 31, 2020 2019 (Unaudited) (Unaudited) Mainland China $ 6,430,883 $ 6,138,185 United States 3,235,212 2,283,744 Europe 938,083 1,195,122 Australia 235,819 523,383 Canada 784,403 161,353 Central and South America 50,915 62,641 Japan and other Asian countries and regions 570,192 1,112,127 Total $ 12,245,507 $ 11,476,555 |
Schedule of Revenue by Products and Services Categories | The summary of total revenues by product and service categories for the six months ended December 31,2020 and 2019 was as follows: For the six months ended December 31, 2020 2019 (Unaudited) (Unaudited) Product sales: Pet leashes $ 1,845,601 $ 2,533,043 Pet collars 2,846,833 2,764,380 Pet harnesses 791,441 1,025,927 Retractable dog leashes 106,585 427,183 Intelligent pet products 3,383,666 2,110,239 Gift suspender 1,489,852 1,661,916 Other pet accessories 529,954 511,782 Climbing hooks 769,199 442,085 Total revenue from product sales 11,763,131 11,476,555 Service: Dyeing services 482,376 - Total revenue from service 482,376 - Total revenue $ 12,245,507 $ 11,476,555 |
Organization and Description _2
Organization and Description of Business (Details Narrative) | Nov. 28, 2020USD ($) | Jan. 15, 2020USD ($) | Jan. 15, 2020CNY (¥) | Mar. 16, 2019USD ($) | Mar. 16, 2019CNY (¥) | Mar. 16, 2018USD ($) | Mar. 16, 2018CNY (¥) | Dec. 18, 2017USD ($)$ / sharesshares | Dec. 31, 2020USD ($)shares | Dec. 31, 2020CNY (¥) | Dec. 31, 2019USD ($) | Nov. 27, 2020USD ($) | Jun. 30, 2020USD ($)shares | Feb. 05, 2020USD ($) | Jan. 15, 2020CNY (¥) | Jul. 06, 2019 | Dec. 14, 2018USD ($) | Dec. 14, 2018CNY (¥) | Jul. 06, 2018USD ($) | Jul. 06, 2018CNY (¥) | Apr. 26, 2017shares | Jan. 09, 2017 | Nov. 24, 2016 |
Common stock, shares outstanding | shares | 25,913,631 | 25,913,631 | 15,000,000 | ||||||||||||||||||||
Ownership interest percentage | 100.00% | 100.00% | 100.00% | 100.00% | |||||||||||||||||||
Total assets | $ 74,887,543 | $ 63,551,261 | |||||||||||||||||||||
Total liabilities | 18,317,094 | $ 12,043,333 | |||||||||||||||||||||
Revenue | |||||||||||||||||||||||
Gain from disposition of a subsidiary | 5,104 | ||||||||||||||||||||||
Zhangzhou Meijia Metal Product Co., Ltd [Member] | |||||||||||||||||||||||
Business combination of acquisition ratio | 100.00% | 100.00% | |||||||||||||||||||||
Total cash consideration to acquire the equity interests | $ 10,700,000 | $ 10,900,000 | $ 18,100,000 | ||||||||||||||||||||
Zhangzhou Meijia Metal Product Co., Ltd [Member] | RMB [Member] | |||||||||||||||||||||||
Total cash consideration to acquire the equity interests | ¥ | ¥ 71,000,000 | ¥ 118,500,000 | |||||||||||||||||||||
Dongguan Dogness [Member] | |||||||||||||||||||||||
Ownership interest percentage | 100.00% | ||||||||||||||||||||||
HK Dogness [Member] | |||||||||||||||||||||||
Ownership interest percentage | 100.00% | ||||||||||||||||||||||
Long Kai (Shenzheng) Industrial Co Ltd [Member] | RMB [Member] | |||||||||||||||||||||||
Total cash consideration to acquire the equity interests | ¥ | ¥ 7,100,000 | ||||||||||||||||||||||
Dogness Intelligence Technology Co Ltd [Member] | |||||||||||||||||||||||
Registered capital | $ 12,200,000 | ||||||||||||||||||||||
Dogness Intelligence Technology Co Ltd [Member] | TwoUnrelated Entities [Member] | |||||||||||||||||||||||
Ownership interest percentage | 42.00% | ||||||||||||||||||||||
Dogness Intelligence Technology Co Ltd [Member] | Dongguan Jiasheng [Member] | |||||||||||||||||||||||
Ownership interest percentage | 58.00% | ||||||||||||||||||||||
Dogness Intelligence Technology Co Ltd [Member] | RMB [Member] | |||||||||||||||||||||||
Registered capital | ¥ | ¥ 80,000,000 | ||||||||||||||||||||||
Dogness Japan Co Ltd [Member] | |||||||||||||||||||||||
Ownership interest percentage | 51.00% | 51.00% | |||||||||||||||||||||
Total cash consideration to acquire the equity interests | $ 31,092 | ||||||||||||||||||||||
Investments, amount | $ 150,000 | ||||||||||||||||||||||
Description on disposition | Immediate before the disposition, Dogness Japan's total assets were $98,752, accounting for only 0.1% of the Company's consolidated total assets; and total liabilities were approximately $34,644, accounting for only 0.2% of the Company's consolidated total liabilities. | ||||||||||||||||||||||
Total assets | $ 98,752 | ||||||||||||||||||||||
Total liabilities | $ 34,644 | ||||||||||||||||||||||
Dogness Japan Co Ltd [Member] | Unrelated Individual [Member] | |||||||||||||||||||||||
Ownership interest percentage | 49.00% | ||||||||||||||||||||||
Dogness Japan Co Ltd [Member] | JPY [Member] | |||||||||||||||||||||||
Total cash consideration to acquire the equity interests | $ 3,400,000 | ||||||||||||||||||||||
Class B Common Shares [Member] | |||||||||||||||||||||||
Common stock, shares outstanding | shares | 9,069,000 | 9,069,000 | |||||||||||||||||||||
Common Class A [Member] | |||||||||||||||||||||||
Common stock, shares outstanding | shares | 16,844,631 | 16,844,631 | |||||||||||||||||||||
Common Class A [Member] | IPO [Member] | |||||||||||||||||||||||
Number of shares issued under public offering | shares | 10,913,631 | ||||||||||||||||||||||
Proceeds from issuance or sale of equity | $ 54,600,000 | ||||||||||||||||||||||
Shares Issued, price per share | $ / shares | $ 5 | ||||||||||||||||||||||
Proceeds from issuance of common stock | $ 50,200,000 | ||||||||||||||||||||||
Ms. Yunhao Chen, the Chief Financial Officer of the Company [Member] | |||||||||||||||||||||||
Entity Incorporation, state country name | British Virgin Islands | British Virgin Islands | |||||||||||||||||||||
Entity Incorporation, date of incorporation | Jul. 11, 2016 | Jul. 11, 2016 | |||||||||||||||||||||
Dogness Pet Culture (Dongguan) Co., Ltd. [Member] | |||||||||||||||||||||||
Entity Incorporation, date of incorporation | Dec. 14, 2018 | Dec. 14, 2018 | |||||||||||||||||||||
Registered capital | $ 1,400,000 | ||||||||||||||||||||||
Dogness Pet Culture (Dongguan) Co., Ltd. [Member] | Mr, Silong Chen [Member] | |||||||||||||||||||||||
Ownership interest percentage | 51.20% | 51.20% | |||||||||||||||||||||
Total cash consideration to acquire the equity interests | $ 780,000 | ||||||||||||||||||||||
Registered capital | $ 750,000 | ||||||||||||||||||||||
Dogness Pet Culture (Dongguan) Co., Ltd. [Member] | Two Third Parties [Member] | |||||||||||||||||||||||
Ownership interest percentage | 48.80% | 48.80% | |||||||||||||||||||||
Dogness Pet Culture (Dongguan) Co., Ltd. [Member] | RMB [Member] | |||||||||||||||||||||||
Registered capital | ¥ | ¥ 10,000,000 | ||||||||||||||||||||||
Dogness Pet Culture (Dongguan) Co., Ltd. [Member] | RMB [Member] | Mr, Silong Chen [Member] | |||||||||||||||||||||||
Total cash consideration to acquire the equity interests | ¥ | ¥ 5,120,000 | ||||||||||||||||||||||
Registered capital | ¥ | ¥ 4,880,000 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details Narrative) | 6 Months Ended | 12 Months Ended | ||||||||||||
Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Dec. 30, 2019 | Jun. 30, 2020USD ($) | Jun. 30, 2021USD ($) | Jun. 30, 2021CNY (¥) | Jun. 30, 2020CNY (¥) | Jul. 02, 2019USD ($) | Nov. 30, 2018USD ($) | Nov. 30, 2018CNY (¥) | Jul. 31, 2018USD ($) | Jul. 31, 2018CNY (¥) | Jul. 06, 2018 | Jul. 02, 2018 | |
Short-term investments | $ 933,910 | $ 3,551,968 | ||||||||||||
Interest income | 34,789 | $ 147,971 | ||||||||||||
Allowance for doubtful accounts receivable | 10,047 | 23,982 | ||||||||||||
Inventory reserve | 475,935 | 1,158,551 | ||||||||||||
Change in inventory reserve | (750,145) | 77,338 | ||||||||||||
Long-term investments | 1,377,900 | 1,046,360 | ||||||||||||
Loss on disposal of equipment and machinery | (1,627) | (34,420) | 120,000 | |||||||||||
Long-lived assets impairment | 281,680 | |||||||||||||
Right-of-use lease assets, net | 5,308,717 | 5,123,898 | $ 51,000,000 | |||||||||||
Lease liabilities | 1,361,889 | 1,373,015 | $ 1,400,000 | |||||||||||
Service fees | $ 482,376 | |||||||||||||
Tax benefit percentage | 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. | |||||||||||||
Income tax provision | $ 530,679 | $ 104,730 | ||||||||||||
Value added taxes rate description | 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. | |||||||||||||
Cash and cash equivalents | $ 1,007,305 | $ 879,040 | ||||||||||||
Accounts Receivable [Member] | ||||||||||||||
Concentration risk, percentage | 98.00% | |||||||||||||
Four Customers [Member] | Accounts Receivable [Member] | Customer Concentration Risk [Member] | ||||||||||||||
Concentration risk, percentage | 80.00% | 73.00% | ||||||||||||
Customers Two [Member] | Accounts Receivable [Member] | Customer Concentration Risk [Member] | ||||||||||||||
Concentration risk, percentage | 28.00% | 20.00% | ||||||||||||
Customers Two [Member] | Sales Revenue [Member] | Customer Concentration Risk [Member] | ||||||||||||||
Concentration risk, percentage | 12.40% | 6.20% | ||||||||||||
Customers Three [Member] | Accounts Receivable [Member] | Customer Concentration Risk [Member] | ||||||||||||||
Concentration risk, percentage | 27.00% | 17.00% | ||||||||||||
Customers Three [Member] | Sales Revenue [Member] | Customer Concentration Risk [Member] | ||||||||||||||
Concentration risk, percentage | 6.30% | 5.90% | ||||||||||||
Customers Four [Member] | Accounts Receivable [Member] | Customer Concentration Risk [Member] | ||||||||||||||
Concentration risk, percentage | 12.00% | 13.00% | ||||||||||||
Customers Four [Member] | Sales Revenue [Member] | Customer Concentration Risk [Member] | ||||||||||||||
Concentration risk, percentage | 5.30% | |||||||||||||
Customers [Member] | Sales Revenue [Member] | Customer Concentration Risk [Member] | ||||||||||||||
Concentration risk, percentage | 47.50% | 46.50% | ||||||||||||
Customers One [Member] | Sales Revenue [Member] | Customer Concentration Risk [Member] | ||||||||||||||
Concentration risk, percentage | 31.40% | 25.20% | ||||||||||||
PRC Statutory [Member] | ||||||||||||||
Income tax payable | $ 3,600,000 | |||||||||||||
Income tax provision | $ 527,110 | |||||||||||||
Software [Member] | ||||||||||||||
Intangible asset, useful life | 10 years | |||||||||||||
Land [Member] | ||||||||||||||
Intangible asset, useful life | 50 years | |||||||||||||
Minimum [Member] | ||||||||||||||
Investments percentage | 1.75% | |||||||||||||
Maximum [Member] | ||||||||||||||
Investments percentage | 3.95% | |||||||||||||
Ownership percentage | 20.00% | |||||||||||||
Dogness Intelligence Technology Co Ltd [Member] | ||||||||||||||
Noncontrolling interest rate | 42.00% | |||||||||||||
Ownership percentage | 58.00% | |||||||||||||
Dogness Pet Culture (Dongguan) Co., Ltd. [Member] | ||||||||||||||
Noncontrolling interest rate | 48.80% | |||||||||||||
Nanjing Rootaya Intelligence Technology Co Ltd [Member] | ||||||||||||||
Impairment loss on investment | $ 177,750 | |||||||||||||
Nanjing Rootaya Intelligence Technology Co Ltd [Member] | Equity Investment Agreement [Member] | ||||||||||||||
Ownership percentage | 10.00% | 10.00% | ||||||||||||
Long-term investments | $ 177,750 | |||||||||||||
Nanjing Rootaya Intelligence Technology Co Ltd [Member] | Equity Investment Agreement [Member] | RMB [Member] | ||||||||||||||
Long-term investments | ¥ | ¥ 12,500,000 | |||||||||||||
Three Unrelated Shareholders [Member] | Equity Investment Agreement [Member] | ||||||||||||||
Ownership percentage | 90.00% | 90.00% | ||||||||||||
Dogness Network Technology Co Ltd [Member] | Equity Investment Agreement [Member] | ||||||||||||||
Ownership percentage | 10.00% | 10.00% | ||||||||||||
Long-term investments | $ 1,224,800 | |||||||||||||
Dogness Network Technology Co Ltd [Member] | Equity Investment Agreement [Member] | RMB [Member] | ||||||||||||||
Long-term investments | ¥ | ¥ 8,000,000 | |||||||||||||
Dogness Network Technology Co Ltd [Member] | ||||||||||||||
Ownership percentage | 10.00% | |||||||||||||
Impairment loss on investment | ||||||||||||||
Dogness Network Technology Co Ltd [Member] | Equity Investment Agreement [Member] | ||||||||||||||
Capital contribution | 673,640 | |||||||||||||
Dogness Network Technology Co Ltd [Member] | Equity Investment Agreement [Member] | Forecast [Member] | ||||||||||||||
Capital contribution | $ 306,200 | |||||||||||||
Dogness Network Technology Co Ltd [Member] | Equity Investment Agreement [Member] | RMB [Member] | ||||||||||||||
Capital contribution | ¥ | ¥ 4,400,000 | |||||||||||||
Dogness Network Technology Co Ltd [Member] | Equity Investment Agreement [Member] | RMB [Member] | Forecast [Member] | ||||||||||||||
Capital contribution | ¥ | ¥ 2,000,000 | |||||||||||||
Linsun Smart Technology Co Ltd [Member] | Equity Investment Agreement [Member] | RMB [Member] | ||||||||||||||
Long-term investments | ¥ | ¥ 3,000,000 | |||||||||||||
Linsun Smart Technology Co Ltd [Member] | ||||||||||||||
Impairment loss on investment | ||||||||||||||
Linsun Smart Technology Co Ltd [Member] | Equity Investment Agreement [Member] | ||||||||||||||
Ownership percentage | 13.00% | 13.00% | ||||||||||||
Long-term investments | $ 459,300 | |||||||||||||
Guangdong Dogness Network [Member] | Customer One [Member] | Accounts Receivable [Member] | ||||||||||||||
Concentration risk, percentage | 13.00% | 23.00% | ||||||||||||
Two Supplier [Member] | Raw Material [Member] | Supplier Concentration Risk [Member] | ||||||||||||||
Concentration risk, percentage | 5.30% | 33.10% | ||||||||||||
Supplier One [Member] | Raw Material [Member] | Supplier Concentration Risk [Member] | ||||||||||||||
Concentration risk, percentage | 15.60% | 20.90% | ||||||||||||
Supplier Two [Member] | Raw Material [Member] | Supplier Concentration Risk [Member] | ||||||||||||||
Concentration risk, percentage | 10.50% | 12.20% |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of Entities (Details) | 6 Months Ended |
Dec. 31, 2020 | |
Dogness (International) Corporation [Member] | |
Date of Incorporation | Jul. 11, 2016 |
Place of Incorporation | BVI |
% of Ownership | 100.00% |
Principal Activities | Holding Company |
Dogness (Hongkong) Pet's Products Co., Limited [Member] | |
Date of Incorporation | Mar. 10, 2009 |
Place of Incorporation | Hong Kong |
% of Ownership | 100.00% |
Principal Activities | Trading |
Jiasheng Enterprise (Hong Kong) Co., Limited [Member] | |
Date of Incorporation | Jul. 12, 2007 |
Place of Incorporation | Hong Kong |
% of Ownership | 100.00% |
Principal Activities | Trading |
Dogness Intelligence Technology (Dongguan) Co., Ltd [Member] | |
Date of Incorporation | Oct. 26, 2016 |
Place of Incorporation | Dongguan, China |
% of Ownership | 100.00% |
Principal Activities | Holding Company |
Dongguan Jiasheng Enterprise Co., Ltd. [Member] | |
Date of Incorporation | May 15, 2009 |
Place of Incorporation | Dongguan, China |
% of Ownership | 100.00% |
Principal Activities | Development and manufacturing of pet leash products |
Zhangzhou Meijia Metal Product Co., Ltd [Member] | |
Date of Incorporation | Jul. 9, 2009 |
Place of Incorporation | Zhangzhou, China |
% of Ownership | 100.00% |
Principal Activities | Manufacturing of pet leash products |
Dogness Overseas Ltd [Member] | |
Date of Incorporation | Feb. 8, 2018 |
Place of Incorporation | BVI |
% of Ownership | 100.00% |
Principal Activities | Holding Company |
Dogness Group LLC [Member] | |
Date of Incorporation | Jan. 23, 2018 |
Place of Incorporation | Delaware, United States |
% of Ownership | 100.00% |
Principal Activities | Pet products trading |
Dogness Intelligence Technology Co Ltd [Member] | |
Date of Incorporation | Jul. 6, 2018 |
Place of Incorporation | Guangzhou, China |
% of Ownership | 58.00% |
Principal Activities | Research and manufacturing of intelligent pet products |
Dogness Japan Co Ltd [Member] | |
Date of Incorporation | Feb. 5, 2019 |
Place of Incorporation | Osaka, Japan |
% of Ownership | 51.00% |
Principal Activities | Developing and expanding pet food market, disposed on November 28, 2020 |
Dogness Pet Culture (Dongguan) Co., Ltd. [Member] | |
Date of Incorporation | Dec. 14, 2018 |
Place of Incorporation | Dongguan, China |
% of Ownership | 51.20% |
Principal Activities | Developing and expanding pet food market |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Schedule of Property and Equiipment Useful Life (Details) | 6 Months Ended |
Dec. 31, 2020 | |
Buildings [Member] | Minimum [Member] | |
Property, plant and equipment useful life | 10 years |
Buildings [Member] | Maximum [Member] | |
Property, plant and equipment useful life | 50 years |
Leasehold Improvements [Member] | |
Estimated useful lives | Lesser of useful life and lease term |
Machinery Equipment [Member] | Minimum [Member] | |
Property, plant and equipment useful life | 5 years |
Machinery Equipment [Member] | Maximum [Member] | |
Property, plant and equipment useful life | 10 years |
Transportation Vehicles [Member] | |
Property, plant and equipment useful life | 5 years |
Office Equipment and Furniture [Member] | |
Property, plant and equipment useful life | 5 years |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Schedule of Currency Exchange Rates (Details) | Dec. 31, 2020 | Jun. 30, 2020 | Dec. 31, 2019 |
Year-End Spot Rate : US$1 Exchange Rate=RMB [Member] | |||
Foreign currency exchange rate, translation | 6.5326 | 7.0721 | 6.9680 |
Year-End Spot Rate : US$1 Exchange Rate= JPY [Member] | |||
Foreign currency exchange rate, translation | 103.2 | 107.5 | 108.6 |
Average Rate US$1=RMB [Member] | |||
Foreign currency exchange rate, translation | 6.7715 | 7.0323 | 7.0289 |
Average Rate US$1=JPY [Member] | |||
Foreign currency exchange rate, translation | 105.3 | 107.5 | 108 |
Liquidity (Details Narrative)
Liquidity (Details Narrative) - USD ($) | Jan. 20, 2021 | Apr. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Jun. 30, 2020 |
Cash used in operating activities | $ (108,516) | $ 1,765,183 | |||
Future minimum capital expenditure commitment on construction-in-progress projects | 5,800,000 | ||||
Additional future minimum capital expenditure commitment on construction-in-progress projects | 12,000,000 | ||||
Unpaid tax liabilities | 3,613,007 | $ 2,814,411 | |||
Increase in revenue | 800,000 | ||||
Net Income | 749,506 | (424,496) | |||
Increase in working capital | 1,400,000 | ||||
Working capital | 2,300,000 | 900,000 | |||
Cash | 1,400,000 | ||||
Short-term investments | 933,910 | 3,551,968 | |||
Outstanding accounts receivable | 3,800,000 | ||||
Outstanding bank loans | 8,600,000 | ||||
Shor-term bank loans payable | 910,000 | 5,142,000 | |||
Current portion of long-term bank loans payable | 623,669 | ||||
Long-term bank loans payable | 7,000,000 | ||||
Repayment of loan | 4,494,271 | $ 2,845,400 | |||
Proceeds from related party debt | 2,000,000 | ||||
PRC Bank [Member] | |||||
Repayment of loan | $ 1,500,000 | ||||
Subsequent Event [Member] | |||||
Collections from accounts receivables | $ 3,400,000 | ||||
Percentage of collections from accounts receivable | 90.40% | ||||
Proceeds from issuance of warrants | $ 5,400,000 | ||||
Subsequent Event [Member] | Investor [Member] | |||||
Warrants to purchase common shares | 1,727,565 | ||||
Warrant exercise price per share | $ 2.70 | ||||
Subsequent Event [Member] | Placement Agent [Member] | |||||
Warrants to purchase common shares | 276,410 | ||||
Warrant exercise price per share | $ 2.70 | ||||
Subsequent Event [Member] | Common Class A [Member] | |||||
Stock issued during period, shares | 3,455,130 | ||||
Shares Issued, price per share | $ 2.15 | ||||
Proceeds from issuance or sale of equity | $ 6,600,000 | ||||
Subsequent Event [Member] | Third Party Customers [Member] | |||||
Collections from accounts receivables | $ 3,200,000 | ||||
Subsequent Event [Member] | Related Party Customer [Member] | |||||
Collections from accounts receivables | $ 200,000 |
Accounts Receivable, Net (Detai
Accounts Receivable, Net (Details Narrative) - USD ($) | 6 Months Ended | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | Jun. 30, 2020 | |
Recovery of bad debt | $ 15,358 | ||
Provision for bad debt | (15,358) | $ 205,829 | |
Allowance for doubtful accounts | 10,047 | 23,982 | |
Allowance for doubtful accounts written off | 0 | $ 205,829 | |
Accounts receivable related parties | 3,303,159 | $ 1,916,840 | |
Linshui and Dogness Newwork [Member] | |||
Accounts receivable related parties | $ 497,974 | ||
Accounts Receivable [Member] | |||
Concentration risk, percentage | 98.00% | ||
Collected at the Date of this Report [Member] | |||
Accounts receivable related parties | $ 181,409 | ||
Third Party Customers [Member] | |||
Accounts receivable related parties | 3,200,000 | ||
Third Party Customers [Member] | RMB [Member] | |||
Accounts receivable related parties | $ 21,200,000 |
Accounts Receivable, Net - Sche
Accounts Receivable, Net - Schedule of Accounts Receivable (Details) - USD ($) | Dec. 31, 2020 | Jun. 30, 2020 |
Receivables [Abstract] | ||
Accounts receivable from third-party customers | $ 3,303,159 | $ 1,916,840 |
Less: allowance for doubtful accounts | (10,047) | (23,982) |
Total accounts receivable from third-party customers, net | 3,303,159 | 1,916,840 |
Add: accounts receivable - related parties | 497,974 | 559,465 |
Total accounts receivable, net | $ 3,801,133 | $ 2,476,305 |
Accounts Receivable, Net - Sc_2
Accounts Receivable, Net - Schedule of Allowance for Doubtful Accounts (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Dec. 31, 2020 | Jun. 30, 2020 | |
Receivables [Abstract] | ||
Beginning balance | $ 23,982 | $ 128,106 |
Additions | 755,472 | |
Recovery | (15,358) | |
Write-off | (856,383) | |
Foreign currency translation adjustments | 1,423 | (3,213) |
Ending balance | $ 10,047 | $ 23,982 |
Inventories, Net (Details Narra
Inventories, Net (Details Narrative) - USD ($) | 6 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Jun. 30, 2020 | |
Inventory Disclosure [Abstract] | |||
Inventory reserve | $ 77,338 | ||
Change in inventory reserve | (750,145) | $ 77,338 | |
Inventory reserve | $ 475,935 | $ 1,158,551 |
Inventories, Net - Schedule of
Inventories, Net - Schedule of Inventory (Details) - USD ($) | Dec. 31, 2020 | Jun. 30, 2020 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 391,935 | $ 140,745 |
Work in process | 999,049 | 677,301 |
Finished goods | 3,852,988 | 3,201,205 |
Inventory, gross | 5,243,972 | 4,019,251 |
Less: inventory allowance | (475,935) | (1,158,551) |
Inventory, net | $ 4,768,037 | $ 2,860,700 |
Property, Plant and Equipment_3
Property, Plant and Equipment, Net (Details Narrative) | 4 Months Ended | 6 Months Ended | 12 Months Ended | ||
Apr. 30, 2021USD ($) | Apr. 30, 2021CNY (¥) | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Jun. 30, 2020USD ($) | |
Depreciation | $ 1,239,397 | $ 1,220,245 | |||
Loss from disposition of fixed assets | $ 1,036,304 | ||||
Impairment of fixed assets | 281,680 | ||||
Payment for capital expenditure | 15,400,000 | ||||
Subsequent Event [Member] | |||||
Property plant and equipment additional amount | $ 2,400,000 | ||||
Subsequent Event [Member] | RMB [Member] | |||||
Property plant and equipment additional amount | ¥ | ¥ 16,100,000 | ||||
Cathay Bank [Membeer] | |||||
Collateralized Financings | 900,000 | ||||
Dongguan Rural Commercial Bank [Membeer] | |||||
Long-term bank loans borrowed | 7,700,000 | ||||
Collateralized Financings | $ 4,300,000 | ||||
Machinery Equipment [Member] | |||||
Depreciation | 1,200,000 | ||||
Payment for capital expenditure | $ 17,800,000 |
Property, Plant and Equipment_4
Property, Plant and Equipment, Net - Schedule of Property, Plant and Equipment, Net (Details) - USD ($) | Dec. 31, 2020 | Jun. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |||
Buildings | $ 27,802,475 | $ 25,532,908 | |
Machinery and equipment | 7,423,963 | 6,698,443 | |
Office equipment and furniture | 1,345,745 | 765,597 | |
Automobiles | 870,806 | 810,156 | |
Leasehold improvements | 5,377,917 | 5,028,382 | |
Construction-in-progress ("CIP") | [1] | 18,391,993 | 10,647,107 |
Total | 61,212,899 | 49,482,593 | |
Less: accumulated depreciation | (7,413,701) | (5,668,986) | |
Impairment of fixed assets | (303,272) | (280,095) | |
Property, plant and equipment, net | $ 53,495,926 | $ 43,533,512 | |
[1] | 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 ($10.9 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 ($16.8 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 December 31, 2020, amounted to RMB 118.5 million ($18.1 million). As of December 31, 2020, the Company had future capital expenditure commitment of approximately RMB 80,000 ($12,248). Meijia plant started test operations in August 2019, and has started normal production since December 2019 upon passing the final inspection conducted by the local government. As of December 31, 2020, Meijia plant has substantially reached its designed production capacity and is expected to reach its full production capacity by June 2021. |
Property, Plant and Equipment_5
Property, Plant and Equipment, Net - Schedule of Property, Plant and Equipment, Net (Details) (Parenthetical) | Mar. 16, 2019USD ($) | Mar. 16, 2018USD ($) | Mar. 16, 2018CNY (¥) | Dec. 31, 2020USD ($) | Dec. 31, 2020CNY (¥) | Jun. 30, 2020USD ($) | Jun. 30, 2020CNY (¥) | Jan. 09, 2017 |
Equity interest percentage | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | |||
Payment for capital expenditure | $ 15,400,000 | |||||||
Zhangzhou Meijia Metal Product Co., Ltd [Member] | ||||||||
Cash consideration | $ 10,700,000 | $ 10,900,000 | 18,100,000 | |||||
Purchase of equipment and machinery | 16,800,000 | 12,248 | ||||||
RMB [Member] | Zhangzhou Meijia Metal Product Co., Ltd [Member] | ||||||||
Cash consideration | ¥ | ¥ 71,000,000 | ¥ 118,500,000 | ||||||
Purchase of equipment and machinery | ¥ | 110,000,000 | 80,000 | ||||||
Dongguan Jiasheng Enterprise Co., Ltd. [Member] | Warehouse Construction [Member] | ||||||||
Cash consideration | 18,000,000 | $ 10,400,000 | ||||||
Estimated budgeted costs | 11,500,000 | |||||||
Adjusted and revised budget cost | 35,700,000 | |||||||
Payment for capital expenditure | 17,700,000 | $ 22,300,000 | ||||||
Dongguan Jiasheng Enterprise Co., Ltd. [Member] | Warehouse Construction [Member] | RMB [Member] | ||||||||
Cash consideration | ¥ | 117,700,000 | ¥ 73,600,000 | ||||||
Estimated budgeted costs | ¥ | 75,000,000 | |||||||
Adjusted and revised budget cost | ¥ | 233,100,000 | |||||||
Payment for capital expenditure | ¥ | 115,500,000 | ¥ 157,500,000 | ||||||
Dogness Culture [Member] | ||||||||
Cash consideration | $ 200,000 | |||||||
Estimated budgeted costs | $ 300,000 | |||||||
Dogness Culture [Member] | RMB [Member] | ||||||||
Cash consideration | ¥ | ¥ 1,100,000 | |||||||
Estimated budgeted costs | ¥ | ¥ 21,500,000 |
Property, Plant and Equipment_6
Property, Plant and Equipment, Net - Schedule of Future Minimum Capital Expenditures (Details) - USD ($) | Apr. 30, 2021 | Dec. 31, 2020 |
2021 | $ 5,782,987 | |
2022 | 4,008,850 | |
2023 | 3,476,038 | |
2024 | 3,002,384 | |
2025 | 1,573,101 | |
Total | 17,843,360 | |
Subsequent Event [Member] | ||
2021 | $ 3,314,814 | |
2022 | 4,008,850 | |
2023 | 3,476,038 | |
2024 | 3,002,384 | |
2025 | 1,573,101 | |
Total | 15,375,187 | |
Zhangzhou Meijia Metal Product Co., Ltd ('Meijia') [Member] | ||
2021 | 12,248 | |
2022 | ||
2023 | ||
2024 | ||
2025 | ||
Total | 12,248 | |
Zhangzhou Meijia Metal Product Co., Ltd ('Meijia') [Member] | Subsequent Event [Member] | ||
2021 | ||
2022 | ||
2023 | ||
2024 | ||
2025 | ||
Total | ||
Dongguan Jiasheng Enterprise Co., Ltd. [Member] | ||
2021 | 5,615,852 | |
2022 | 4,008,850 | |
2023 | 3,476,038 | |
2024 | 3,002,384 | |
2025 | 1,573,101 | |
Total | 17,676,225 | |
Dongguan Jiasheng Enterprise Co., Ltd. [Member] | Subsequent Event [Member] | ||
2021 | 3,159,927 | |
2022 | 4,008,850 | |
2023 | 3,476,038 | |
2024 | 3,002,384 | |
2025 | 1,573,101 | |
Total | 15,220,300 | |
Dogness Culture [Member] | ||
2021 | 154,887 | |
2022 | ||
2023 | ||
2024 | ||
2025 | ||
Total | $ 154,887 | |
Dogness Culture [Member] | Subsequent Event [Member] | ||
2021 | 154,887 | |
2022 | ||
2023 | ||
2024 | ||
2025 | ||
Total | $ 154,887 |
Intangible Assets, Net (Details
Intangible Assets, Net (Details Narrative) - USD ($) | 6 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Amortization of intangible assets | $ 39,319 | $ 20,803 |
Intangible Assets [Member] | ||
Loan from bank | 7,700,000 | |
Collateral to secure loan | $ 1,400,000 |
Intangible Assets, Net - Schedu
Intangible Assets, Net - Schedule of Intangible Assets, Net (Details) - USD ($) | Dec. 31, 2020 | Jun. 30, 2020 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Software | $ 230,059 | $ 212,478 |
Land use right | 2,324,996 | 2,147,318 |
Less: accumulated amortization | (316,849) | (254,993) |
Intangible assets, net | $ 2,238,206 | $ 2,104,803 |
Intangible Assets, Net - Sche_2
Intangible Assets, Net - Schedule of Estimated Future Amortization Expense for Intangible Assets (Details) - USD ($) | Dec. 31, 2020 | Jun. 30, 2020 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2021 | $ 81,514 | |
2022 | 81,514 | |
2023 | 76,491 | |
2024 | 65,583 | |
Thereafter | 1,933,104 | |
Intangible assets, net | $ 2,238,206 | $ 2,104,803 |
Leases (Details Narrative)
Leases (Details Narrative) - USD ($) | 6 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Leases [Abstract] | ||
Rent expense | $ 233,857 | $ 366,236 |
Leases - Schedule of Supplement
Leases - Schedule of Supplemental Balance Sheet Information (Details) - USD ($) | Dec. 31, 2020 | Jun. 30, 2020 | Jul. 02, 2019 |
Leases [Abstract] | |||
Right-of-use assets, net | $ 5,308,717 | $ 5,123,898 | $ 51,000,000 |
Operating lease liabilities - current | 164,694 | 172,716 | |
Operating lease liabilities - non-current | 1,197,195 | 1,200,299 | |
Total operating lease liabilities | $ 1,361,889 | $ 1,373,015 | $ 1,400,000 |
Leases - Schedule of Weighted A
Leases - Schedule of Weighted Average Remaining Lease Terms and Discount Rates (Details) | Dec. 31, 2020 |
Leases [Abstract] | |
Weighted average remaining lease term (years) | 15 years |
Weighted average discount rate | 5.79% |
Leases - Schedule of Maturities
Leases - Schedule of Maturities of Lease Liabilities (Details) - USD ($) | Dec. 31, 2020 | Jun. 30, 2020 | Jul. 02, 2019 |
Leases [Abstract] | |||
2021 | $ 237,306 | ||
2022 | 239,089 | ||
2023 | 254,103 | ||
2024 | 261,036 | ||
2025 | 262,998 | ||
Thereafter | 378,977 | ||
Total future minimum lease payments | 1,633,509 | ||
Less: imputed interest | 271,620 | ||
Total | $ 1,361,889 | $ 1,373,015 | $ 1,400,000 |
Bank Loans (Details Narrative)
Bank Loans (Details Narrative) | Jul. 17, 2020USD ($) | Jul. 17, 2020CNY (¥) | May 11, 2020USD ($) | Dec. 31, 2020USD ($) | Dec. 31, 2020CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2020CNY (¥) | Jul. 17, 2020CNY (¥) | Jun. 30, 2020USD ($) | Jul. 02, 2019USD ($) |
Right use of assets | $ 5,308,717 | $ 5,123,898 | $ 51,000,000 | |||||||
Repayments of debt | 100,000 | |||||||||
Loans payable | 7,600,000 | |||||||||
Interest expense | 158,269 | $ 104,040 | ||||||||
Capitalized interest | 51,425 | |||||||||
Long term debt | $ 8,561,392 | |||||||||
RMB [Member] | ||||||||||
Repayments of debt | ¥ | ¥ 500,000 | |||||||||
Loans payable | ¥ | ¥ 49,500,000 | |||||||||
Dongguan Rural Commercial Bank [Membeer] | ||||||||||
Proceeds from loan | $ 7,100,000 | |||||||||
Debt description | 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 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. | ||||||||
Dongguan Rural Commercial Bank [Membeer] | RMB [Member] | ||||||||||
Proceeds from loan | ¥ | ¥ 50,000,000 | |||||||||
U.S. Small Business Administration [Member] | Paycheck Protection Program Loan (PPP) [Member] | ||||||||||
Proceeds from loan | $ 73,300 | |||||||||
Debt description | 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. | |||||||||
U.S. Small Business Administration [Member] | Paycheck Protection Program Loan (PPP) [Member] | Maximum [Member] | ||||||||||
Debt interest | 100.00% | |||||||||
Meijia [Member] | ||||||||||
Loans secured | $ 4,600,000 | |||||||||
Meijia [Member] | Mr, Silong Chen [Member] | ||||||||||
Loans secured | 3,100,000 | |||||||||
Meijia [Member] | Buildings [Member] | ||||||||||
Right use of assets | $ 4,300,000 | |||||||||
Meijia [Member] | RMB [Member] | ||||||||||
Loans secured | ¥ | ¥ 30,000,000 | |||||||||
Meijia [Member] | RMB [Member] | Mr, Silong Chen [Member] | ||||||||||
Loans secured | ¥ | ¥ 20,000,000 |
Bank Loans - Schedule of Short-
Bank Loans - Schedule of Short-term Bank Loans (Details) - USD ($) | Dec. 31, 2020 | Jun. 30, 2020 | |
Short-term Debt | $ 910,000 | $ 5,142,000 | |
Bank of Communications of China [Member] | |||
Short-term Debt | [1] | 2,545,200 | |
Industrial and Commercial Bank of China [Membeer] | |||
Short-term Debt | [2] | 1,696,800 | |
Cathay Bank [Member] | |||
Short-term Debt | [3] | $ 910,000 | $ 900,000 |
[1] | In August 2019, the Company entered into two loan agreements with BCC Dongguan Branch to borrow a 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. | ||
[2] | 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, 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. | ||
[3] | On February 6, 2020, one of the Company's U.S. subsidiaries, 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. As of June 30, 2020, the outstanding balance was $900,000. During the six months ended December 31, 2020, Dogness Group borrowed total of $73,271 and made repayment of $63,271. As of December 31, 2020, the outstanding balance was $910,000, which was recorded as current liabilities because Dogness Group plans to repay this loan within one year. |
Bank Loans - Schedule of Shor_2
Bank Loans - Schedule of Short-term Bank Loans (Details) (Parenthetical) | Feb. 06, 2020USD ($) | Aug. 30, 2019USD ($) | Aug. 30, 2019CNY (¥) | Aug. 09, 2019USD ($) | Dec. 31, 2020USD ($) | Dec. 31, 2020CNY (¥) | Dec. 31, 2019USD ($) | Jun. 30, 2020USD ($) | Aug. 17, 2019USD ($) | Aug. 09, 2019CNY (¥) |
Proceeds from short term debt | $ 73,271 | $ 4,268,100 | ||||||||
Repayment of debt | 100,000 | |||||||||
RMB [Member] | ||||||||||
Repayment of debt | ¥ | ¥ 500,000 | |||||||||
Dongguan Jiasheng Enterprise Co., Ltd. [Member] | Cathay Bank [Membeer] | ||||||||||
Proceeds from short term debt | 73,271 | |||||||||
Maximum line of credit | $ 1,200,000 | |||||||||
Outstanding balance | 900,000 | $ 900,000 | ||||||||
Repayment of debt | $ 45,000 | $ 63,271 | ||||||||
Dongguan Jiasheng Enterprise Co., Ltd. [Member] | Line Of Credit Agreement [Member] | ||||||||||
Proceeds from short term debt | $ 2,500,000 | |||||||||
Debt description | 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 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. | ||||||||
Dongguan Jiasheng Enterprise Co., Ltd. [Member] | Line Of Credit Agreement [Member] | Land Use Right [Member] | ||||||||||
Collateral debt | $ 2,100,000 | |||||||||
Dongguan Jiasheng Enterprise Co., Ltd. [Member] | Line Of Credit Agreement [Member] | RMB [Member] | ||||||||||
Proceeds from short term debt | ¥ | ¥ 18,000,000 | |||||||||
Dongguan Jiasheng Enterprise Co., Ltd. [Member] | Loan Agreement [Member] | Industrial and Commercial Bank of China [Membeer] | ||||||||||
Debt description | 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. | |||||||||
Short term debt | $ 1,700,000 | |||||||||
Dongguan Jiasheng Enterprise Co., Ltd. [Member] | Loan Agreement [Member] | RMB [Member] | Industrial and Commercial Bank of China [Membeer] | ||||||||||
Short term debt | ¥ | ¥ 12,000,000 | |||||||||
Dongguan Jiasheng Enterprise Co., Ltd. [Member] | Line Of Credit Agreement [Member] | Buildings [Member] | ||||||||||
Collateral debt | $ 8,200,000 |
Bank Loans - Schedule of Long-t
Bank Loans - Schedule of Long-term Loan (Details) - USD ($) | Dec. 31, 2020 | Jun. 30, 2020 |
Total | $ 7,651,392 | $ 73,300 |
Less: current portion of long-term loans | 623,669 | |
Long-term loans | 7,027,723 | 73,300 |
Southwestern National Bank [Member] | ||
Total | 73,300 | 73,300 |
Dongguan Rural Commercial Bank [Member] | ||
Total | $ 7,578,092 |
Bank Loans - Schedule of Long_2
Bank Loans - Schedule of Long-term Loan (Details) (Parenthetical) | Dec. 31, 2020 | Jun. 30, 2020 |
Dongguan Rural Commercial Bank [Member] | ||
Effective interest rate | 6.15% | 6.55% |
Bank Loans - Schedule of Repaym
Bank Loans - Schedule of Repayment of Bank Loans (Details) | Dec. 31, 2020USD ($) |
Debt Disclosure [Abstract] | |
2021 | $ 1,533,669 |
2022 | 1,024,354 |
2023 | 4,035,655 |
2024 | 385,010 |
2025 | 411,062 |
2026 | 438,499 |
2027 | 467,770 |
2028 | 265,373 |
Total | $ 8,561,392 |
Taxes (Details Narrative)
Taxes (Details Narrative) - USD ($) | 6 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Jun. 30, 2020 | |
Statutory income tax rate | 15.00% | 15.00% | |
Description on tax rate | 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. | ||
Decrease in foreign taxes | $ 140,015 | ||
Benefit of Tax Holiday on Net Income per Share (basic and diluted) | $ 0 | ||
Accrued tax liabilities | $ 3,613,007 | $ 2,814,411 | |
Hong Kong [Member] | |||
Statutory income tax rate | 16.50% |
Taxes - Schedule of Components
Taxes - Schedule of Components of Income Tax Expense (Benefit) (Details) - USD ($) | 6 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Current income tax provision | $ 544,419 | $ 176,703 |
Deferred income tax benefit | (13,740) | (71,973) |
Total income tax expense | 530,679 | 104,730 |
PRC Statutory Income Tax [Member] | ||
Income tax expense computed based on PRC statutory rate | 320,046 | |
Effect of rate differential for Hong Kong entities | (8,917) | (5,198) |
Effect of PRC preferential tax rate | (140,015) | |
Research and development tax credit | (28,679) | (16,709) |
Changes in bad debt and inventory reserve | (108,925) | 32,241 |
Change in valuation allowance | (56,940) | |
Net operating loss carryforward | 18,424 | |
Stock-based compensation | 10,662 | 48,508 |
Meals and entertainment | 16,337 | 27,464 |
Surcharge on unpaid income tax | 527,110 | |
Total income tax expense | $ 530,679 | $ 104,730 |
Taxes - Schedule of Deferred Ta
Taxes - Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) | Dec. 31, 2020 | Jun. 30, 2020 |
Income Tax Disclosure [Abstract] | ||
Net operating losses | $ 1,572,028 | $ 1,515,308 |
Assets impairment reserve | 133,838 | 233,759 |
Valuation allowance | (1,576,897) | (1,633,837) |
Deferred tax assets, net | $ 128,969 | $ 115,230 |
Taxes - Schedule of Taxes Payab
Taxes - Schedule of Taxes Payable (Details) - USD ($) | Dec. 31, 2020 | Jun. 30, 2020 |
Income Tax Disclosure [Abstract] | ||
Corporate income tax payable | $ 3,610,097 | $ 2,813,014 |
Other tax payable | 2,910 | 1,397 |
Total taxes payable | $ 3,613,007 | $ 2,814,411 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) | Jul. 06, 2018USD ($) | Apr. 30, 2021USD ($) | Dec. 31, 2020USD ($) | Jun. 30, 2020USD ($) | Jul. 06, 2018CNY (¥) | Jul. 02, 2018 | Mar. 16, 2018USD ($) |
Payment to capital expenditure | $ 15,400,000 | ||||||
Future minimum capital expenditure commitment | 17,843,360 | ||||||
Maximum [Member] | |||||||
Ownership percentage | 20.00% | ||||||
Subsequent Event [Member] | |||||||
Future minimum capital expenditure commitment | $ 15,375,187 | ||||||
Dogness Intelligence Technology Co Ltd [Member] | |||||||
Capital | $ 12,200,000 | ||||||
Ownership percentage | 58.00% | 58.00% | |||||
Dogness Intelligence Technology Co Ltd [Member] | RMB [Member] | |||||||
Capital | ¥ | ¥ 80,000,000 | ||||||
Dongguan Jiasheng Enterprise Co., Ltd. [Member] | |||||||
Capital | $ 7,100,000 | ||||||
Dongguan Jiasheng Enterprise Co., Ltd. [Member] | RMB [Member] | |||||||
Capital | $ 46,400,000 | ||||||
Zhangzhou Meijia Metal Product Co., Ltd ('Meijia') [Member] | |||||||
Capital | 200,000 | $ 6,300,000 | $ 9,200,000 | ||||
Future minimum capital expenditure commitment | 12,248 | ||||||
Zhangzhou Meijia Metal Product Co., Ltd ('Meijia') [Member] | December 30, 2025 [Member] | |||||||
Capital | 2,600,000 | ||||||
Zhangzhou Meijia Metal Product Co., Ltd ('Meijia') [Member] | Subsequent Event [Member] | |||||||
Capital | 100,000 | ||||||
Future minimum capital expenditure commitment | |||||||
Zhangzhou Meijia Metal Product Co., Ltd ('Meijia') [Member] | RMB [Member] | |||||||
Capital | 1,300,000 | 40,900,000 | $ 60,000,000 | ||||
Zhangzhou Meijia Metal Product Co., Ltd ('Meijia') [Member] | RMB [Member] | December 30, 2025 [Member] | |||||||
Capital | 17,300,000 | ||||||
Zhangzhou Meijia Metal Product Co., Ltd ('Meijia') [Member] | RMB [Member] | Subsequent Event [Member] | |||||||
Capital | 500,000 | ||||||
Dongguan Jiasheng Enterprise Co., Ltd. [Member] | |||||||
Capital | 2,400,000 | 6,000,000 | |||||
Future minimum capital expenditure commitment | 17,676,225 | ||||||
Dongguan Jiasheng Enterprise Co., Ltd. [Member] | Minimum [Member] | |||||||
Capital | 7,600,000 | ||||||
Dongguan Jiasheng Enterprise Co., Ltd. [Member] | Maximum [Member] | |||||||
Capital | 8,400,000 | ||||||
Dongguan Jiasheng Enterprise Co., Ltd. [Member] | Subsequent Event [Member] | |||||||
Future minimum capital expenditure commitment | 15,220,300 | ||||||
Dongguan Jiasheng Enterprise Co., Ltd. [Member] | RMB [Member] | |||||||
Capital | 16,000,000 | 39,000,000 | |||||
Dongguan Jiasheng Enterprise Co., Ltd. [Member] | RMB [Member] | Minimum [Member] | |||||||
Capital | 50,000,000 | ||||||
Dongguan Jiasheng Enterprise Co., Ltd. [Member] | RMB [Member] | Maximum [Member] | |||||||
Capital | 55,000,000 | ||||||
Dogness Network Technology Co Ltd [Member] | |||||||
Capital | 300,000 | 900,000 | |||||
Ownership percentage | 10.00% | 10.00% | |||||
Capital contribution | $ 1,200,000 | ||||||
Dogness Network Technology Co Ltd [Member] | RMB [Member] | |||||||
Capital | $ 2,000,000 | $ 6,000,000 | |||||
Capital contribution | $ 8,000,000 | ||||||
Meijia and Dongguan Jiasheng [Member] | Subsequent Event [Member] | |||||||
Payment to capital expenditure | 2,400,000 | ||||||
Meijia and Dongguan Jiasheng [Member] | RMB [Member] | Subsequent Event [Member] | |||||||
Payment to capital expenditure | $ 16,100,000 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) | Aug. 01, 2020USD ($)m² | Jan. 02, 2020USD ($)m² | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Apr. 30, 2021USD ($) | Jun. 30, 2020USD ($) |
Cost of revenue to related parties | $ 285,258 | $ 351,601 | ||||
Accounts receivable from a related party | 497,974 | $ 559,465 | ||||
Payments to related parties | 909,651 | |||||
Rent income | 233,857 | 366,236 | ||||
Lease Agreement [Member] | ||||||
Area of land | m² | 8,640 | |||||
Lease term | 10 years | |||||
Lease Agreement [Member] | Dongguan Jiasheng Enterprise Co., Ltd. [Member] | ||||||
Area of land | m² | 580 | |||||
Lease term | 10 years | |||||
Annual lease payment | $ 35,000 | |||||
Lease description | Annual lease payment from Dogness Network amounted to approximately $35,000 and is subject to 15% increase every three years. | |||||
Rent income | 16,099 | |||||
Linsun Smart Technology Co Ltd [Member] | ||||||
Payments to related parties | 1,004,185 | |||||
Linsun Smart Technology Co Ltd [Member] | Lease Agreement [Member] | ||||||
Annual lease payment | $ 240,000 | |||||
Lease description | Annual lease payment from Linsun amounted to approximately $240,000 and is subject to 15% increase every three years. | |||||
Rent income | 119,956 | |||||
Dogness Network Technology Co Ltd [Member] | ||||||
Accounts receivable from a related party | $ 497,974 | $ 559,465 | ||||
Payments to related parties | $ 1,295,498 | |||||
Subsequent Event [Member] | ||||||
Accounts receivable from a related party | $ 181,409 |
Related Party Transactions - Sc
Related Party Transactions - Schedule of Relationship of Related Parties (Details) | 6 Months Ended |
Dec. 31, 2020 | |
Mr, Silong Chen [Member] | |
Relationship to the Company | Chief Executive Officer; Chairman of the Board of Directors |
Junqiang Chen and Caiyuan He [Member] | |
Relationship to the Company | Relatives of Mr. Silong Chen |
Linsun Smart Technology Co Ltd [Member] | |
Relationship to the Company | Equity investee -10% of the ownership |
Equity ownership percentage | 10.00% |
Dogness Network Technology Co Ltd [Member] | |
Relationship to the Company | Equity Investee - 13% of the ownership |
Equity ownership percentage | 13.00% |
Guangdong Dogness Biotechnology Co., Ltd., [Member] | |
Relationship to the Company | Relate to one of the Company's shareholders |
Mark Trade (HK) Limited [Member] | |
Relationship to the Company | Shareholder of Dogness Culture |
Related Party Transactions - _2
Related Party Transactions - Schedule of Due to Related Parties (Details) - USD ($) | Dec. 31, 2020 | Jun. 30, 2020 |
Due to related parties | $ 2,035,922 | $ 25,462 |
Mr, Silong Chen [Member] | ||
Due to related parties | 2,027,662 | 25,462 |
Mark Trade (HK) Limited [Member] | ||
Due to related parties | $ 8,260 |
Related Party Transactions - _3
Related Party Transactions - Schedule of Revenue from Related Parties (Details) - USD ($) | 6 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Total | $ 548,351 | $ 588,733 |
Linsun Smart Technology Co Ltd [Member] | ||
Total | 73,024 | |
Dogness Network Technology Co Ltd [Member] | ||
Total | $ 548,351 | $ 515,709 |
Related Party Transactions - _4
Related Party Transactions - Schedule of Accounts Receivable from Related Parties (Details) - USD ($) | Dec. 31, 2020 | Jun. 30, 2020 |
Accounts receivable from related parties | $ 497,974 | $ 559,465 |
Dogness Network Technology Co Ltd [Member] | ||
Accounts receivable from related parties | $ 497,974 | $ 559,465 |
Related Party Transactions - _5
Related Party Transactions - Schedule of Advances to Suppliers- Related Party (Details) - USD ($) | Dec. 31, 2020 | Jun. 30, 2020 |
Advances to suppliers- related party | $ 29,240 | |
Linsun Smart Technology Co Ltd [Member] | ||
Advances to suppliers- related party | $ 29,240 |
Related Party Transactions - _6
Related Party Transactions - Schedule of Accounts Payable to Related Parties (Details) - USD ($) | Dec. 31, 2020 | Jun. 30, 2020 |
Accounts payable to related parties | $ 3,963 | $ 305,215 |
Linsun Smart Technology Co Ltd [Member] | ||
Accounts payable to related parties | 301,555 | |
Dogness Network Technology Co Ltd [Member] | ||
Accounts payable to related parties | $ 3,963 | $ 3,660 |
Equity (Details Narrative)
Equity (Details Narrative) - USD ($) | Dec. 18, 2017 | Dec. 31, 2020 | Dec. 31, 2019 | Jun. 30, 2020 | Apr. 26, 2017 | Jul. 11, 2016 |
Common stock, shares authorized | 100,000,000 | 100,000,000 | 100,000,000 | 15,000,000 | ||
Common stock par value | $ 0.002 | $ 0.002 | $ 0.002 | $ 0.002 | ||
Common stock, shares issued | 25,913,631 | 25,913,631 | 15,000,000 | |||
Common stock, shares outstanding | 25,913,631 | 25,913,631 | 15,000,000 | |||
Statutory reserve, description | Appropriations to the statutory surplus reserve are required to be at least 10% of the after-tax net income determined in accordance with PRC regulations until the reserve is equal to 50% of the entity's registered capital. | |||||
Allocation to statutory reserve | $ 2,685 | |||||
Restricted reserve | $ 194,401 | $ 191,716 | ||||
Public Offering Warrants [Member] | ||||||
Warrants term | 3 years | |||||
Warrants exercise price | $ 6.25 | |||||
Class B Common Shares [Member] | ||||||
Common stock, shares outstanding | 9,069,000 | 9,069,000 | ||||
Common Class A [Member] | ||||||
Common stock, shares authorized | 5,931,000 | |||||
Common stock par value | $ 0.002 | |||||
Common stock, shares outstanding | 16,844,631 | 16,844,631 | ||||
Common Class A [Member] | Public Offering Warrants [Member] | ||||||
Warrants to purchase common stock | 500,000 | |||||
Percentage for common stock sold for offering | 5.00% | |||||
Common Class A [Member] | IPO [Member] | ||||||
Shares of initial public offering | 10,913,631 | |||||
Shares issued price per share | $ 5 | |||||
Gross from initial public offering | $ 54,600,000 | |||||
Proceeds from initial public offering | $ 50,200,000 | |||||
Mr, Silong Chen [Member] | Class B Common Shares [Member] | ||||||
Common stock, shares authorized | 9,069,000 | |||||
Common stock par value | $ 0.002 |
Earnings (Loss) Per Share (Deta
Earnings (Loss) Per Share (Details Narrative) - shares | 6 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Earnings Per Share [Abstract] | ||
Antidilutive securities excluded from computation of earnings per share | 17,515 |
Earnings (Loss) Per Share - Sch
Earnings (Loss) Per Share - Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($) | 6 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Earnings Per Share [Abstract] | ||
Net income (loss) attributable to the Company | $ 839,248 | $ (383,094) |
Weighted average number of common shares outstanding - Basic | 25,913,631 | 25,913,631 |
Dilutive securities -unexercised warrants and options | 17,515 | |
Weighted average number of common shares outstanding - diluted | 25,931,146 | 25,913,631 |
Earnings (loss) per share - Basic | $ 0.03 | $ (0.01) |
Earnings (loss) per share - Diluted | $ 0.03 | $ (0.01) |
Options (Details Narrative)
Options (Details Narrative) - USD ($) | Jul. 30, 2019 | May 28, 2018 | Nov. 10, 2017 | May 28, 2017 | Dec. 31, 2020 | Jun. 30, 2020 | Dec. 31, 2019 | Oct. 31, 2019 |
Stock options exercise purchase price | $ 1.50 | $ 1.50 | $ 1.50 | |||||
Options vested | 453,339 | |||||||
Options exercised | ||||||||
Stock options non vested shares | 46,661 | |||||||
Share-based compensation for services | $ 71,079 | $ 323,386 | ||||||
Outstanding vested stock options, weighted average remaining term | 4 months 6 days | 1 year 2 months 19 days | ||||||
Unvested stock options, weighted average remaining term | 1 year 29 days | |||||||
TJ Capital Management, L.P [Member] | ||||||||
Stock options grants to purchase | 160,000 | |||||||
Stock options exercise purchase price | $ 1.50 | |||||||
TJ Capital Management, L.P [Member] | Corporate and Executive Service Agreement [Member] | ||||||||
Stock options grants to purchase | 160,000 | |||||||
Stock options exercise purchase price | $ 1.50 | |||||||
Options vested | 6,667 | 73,337 | ||||||
Aggregated fair value of options granted | $ 284,300 | |||||||
Share price | $ 2.90 | |||||||
Risk free interest rate | 1.85% | |||||||
Expected term | 2 years | |||||||
Exercise price | $ 1.50 | |||||||
Expected volatility rate | 77.00% | |||||||
Expected dividend payments | ||||||||
Options exercised | ||||||||
TJ Capital Management, L.P [Member] | IPO [Member] | ||||||||
Options vested | 60,000 | |||||||
Vest Period | 7 months | |||||||
TJ Capital Management, L.P [Member] | IPO [Member] | ||||||||
Options vested | 50,000 | |||||||
Vest Period | 10 months | |||||||
TJ Capital Management, L.P [Member] | IPO [Member] | ||||||||
Options vested | 50,000 | |||||||
Vest Period | 15 months | |||||||
Dr. Yunhao Chen [Member] | ||||||||
Options vested | 120,000 | |||||||
Aggregated fair value of options granted | $ 440,840 | |||||||
Fair value assumptions, method used | Black-Scholes pricing model | |||||||
Share price | $ 5 | |||||||
Risk free interest rate | 1.84% | |||||||
Expected term | 2 years | |||||||
Exercise price | $ 1.50 | |||||||
Expected volatility rate | 69.50% | |||||||
Expected dividend payments | ||||||||
Options exercised | ||||||||
Dr. Yunhao Chen [Member] | Employment Agreement [Member] | Common Class A [Member] | ||||||||
Stock options grants to purchase | 120,000 | |||||||
Stock options exercise purchase price | $ 1.50 | |||||||
Dr. Yunhao Chen [Member] | IPO [Member] | Employment Agreement [Member] | ||||||||
Options vested | 5,000 | |||||||
Mr, Silong Chen [Member] | ||||||||
Options vested | 220,000 | |||||||
Aggregated fair value of options granted | $ 1,385,500 | |||||||
Fair value assumptions, method used | Black-Scholes pricing model | |||||||
Share price | $ 5 | |||||||
Risk free interest rate | 1.94% | |||||||
Expected term | 3 years | |||||||
Exercise price | $ 1.50 | |||||||
Expected volatility rate | 74.70% | |||||||
Expected dividend payments | ||||||||
Options exercised | ||||||||
Stock options non vested shares | 140,000 | |||||||
Mr, Silong Chen [Member] | Employment Agreement [Member] | Common Class A [Member] | ||||||||
Stock options grants to purchase | 360,000 | |||||||
Stock options exercise purchase price | $ 1.50 | |||||||
Mr, Silong Chen [Member] | IPO [Member] | Employment Agreement [Member] | ||||||||
Options vested | 10,000 |
Options - Schedule of Stock Opt
Options - Schedule of Stock Option Activity (Details) - $ / shares | 6 Months Ended | |
Dec. 31, 2020 | Jun. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | ||
Number of Options Outstanding, Beginning Balance | 500,000 | 480,000 |
Number of Option Outstanding Exercisable, Beginning Balance | 413,337 | 270,000 |
Number of Options, Granted | 160,000 | |
Number of Options, Cancelled | (140,000) | |
Number of Options, Exercised | ||
Number of Options Outstanding, Ending Balance | 500,000 | 500,000 |
Number of Options Outstanding Exercisable, Ending Balance | 453,339 | 413,337 |
Weighted Average Exercise Price, Beginning Balance | $ 1.50 | $ 1.50 |
Weighted Average Exercise Price Exercisable, Beginning Balance | 1.50 | 1.50 |
Weighted Average Price, Granted | ||
Weighted Average Exercise Price, Cancelled | ||
Weighted Average Exercise Price, Exercised | ||
Weighted Average Exercise Price, Ending Balance | 1.50 | 1.50 |
Weighted Average Exercise Price Exercisable, Ending Balance | $ 1.50 | $ 1.50 |
Weighted Average Remaining Life in Years, Beginning Balance | 4 months 6 days | 1 year 2 months 19 days |
Weighted Average Remaining Life in Years, Beginning Balance | 2 months 8 days | 1 year 1 month 20 days |
Weighted Average Remaining Life in Years, Ending Balance | 2 months 8 days | 4 months 6 days |
Weighted Average Remaining Life in Years, Ending Balance | 1 month 24 days | 2 months 8 days |
Segment Information and Revenue
Segment Information and Revenue Analysis (Details Narrative) | 6 Months Ended |
Dec. 31, 2020Integer | |
Segment Reporting [Abstract] | |
Number of reporting segment | 1 |
Segment Information and Reven_2
Segment Information and Revenue Analysis - Schedule of Revenues by Geographic Market (Details) - USD ($) | 6 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Revenues | $ 12,245,507 | $ 11,476,555 |
Mainland China [Member] | ||
Revenues | 6,430,883 | 6,138,185 |
United States [Member] | ||
Revenues | 3,235,212 | 2,283,744 |
Europe [Member] | ||
Revenues | 938,083 | 1,195,122 |
Australia [Member] | ||
Revenues | 235,819 | 523,383 |
Canada [Member] | ||
Revenues | 784,403 | 161,353 |
Central and South America [Member] | ||
Revenues | 50,915 | 62,641 |
Japan and Other Asian Countries and Regions [Member] | ||
Revenues | $ 570,192 | $ 1,112,127 |
Segment Information and Reven_3
Segment Information and Revenue Analysis - Schedule of Revenue by Products and Services Categories (Details) - USD ($) | 6 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Revenues | $ 12,245,507 | $ 11,476,555 |
Pet leashes [Member] | ||
Revenues | 1,845,601 | 2,533,043 |
Pet Collars [Member] | ||
Revenues | 2,846,833 | 2,764,380 |
Pet Harnesses [Member] | ||
Revenues | 791,441 | 1,025,927 |
Retractable Dog Leashes [Member] | ||
Revenues | 106,585 | 427,183 |
Intelligent Pet Products [Member] | ||
Revenues | 3,383,666 | 2,110,239 |
Gift Suspender [Member] | ||
Revenues | 1,489,852 | 1,661,916 |
Other Pet Accessories [Member] | ||
Revenues | 529,954 | 511,782 |
Climbing Hooks [Member] | ||
Revenues | 769,199 | 442,085 |
Product [Member] | ||
Revenues | 11,763,131 | 11,476,555 |
Dyeing Services [Member] | ||
Revenues | 482,376 | |
Service [Member] | ||
Revenues | $ 482,376 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | Apr. 15, 2021 | Feb. 18, 2021 | Jan. 20, 2021 | Jul. 30, 2019 | Dec. 31, 2020 | Jun. 30, 2020 |
Options exercised | ||||||
Consulting Agreement [Member] | TJ Capital Management, L.P [Member] | ||||||
Options exercised | 10,000 | |||||
Subsequent Event [Member] | ||||||
Proceeds from issuance of warrants | $ 5,400,000 | |||||
Subsequent Event [Member] | Common Class A [Member] | ||||||
Stock issued during period, shares | 3,455,130 | |||||
Shares issued price per share | $ 2.15 | |||||
Subsequent Event [Member] | Investor [Member] | ||||||
Warrants purchase price per share | 2.70 | |||||
Subsequent Event [Member] | Placement Agent [Member] | ||||||
Warrants purchase price per share | $ 2.70 | |||||
Subsequent Event [Member] | TJ Capital Management, L.P [Member] | Common Stock [Member] | ||||||
Stock issued during period, shares | 6,053 | |||||
Subsequent Event [Member] | Securities Purchase Agreement [Member] | ||||||
Proceeds from issuance of warrants | $ 5,400,000 | |||||
Subsequent Event [Member] | Securities Purchase Agreement [Member] | Investor [Member] | ||||||
Warrants to purchase common stock | 1,727,565 | |||||
Warrants purchase price per share | $ 2.70 | |||||
Subsequent Event [Member] | Securities Purchase Agreement [Member] | Investor [Member] | Common Class A [Member] | ||||||
Stock issued during period, shares | 3,455,130 | |||||
Shares issued price per share | $ 2.15 | |||||
Proceeds from sale of common shares | $ 6,600,000 | |||||
Subsequent Event [Member] | Securities Purchase Agreement [Member] | Placement Agent [Member] | ||||||
Warrants to purchase common stock | 276,410 | |||||
Warrants purchase price per share | $ 2.70 | |||||
Subsequent Event [Member] | Consulting Agreement [Member] | Real Miracle Investments Limited [Member] | ||||||
Shares issued for service | 250,000 |