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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p>

<!-- Field: Rule-Page --><div style="margin-top: 0pt; margin-bottom: 0pt; width: 100%"><div style="border-top: Black 4pt solid; font-size: 1pt; border-bottom: Black 1.5pt solid">&#160;</div></div><!-- Field: /Rule-Page -->

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 18pt"><b>UNITED
STATES</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 18pt"><b>SECURITIES
AND EXCHANGE COMMISSION</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 12pt"><b>Washington,
D.C. 20549</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 18pt"><b>FORM
<span id="xdx_900_edei--DocumentType_c20220701__20230630_zScGiZnZWlCa"><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" name="dei:DocumentType">20-F</ix:nonNumeric></span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(Mark
One)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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REGISTRATION STATEMENT PURSUANT TO SECTION 12(B) OR 12(G) OF THE SECURITIES EXCHANGE ACT OF 1934</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>OR</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_908_edei--DocumentAnnualReport_c20220701__20230630_zwgPgtqOkZY4"><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" format="ixt:booleantrue" name="dei:DocumentAnnualReport">&#9746;</ix:nonNumeric></span>
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>For
the fiscal year ended <span id="xdx_90B_edei--DocumentPeriodEndDate_c20220701__20230630_zpLrOMk3W3cl"><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" format="ixt:datemonthdayyearen" name="dei:DocumentPeriodEndDate"><span id="xdx_90A_edei--CurrentFiscalYearEndDate_c20220701__20230630_zmnKoIZqpGV4"><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" format="ixt:datemonthdayen" name="dei:CurrentFiscalYearEndDate">June 30</ix:nonNumeric></span>, <span id="xdx_90D_edei--DocumentFiscalYearFocus_c20220701__20230630_zdqGPuOVPyAi"><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" name="dei:DocumentFiscalYearFocus">2023</ix:nonNumeric></span></ix:nonNumeric></span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>OR</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_901_edei--DocumentTransitionReport_c20220701__20230630_zTDke0Viifei"><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" format="ixt:booleanfalse" name="dei:DocumentTransitionReport">&#9744;</ix:nonNumeric></span>
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>OR</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_908_edei--DocumentShellCompanyReport_c20220701__20230630_z86zz9t9NiIe"><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" format="ixt:booleanfalse" name="dei:DocumentShellCompanyReport">&#9744;</ix:nonNumeric></span>
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Date
of event requiring this shell company report</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>For
the transition period from&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; to</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Commission
file number <span id="xdx_90F_edei--EntityFileNumber_c20220701__20230630_zJDdw6p8vtV4"><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" name="dei:EntityFileNumber">001-38304</ix:nonNumeric></span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 18pt"><b><span id="xdx_909_edei--EntityRegistrantName_c20220701__20230630_zDCNROj5XCk3"><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" name="dei:EntityRegistrantName">Dogness
(International) Corporation</ix:nonNumeric></span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(Exact
name of Registrant as specified in its charter)</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_902_edei--EntityIncorporationStateCountryCode_c20220701__20230630_zLxVxxiLjcRd"><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" format="ixt-sec:edgarprovcountryen" name="dei:EntityIncorporationStateCountryCode">British
Virgin Islands</ix:nonNumeric></span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(Jurisdiction
of incorporation or organization)</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_907_edei--EntityAddressAddressLine1_c20220701__20230630_z2G2c0gN6wN8"><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" name="dei:EntityAddressAddressLine1">Tongsha
Industrial Estate</ix:nonNumeric></span>, <span id="xdx_906_edei--EntityAddressAddressLine2_c20220701__20230630_zoXNo3qhoST5"><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" name="dei:EntityAddressAddressLine2">East District</ix:nonNumeric></span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_908_edei--EntityAddressCityOrTown_c20220701__20230630_znWl1bQ2gSg"><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" name="dei:EntityAddressCityOrTown">Dongguan</ix:nonNumeric></span>,
Guangdong <span id="xdx_907_edei--EntityAddressPostalZipCode_c20220701__20230630_zTULWdkOklXd"><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" name="dei:EntityAddressPostalZipCode">523217</ix:nonNumeric></span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>People&#8217;s
Republic of <span id="xdx_902_edei--EntityAddressCountry_c20220701__20230630_zCLAZuGiOoL1"><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" format="ixt-sec:countrynameen" name="dei:EntityAddressCountry">China</ix:nonNumeric></span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(Address
of principal executive offices)</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_905_edei--ContactPersonnelName_c20220701__20230630__dei--EntityAddressesAddressTypeAxis__dei--BusinessContactMember_zEc25pmrKzpl"><ix:nonNumeric contextRef="From2022-07-012023-06-30_dei_BusinessContactMember" name="dei:ContactPersonnelName">Aihua
Cao, Chief Financial Officer</ix:nonNumeric></span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Telephone:
<span id="xdx_901_edei--CityAreaCode_c20220701__20230630__dei--EntityAddressesAddressTypeAxis__dei--BusinessContactMember_zNmc1OEJ6Lcd"><ix:nonNumeric contextRef="From2022-07-012023-06-30_dei_BusinessContactMember" name="dei:CityAreaCode">(+86)</ix:nonNumeric></span> <span id="xdx_90F_edei--LocalPhoneNumber_c20220701__20230630__dei--EntityAddressesAddressTypeAxis__dei--BusinessContactMember_zhLT6AFVcwsf"><ix:nonNumeric contextRef="From2022-07-012023-06-30_dei_BusinessContactMember" name="dei:LocalPhoneNumber">18820609835</ix:nonNumeric></span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">of08@dogness.com
</span><span id="xdx_900_edei--EntityAddressAddressLine1_c20220701__20230630__dei--EntityAddressesAddressTypeAxis__dei--BusinessContactMember_zyhccnMhnake"><ix:nonNumeric contextRef="From2022-07-012023-06-30_dei_BusinessContactMember" name="dei:EntityAddressAddressLine1">Tongsha Industrial Estate, East District</ix:nonNumeric></span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_908_edei--EntityAddressCityOrTown_c20220701__20230630__dei--EntityAddressesAddressTypeAxis__dei--BusinessContactMember_zcaTu8BsQmg1"><ix:nonNumeric contextRef="From2022-07-012023-06-30_dei_BusinessContactMember" name="dei:EntityAddressCityOrTown">Dongguan</ix:nonNumeric></span>,
Guangdong <span id="xdx_908_edei--EntityAddressPostalZipCode_c20220701__20230630__dei--EntityAddressesAddressTypeAxis__dei--BusinessContactMember_z7aTGN5MdBK5"><ix:nonNumeric contextRef="From2022-07-012023-06-30_dei_BusinessContactMember" name="dei:EntityAddressPostalZipCode">523217</ix:nonNumeric></span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>People&#8217;s
Republic of <span id="xdx_908_edei--EntityAddressCountry_c20220701__20230630__dei--EntityAddressesAddressTypeAxis__dei--BusinessContactMember_zgHduDaJyJMa"><ix:nonNumeric contextRef="From2022-07-012023-06-30_dei_BusinessContactMember" format="ixt-sec:countrynameen" name="dei:EntityAddressCountry">China</ix:nonNumeric></span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Securities
registered or to be registered pursuant to Section 12(b) of the Act:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom">
    <td style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; width: 49%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Title
    of each class</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; width: 2%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; width: 49%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Name
    of each exchange on which registered</b></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_906_edei--Security12bTitle_c20220701__20230630_zbZ4ZaMMzoMj"><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" name="dei:Security12bTitle">Common
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_90D_edei--SecurityExchangeName_c20220701__20230630_zOOT7UFQk7hi"><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" format="ixt-sec:exchnameen" name="dei:SecurityExchangeName">NASDAQ</ix:nonNumeric></span>
    Global Market</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Securities
registered or to be registered pursuant to Section 12(g) of the Act: <b>None</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Securities
for which there is a reporting obligation pursuant to Section 15(d) of the Act: <b>None</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Indicate
the number of outstanding shares of each of the issuer&#8217;s classes of capital or common stock as of the close of the period covered
by the annual report: <span id="xdx_904_edei--EntityCommonStockSharesOutstanding_iI_c20230630__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember_zBPcCkIklTs3"><ix:nonFraction name="dei:EntityCommonStockSharesOutstanding" contextRef="AsOf2023-06-30_us-gaap_CommonClassAMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">31,055,259</ix:nonFraction></span> Class A Common Shares and <span id="xdx_906_edei--EntityCommonStockSharesOutstanding_iI_c20230630__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassBMember_zaOwGrA1WFtl"><ix:nonFraction name="dei:EntityCommonStockSharesOutstanding" contextRef="AsOf2023-06-30_us-gaap_CommonClassBMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">9,069,000</ix:nonFraction></span> Class B Common Shares.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9744;
Yes &#9746; <span id="xdx_901_edei--EntityWellKnownSeasonedIssuer_c20220701__20230630_zlUyD2NtYC"><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" name="dei:EntityWellKnownSeasonedIssuer">No</ix:nonNumeric></span></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9744;
Yes &#9746; <span id="xdx_905_edei--EntityVoluntaryFilers_c20220701__20230630_zL0SaccmljX7"><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" name="dei:EntityVoluntaryFilers">No</ix:nonNumeric></span></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Indicate
by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9746;
<span id="xdx_901_edei--EntityCurrentReportingStatus_c20220701__20230630_zfl6aP1dt83d"><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" name="dei:EntityCurrentReportingStatus">Yes</ix:nonNumeric></span> &#9744; No</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data
File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (&#167;232.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant was required to submit and post such files).</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9746;
<span id="xdx_909_edei--EntityInteractiveDataCurrent_c20220701__20230630_zQNJ4LsGOKKb"><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" name="dei:EntityInteractiveDataCurrent">Yes</ix:nonNumeric></span> &#9744; No</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth
company. See definition of &#8220;large accelerated filer, &#8220;accelerated filer,&#8221; and &#8220;emerging growth company&#8221;
in Rule 12b-2 of the Exchange Act.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 34%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Large
    accelerated filer &#9744;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 1%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 32%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Accelerated
    filer &#9744;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 1%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 32%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_907_edei--EntityFilerCategory_c20220701__20230630_zCy8WvxdSATi"><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" format="ixt-sec:entityfilercategoryen" name="dei:EntityFilerCategory">Non-accelerated
    filer</ix:nonNumeric></span> &#9746;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Emerging
    growth company <span id="xdx_90A_edei--EntityEmergingGrowthCompany_c20220701__20230630_zTqd5wGIw2Z6"><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" format="ixt:booleanfalse" name="dei:EntityEmergingGrowthCompany">&#9744;</ix:nonNumeric></span></span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant
has elected not to use the extended transition period for complying with any new or revised financial accounting standards&#8224; provided
pursuant to Section 13(a) of the Exchange Act. &#9744;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8224;
The term &#8220;new or revised financial accounting standard&#8221; refers to any update issued by the Financial Accounting Standards
Board to its Accounting Standards Codification after April 5, 2012.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-right: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements. <span id="xdx_907_edei--DocumentFinStmtErrorCorrectionFlag_c20220701__20230630_zZsEIEVf7ah7"><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" format="ixt:booleanfalse" name="dei:DocumentFinStmtErrorCorrectionFlag">&#9744;</ix:nonNumeric></span></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-right: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-right: 0pt; margin-bottom: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Indicate
by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant&#8217;s executive officers during the relevant recovery period pursuant to &#167;240.10D-1(b).
&#9744;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Indicate
by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 20%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_90A_edei--DocumentAccountingStandard_c20220701__20230630_zjmn2xvG3V21"><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" name="dei:DocumentAccountingStandard">U.S. GAAP</ix:nonNumeric></span> &#9746;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 1%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 58%"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">International
    Financial Reporting Standards as issued</span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">by
    the International Accounting Standards Board &#9744;</span></p></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 1%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 20%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Other
    &#9744;</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
&#8220;Other&#8221; has been checked in response to the previous question, indicate by check mark which financial statement item the
registrant has elected to follow.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9744;
Item 17 &#9744; Item 18</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities
Exchange Act of 1934).</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9744;
Yes &#9746; <span id="xdx_90D_edei--EntityShellCompany_c20220701__20230630_zUpjzuOzqi3i"><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" format="ixt:booleanfalse" name="dei:EntityShellCompany">No</ix:nonNumeric></span></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(APPLICABLE
ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Indicate
by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9744;
Yes &#9744; No</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Table
of Contents</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td colspan="2" style="font: 10pt Times New Roman, Times, Serif; text-align: center"><a href="#S1_001"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Part I</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center">&#160;</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.75in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item
    1.</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><a href="#S1_002"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Identity of Directors, Senior Management and Advisers</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center; width: 0.5in">4</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item
    2.</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><a href="#S1_003"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Offer Statistics and Expected Timetable</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center">4</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item
    3.</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><a href="#S1_004"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Key Information</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center">4</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item
    4.</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><a href="#Ak_001"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Information on the Company</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center">53</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item
    4A.</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><a href="#Ak_002"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Unresolved Staff Comments</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center; padding-left: -10pt">72</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item
    5.</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><a href="#Ak_003"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Operating and Financial Review and Prospects</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center">72</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item
    6.</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#Ak_004">Directors, Senior Management and Employees</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center">97</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item
    7.</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><a href="#SJ_001"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Major Shareholders and Related Party Transactions</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center">118</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item
    8.</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#SJ_002">Financial Information</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center">122</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item
    9.</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#SJ_003">The Offer and Listing</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center">123</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item
    10.</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#SJ_004">Additional Information</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center">123</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item
    11.</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#bs_001">Quantitative and Qualitative Disclosures About Market Risk</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center">130</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item
    12.</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#bs_002">Description of Securities Other than Equity Securities</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center">131</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td colspan="2" style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#bs_003">Part II</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center">&#160;</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item
    13.</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#bs_004">Defaults, Dividend Arrearages and Delinquencies</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center">131</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item
    14.</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#bs_005">Material Modifications to the Rights of Securities Holders and Use of Proceeds</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center">131</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item
    15.</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#bs_006">Controls and Procedures</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center">131</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item
    16.</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#bs_007">[Reserved]</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center">132</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item
    16A.</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><a href="#bs_008"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Audit Committee Financial Expert</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center">132</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item
    16B.</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><a href="#bs_009"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Code of Ethics</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center">132</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item
    16C.</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><a href="#bs_010"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Principal Accountant Fees and Services</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center">132</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item
    16D.</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><a href="#bs_011"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Exemptions from the Listing Standards for Audit Committees</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center">133</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item
    16E.</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><a href="#bs_012"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Purchases of Equity Securities by the Issuer and Affiliated Purchasers</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center">133</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item
    16F.</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><a href="#bs_013"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Change in Registrant&#8217;s Certifying Accountant</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center">133</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item
    16G.</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><a href="#bs_014"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Corporate Governance</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center">133</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item
    16H.</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><a href="#bs_015"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Mine Safety Disclosure</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center">134</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td colspan="2" style="font: 10pt Times New Roman, Times, Serif; text-align: center"><a href="#bs_016"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Part III.</span></span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center">&#160;</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item
    17.</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><a href="#bs_017"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Financial Statements</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center">135</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item
    18.</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><a href="#bs_018"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Financial Statements</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center">135</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item
    19.</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><a href="#bs_019"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Exhibits</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center">135</td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Statements
in this annual report with respect to the Company&#8217;s current plans, estimates, strategies and beliefs and other statements that
are not historical facts are forward-looking statements about the future performance of the Company. Forward-looking statements include,
but are not limited to, those statements using words such as &#8220;believe,&#8221; &#8220;expect,&#8221; &#8220;plans,&#8221; &#8220;strategy,&#8221;
&#8220;prospects,&#8221; &#8220;forecast,&#8221; &#8220;estimate,&#8221; &#8220;project,&#8221; &#8220;anticipate,&#8221; &#8220;aim,&#8221;
&#8220;intend,&#8221; &#8220;seek,&#8221; &#8220;may,&#8221; &#8220;might,&#8221; &#8220;could&#8221; or &#8220;should,&#8221; and words
of similar meaning in connection with a discussion of future operations, financial performance, events or conditions. From time to time,
oral or written forward-looking statements may also be included in other materials released to the public. These statements are based
on management&#8217;s assumptions, judgments and beliefs in light of the information currently available to it. The Company cautions
investors that a number of important risks and uncertainties could cause actual results to differ materially from those discussed in
the forward-looking statements, including but not limited to, our ability to continue as a going concern, product and service demand
and acceptance, changes in technology, economic conditions, the impact of competition and pricing, government regulation, and other risks
contained in reports filed by the company with the Securities and Exchange Commission. Therefore, investors should not place undue reliance
on such forward-looking statements. Actual results may differ significantly from those set forth in the forward-looking statements.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">All
such forward-looking statements, whether written or oral, and whether made by or on behalf of the company, are expressly qualified by
the cautionary statements and any other cautionary statements which may accompany the forward-looking statements. In addition, the company
disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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    <!-- Field: /Page -->

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="S1_001"></span>Part
I</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>We
are not a Chinese operating company but a British Virgin Islands holding company with operations conducted by our subsidiaries
established in Delaware, mainland China, Hong Kong Special Administrative Region of the People&#8217;s Republic of China and British
Virgin Islands. Therefore, investing in our securities involves unique and a high degree of risk. You should carefully read and
consider the risk factors of this report (beginning on page 8), especially the risk factors under the caption &#8220;Risks Related
to Our Corporate Structure and Operation&#8221; (beginning on Page 20</b> <b>) and &#8220;Risks Related to Doing Business in
China&#8221; (beginning on Page 29).</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Unless
otherwise indicated or the context requires otherwise, references in this prospectus to &#8220;China&#8221; or the &#8220;PRC&#8221;
are to the mainland of People&#8217;s Republic of China, Taiwan, Hong Kong Special Administrative Region of the People&#8217;s Republic
of China (&#8220;HKSAR&#8221; or &#8220;Hong Kong&#8221;), and the special administrative regions of Macau (for the purposes of this
prospectus only); &#8220;mainland China&#8221; are to the mainland of the People&#8217;s Republic of China, excluding Taiwan Hong Kong,
and Macau (for the purposes of this prospectus only); &#8220;Mainland China Subsidiaries&#8221; refer to our subsidiaries incorporated
in mainland China, including Dogness Intelligent Technology (Dongguan) Co., Ltd., a mainland China company (&#8220;Dongguan Dogness&#8221;),
Dongguan Jiasheng Enterprise Co., Ltd., a mainland China company (&#8220;Dongguan Jiasheng&#8221;), Zhangzhou Meijia Metal Product Co.,
Ltd, a mainland China company (&#8220;Meijia&#8221;), and Dogness Intelligence Technology Co., Ltd., a mainland China company (&#8220;Intelligence
Guangzhou&#8221;); &#8220;Hong Kong Subsidiaries&#8221; refer to our subsidiaries incorporated in Hong Kong, including Jiasheng Enterprise
(Hongkong) Co., Limited, a Hong Kong company (&#8220;HK Jiasheng&#8221;) and Dogness (Hongkong) Pet&#8217;s Products Co., Limited, a
Hong Kong company (&#8220;HK Dogness&#8221;). We will also refer to all of our subsidiaries, as the &#8220;Subsidiaries&#8221;.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Securities registered under the Securities Act and the Exchange Act are of the off-shore holding company Dogness (International) Corporation
(the &#8220;Company&#8221;), a British Virgin Islands company, which owns equity interests, directly or indirectly, of the operating
subsidiaries. Subsidiaries conduct operations in China and the holding company does not conduct operations in China.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>We
are subject to legal and operational risks associated with being based in and having the majority of the company&#8217;s operations in
mainland China and Hong Kong. These risks include, among others, the following:</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>PRC
    government interference</i>. The Chinese government may intervene or influence the operation of our Hong Kong and mainland China
    operating entities and exercise significant oversight and discretion over the conduct of their business and may intervene in or influence
    their operations at any time with little advance notice, or may exert more control over offerings conducted overseas and/or foreign
    investment in China-based issuers, which could result in a material change in our operations and/or the value of our Class A Common
    Shares. Any actions by the Chinese government to exert more oversight and control over offerings that are conducted overseas and/or
    foreign investment in China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer
    Securities to investors and cause the value of such securities to significantly decline or be worthless. </b>See Risk Factors &#8211;
    Risks Related to Doing Business in China <i>&#8211; &#8220;China&#8217;s economic, political and social conditions, as well as changes
    in any government policies, laws and regulations may be quick with little advance notice and, could have a material adverse effect
    on our business and the value of our Class A Common Shares</i>&#8221; and &#8220;<i>The Chinese government exerts substantial influence
    over the manner in which we must conduct our business activities and may intervene or influence our operations at any time, which
    could result in a material change in our operations and the value of our Class A Common Shares&#8221; </i>and &#8220;<i>The Chinese
    government exerts oversight and control over overseas offerings and listing conducted by China-based issuers under the Listing Records
    Rules and/or the Confidentiality Provisions, which could significantly limit or completely hinder our ability to offer or continue
    to offer our Class A Common Shares to investors and could cause the value of our Class A Common Shares to significantly decline or
    become worthless</i>&#8221;.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Uncertain
    PRC legal enforcement</i></b>. <b>The mainland China legal system is based on written statutes. Prior court decisions may be cited
    for reference but have limited precedential value. We conduct our business primarily through our subsidiaries established in China.
    These subsidiaries are generally subject to laws and regulations applicable to foreign investment in China. However, since these
    laws and regulations are relatively new and the mainland China legal system continues to rapidly evolve, the interpretations of many
    laws, regulations and rules are not always uniform and enforcement of these laws, regulations and rules involves uncertainties, which
    may limit legal protections available to us.</b> See Risk Factors &#8211; Risks Related to Doing Business in China <i>&#8211; &#8220;Uncertainties
    with respect to the mainland China legal system could have a material adverse effect on us</i>&#8221;.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Shareholder
    enforcement risk</i></b>. <b>Since we conduct a significant portion of our operations in mainland China, the majority of our assets
    are located in mainland China, and all of our directors, officers or senior management other than Yunhao Chen, are located in mainland
    China, it may be more difficult for shareholders to enforce liabilities and enforce judgments on those individuals. Our PRC legal
    counsel, Guangdong Jiamao Law Firm,  has advised us that mainland China does not have treaties providing for the reciprocal
    recognition and enforcement of judgments of courts with the Cayman Islands and many other countries and regions. Therefore, recognition
    and enforcement in mainland China of judgments of a court in any of these jurisdictions outside mainland China in relation to any
    matter not subject to a binding arbitration provision may be difficult or impossible. </b>See Risk Factors &#8211; Risks Related
    to Doing Business in China &#8211; &#8220;You may experience difficulties in effecting service of legal process, enforcing foreign
    judgments or bringing original actions in mainland China against us or Hong Kong or other foreign laws, and the ability of U.S. authorities
    to bring actions in mainland China may also be limited&#8221;.</span></td></tr>
  </table>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Repatriation
    of offering proceeds to PRC</i>. In utilizing the proceeds of this offering in the manner described in &#8220;Use of Proceeds,&#8221;
    as an offshore holding company of our PRC operating subsidiary, we may decide to make loans or additional contributions to our PRC
    subsidiary or the VIE. Certain governmental registrations, submissions or approvals need to be completed or obtained in this regard.
    Failure to complete such registrations, submissions or obtain such approvals, our ability to use the proceeds from our initial public
    offering and to capitalize or otherwise fund our PRC operations may be negatively affected. </b>See Risk Factors &#8211; Risks Related
    to Doing Business in China &#8211; &#8220;<i>We must remit the offering proceeds to China before they may be used to benefit our
    business in China, the process of which may be time-consuming, and we cannot assure that we can finish all necessary governmental
    registration processes in a timely manner&#8221; </i>and &#8220;<i>PRC regulation of loans and direct investment by offshore holding
    companies to mainland China entities may delay or prevent us from using the proceeds of this Offering to make loans or additional
    capital contributions to our Mainland China Subsidiary, which could materially and adversely affect our liquidity and our ability
    to fund and expand our business&#8221;</i>.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">&#160;</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Restriction
    on currency conversion. </i>The PRC government imposes control on the convertibility of the RMB into foreign currencies and, in certain
    cases, the remittance of currency out of mainland China. We receive a majority of our revenues in Renminbi, which currently is not
    a freely convertible currency. Restrictions on currency conversion imposed by the PRC government may limit our ability to use revenues
    generated in Renminbi to fund our expenditures denominated in foreign currencies or our business activities outside mainland China.
    </b>See Risk Factors &#8211; Risks Related to Doing Business in China &#8211; &#8220;<i>Governmental control of currency conversion
    may limit our ability to use our revenues effectively and the ability of our Mainland China Subsidiaries to obtain financing</i>&#8221;.
    </span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Restrictions
    on dividend payment</i>. As a holding company, we rely principally on dividends and other distributions on equity from our subsidiaries,
    including those based in China, for our cash requirements, including for services of any debt we may incur. Our Mainland China Subsidiaries&#8217;
    ability to distribute dividends is based upon their distributable earnings. Current PRC regulations permit our Mainland China Subsidiaries
    to pay dividends to their respective shareholders only out of their accumulated profits, if any, determined in accordance with PRC
    accounting standards and regulations. In addition, if our Mainland China Subsidiaries incur debt on their own behalf in the future,
    the instruments governing the debt may restrict their ability to pay dividends or make other payments to us. Any limitation on the
    ability of our Mainland China Subsidiaries to distribute dividends or other payments to their respective shareholders could materially
    and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends
    or otherwise fund and conduct our business. </b>See Risk Factors &#8211; Risks Related to Doing Business in China &#8211; &#8220;<i>We
    may rely on dividends and other distributions on equity paid by our subsidiaries, including those based in the PRC, for our cash
    and financing requirements we may have, and any limitation on the ability of our Mainland China Subsidiaries to make payments to
    us could have a material and adverse effect on our ability to conduct our business</i>&#8221;.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Possibility
    to be classified as &#8220;Resident Enterprise.&#8221;</i> Under the Enterprise Income Tax Law, Dogness may be classified as a &#8220;Resident
    Enterprise&#8221; of China. Such classification will likely result in unfavorable tax consequences to us and our shareholders outside
    of mainland China, including repayment of any underpayments and penalties for underpayment. </b>See Risk Factors &#8211; Risks Related
    to Doing Business in China &#8211; &#8220;<i>We may be classified as a &#8220;resident enterprise&#8221; for mainland China enterprise
    income tax purposes; such classification could result in unfavorable tax consequences to us and our non-mainland China shareholders&#8221;</i>.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Recently,
the PRC government initiated a series of regulatory actions and statements to regulate business operations in China with little advance
notice, including cracking down on illegal activities in the securities market, adopting new measures to impose filing requirements on
China-based companies for their initial public offerings or listings in overseas stock markets and extend the scope of cybersecurity
reviews, and expanding the efforts in anti-monopoly enforcement.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
July 6, 2021, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council
jointly released the Opinions on Severely Cracking Down on Illegal Securities Activities According to Law, or the Opinions. The Opinions
emphasized the need to strengthen the administration over illegal securities activities, and the need to strengthen the supervision over
overseas listings by Chinese companies. Effective measures, such as promoting the construction of relevant regulatory systems will be
taken to deal with the risks and incidents of China-concept overseas listed companies, and cybersecurity and data privacy protection
requirements, etc. The Opinions and any related implementing rules to be enacted may subject us to compliance requirement in the future.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
February 17, 2023, with the approval of the State Council, China Securities Regulatory Commission (the &#8220;CSRC&#8221;) issued the
relevant system and rules for the management of overseas listing records, which will be implemented from March 31, 2023. A total of six
institutional rules (the &#8220;Listing Records Rules&#8221;) have been issued this time, including the Trial Measures for the Administration
of Overseas Issuance and Listing of Securities by Domestic Enterprises (hereinafter referred to as the &#8220;Trial Measures&#8221;)
and five supporting guidelines. Under the Listing Records Rules, a company established in mainland China seeking securities offering
and listing, by both direct or indirect means, in an overseas market is required to undertake filing procedures with the CSRC for its
overseas offering and listing activities. The Trial Measures also set forth a list of circumstance under which overseas offering and
listing by domestic companies established in mainland China is prohibit, including: (i) where such securities offering and listing is
explicitly prohibited by the PRC laws; (ii) where the intended securities offering and listing may endanger national security as reviewed
and determined by competent PRC authorities under the State Council in accordance with PRC laws; (iii) where the domestic company established
in mainland China, or its controlling shareholders and the actual controller, have committed crimes such as corruption, bribery, embezzlement,
misappropriation of property or undermining the order of the socialist market economy during the latest three (3) years; (iv) where the
domestic company established in mainland China seeking securities offering and listing is suspected of committing crimes or major violations
of laws and regulations, and is under investigation according to law, and no conclusion has yet been made thereof; and (v) where there
are material ownership disputes over equity held by the controlling shareholder of the company established in mainland China or by other
shareholders that are controlled by the controlling shareholder and/or actual controller. In accordance with the Trial Measures, the
listing and trading of our Class A Common Shares on Nasdaq is deemed as an indirect overseas offering and listing by domestic companies
established in mainland China, and thus, we are subject to the Listing Records Rules and the relevant filing procedures as required.
Further, we believe, as of the date of this annual report, none of the circumstances prohibiting the overseas offering and listing by
domestic companies established in mainland China as listed above applies to us, and we can offer and continue to offer our Class A Common
Shares on Nasdaq.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
accordance with the Notice on the Arrangement for the Filing of Overseas Offering and Listing by Domestic Companies issued by the CSRC
along with the Listing Records Rules on the same day, we are deemed as an &#8220;Existing Issuer&#8221; because we have been listed overseas
before March 31, 2023. Under such Notice, we are not required to undertake the initial filing procedure immediately. However, we shall
carry out filing procedures as required in a timely manner for the subsequent events, including any further follow-up offerings on Nasdaq,
dual and/or secondary offering and listing on different overseas markets, and occurrence of material events including change of control,
investigations or sanctions imposed by overseas securities regulatory agencies or other relevant competent authorities, change of listing
status or transfer of listing segment, and voluntary or mandatory delisting. If we or our Mainland China Subsidiaries in future fail
to undertake filing procedures as stipulated in the Trial Measures, or offer and list securities in an overseas market in violation of
the Trial Measures, the CSRC may order rectification, issue warnings to us and/or our Mainland China Subsidiaries, and impose a fine
of between RMB 1,000,000 yuan and RMB 10,000,000 yuan. The CSRC may also inform its regulatory counterparts in the overseas jurisdictions,
such as the SEC, via cross-border securities regulatory cooperation mechanisms.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Further,
on February 24, 2023, the CSRC, together with Ministry of Finance, National Administration of State Secrets Protection, and National
Archives Administration of China, released the Provisions on Strengthening the Confidentiality and Archives Administration Related to
the Overseas Securities Offering and Listing by Domestic Enterprises (the &#8220;Confidentiality Provisions&#8221;), which will come
into effect on March 31, 2023 with the Trial Measures. Under the Confidentiality Provisions, domestic companies established in mainland
China seeking overseas offering and listing, by both direct and indirect means, are required to institute a sound confidentiality and
archives system. If such domestic companies established in mainland China intend to, either directly or through its overseas listed entity,
publicly disclose or provide to relevant individuals or entities including securities companies, securities service providers and overseas
regulators, any documents and materials that contain state secrets or working secrets of government agencies, they shall obtain approval
from competent authorities and complete the relevant filing procedure with the competent secrecy administrative department prior to their
disclosure or provision of such documents and materials. Further, if they provide or publicly disclose documents and materials which
may adversely affect national security or public interests, they shall strictly follow the corresponding procedures in accordance with
relevant laws and regulations. Once effective, any failure or perceived failure by us or our subsidiaries to comply with the above confidentiality
and archives administration requirements under the Confidentiality Provisions and other relevant PRC laws and regulations may cause relevant
entities to be held legally liable by competent authorities, and referred to the judicial organ to be investigated for criminal liability
if suspected of committing a crime. As of the date of this annual report, we believe that we and our subsidiaries have not provided or
publicly disclosed any documents or materials involving state secrets or work secrets of PRC government agencies or any of which may
adversely affect national security or public interests, to relevant securities companies, securities service institutions, overseas regulatory
agencies and other entities and individuals. We intend to strictly comply with the Confidentiality Provisions and other relevant PRC
laws and regulations in our offering and listing on Nasdaq in future.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">However,
any failure of us or our Mainland China Subsidiaries to fully comply with the Listing Records Rules and/or the Confidentiality Provisions,
once effective, may significantly limit or completely hinder our ability to offer or continue to offer our Class A Common Shares on Nasdaq,
cause significant disruption to our business operations, severely damage our reputation, materially and adversely affect our financial
condition and results of operations and cause our Class A Common Shares to significantly decline in value or become worthless. See &#8220;Risk
Factor &#8212; Risks Related to Doing Business in China &#8212; <i>The Chinese government exerts oversight and control over overseas
offerings and listing conducted by China-based issuers under the Listing Records Rules and the Confidentiality Provisions, which could
significantly limit or completely hinder our ability to offer or continue to offer our Class A Common Shares to investors and could cause
the value of our Class A Common Shares to significantly decline or become worthless.&#8221;</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
or our Subsidiaries may also be subject to PRC laws relating to the use, sharing, retention, security and transfer of confidential and
private information, such as personal information and other data. On November 14, 2021, the Cyberspace Administration of China (&#8220;CAC&#8221;)
released the Regulations on the Network Data Security Management (Draft for Comments), or the Data Security Management Regulations Draft,
to solicit public opinion and comments till December 13, 2021, which has not been promulgated as of the date of this annual report. Pursuant
to the Data Security Management Regulations Draft, data processors holding more than one million users/users&#8217; individual information
shall be subject to cybersecurity review before listing abroad. Data processing activities refers to activities such as the collection,
retention, use, processing, transmission, provision, disclosure, or deletion of data. According to the latest amended Cybersecurity Review
Measures, which was promulgated on November 16, 2021 and became effective on February 15, 2022, an online platform operator holding more
than one million users/users&#8217; individual information shall be subject to cybersecurity review before listing abroad. As of the
date of this annual report, we have not been informed by any PRC governmental authority of any requirement that we or our Subsidiaries
file for approval for this offering. We don&#8217;t believe that we or any of our Subsidiaries will be subject to either the amended
Cybersecurity Review Measures or the Data Security Management Regulations Draft since none of us hold more than one million users/users&#8217;
individual information. However, it is uncertain how the above mentioned new laws or regulations will be enacted, interpreted or implemented,
and whether it will affect us. Since the regulatory actions are new, it is highly uncertain how soon legislative or administrative regulation
making bodies will respond and what existing or new laws or regulations or detailed implementations and interpretations will be modified
or promulgated, if any, and the potential impact such modified or new laws and regulations will have on our Subsidiaries&#8217; daily
business operation, their ability to accept foreign investments, and our ability to continue to list or offer securities on an U.S. exchange.
See &#8220;Risk Factor &#8212; <span style="text-decoration: underline">Risks Related to Doing Business in China</span> &#8212; <i>The Chinese government exerts substantial influence
over the manner in which we must conduct our business activities and may intervene or influence our operations at any time, which could
result in a material change in our operations and the value of our Class A Common Shares.</i>&#8221;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
February 7, 2021, the Anti-Monopoly Committee of the State Council promulgated the Anti-monopoly Guidelines for the Platform Economy
Sector, or the Anti-monopoly Guideline, aiming to improve anti-monopoly administration on online platforms. The Anti-monopoly Guideline,
operating as the compliance guidance under the then-existing PRC anti-monopoly regulatory regime for platform economy operators, specifically
prohibits certain acts of the platform economy operators that may have the effect of eliminating or limiting market competition, such
as concentration of undertakings. The PRC anti-monopoly regulatory regime started with the Anti-Monopoly Law promulgated by the Standing
Committee of the National People&#8217;s Congress of China (&#8220;SCNPC&#8221;) on August 30, 2007 and effective on August 1, 2008,
which requires that transactions which are deemed concentrations and involve parties with specified turnover thresholds must be cleared
by the Ministry of Commerce of China (&#8220;MOFCOM&#8221;) before they can be completed. In addition, on February 3, 2011, the General
Office of the State Council promulgated a Notice on Establishing the Security Review System for Mergers and Acquisitions of Domestic
Enterprises by Foreign Investors, or Circular 6, which officially established a security review system for mergers and acquisitions of
domestic enterprises by foreign investors. Further, on August 25, 2011, MOFCOM promulgated the Regulations on Implementation of Security
Review System for the Merger and Acquisition of Domestic Enterprises by Foreign Investors, or the MOFCOM Security Review Regulations,
which became effective on September 1, 2011, to implement Circular 6. Under Circular 6, a security review is required for mergers and
acquisitions by foreign investors having &#8220;national defense and security&#8221; concerns and mergers and acquisitions by which foreign
investors may acquire the &#8220;de facto control&#8221; of domestic enterprises with &#8220;national security&#8221; concerns. Under
the MOFCOM Security Review Regulations, MOFCOM will focus on the substance and actual impact of the transaction when deciding whether
a specific merger or acquisition is subject to security review. If MOFCOM decides that a specific merger or acquisition is subject to
security review, it will submit it to the Inter-Ministerial Panel, an authority established under the Circular 6 led by the NDRC, and
MOFCOM under the leadership of the State Council, to carry out the security review. The regulations prohibit foreign investors from bypassing
the security review by structuring transactions through trusts, indirect investments, leases, loans, control through contractual arrangements
or offshore transactions.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="S1_002"></span>Item
1. Identity of Directors, Senior Management and Advisers</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable for annual reports on Form 20-F.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="S1_003"></span>Item
2. Offer Statistics and Expected Timetable</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable for annual reports on Form 20-F.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="S1_004"></span>Item
3. Key Information</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Dividend
Distributions and Cash Transfer among Dogness and the Subsidiaries</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
a holding company, we may rely on dividends and other distributions on equity paid by our subsidiaries, including those based in mainland
China, for our cash and financing requirements. If any of our Mainland China Subsidiaries incurs debt on its own behalf in the future,
the instruments governing such debt may restrict their ability to pay dividends to us. To date, none of the Subsidiaries has made any
dividends or distributions to Dogness, and Dogness has not made any dividends or distributions to our shareholders. We anticipate that
we will retain any earnings to support operations and to finance the growth and development of our business. Therefore, we do not expect
to pay Company cash dividends in the foreseeable future.&#160;&#160; Under British Virgin Islands law, we may only pay dividends from
surplus (the excess, if any, at the time of the determination of the total assets of our company over the sum of our liabilities, as
shown in our books of account, plus our capital), and we must be solvent before and after the dividend payment in the sense that we will
be able to satisfy our liabilities as they become due in the ordinary course of business; and the realizable value of assets of our company
will not be less than the sum of our total liabilities, other than deferred taxes as shown on our books of account, and our capital.
If we determine to pay dividends on any of our Common Shares in the future, as a holding company, we will be dependent on receipt of
funds from our Hong Kong subsidiaries, HK Jiasheng and HK Dogness. Current PRC regulations permit the Mainland China Subsidiaries to
pay dividends to HK Dogness only out of their accumulated profits, if any, determined in accordance with Chinese accounting standards
and regulations. In addition, each of our subsidiaries in mainland China is required to set aside at least 10% of its after-tax profits
each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital. Each of such entity in mainland
China is also required to further set aside a portion of its after-tax profits to fund the employee welfare fund, although the amount
to be set aside, if any, is determined at the discretion of its board of directors. Although the statutory reserves can be used, among
other ways, to increase the registered capital and eliminate future losses in excess of retained earnings of the respective companies,
the reserve funds are not distributable as cash dividends except in the event of liquidation.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
PRC government also imposes controls on the conversion of RMB into foreign currencies and, in certain cases, the remittance of currencies
out of mainland China. We receive a majority of our revenues in Renminbi, which currently is not a freely convertible currency. Restrictions
on currency conversion imposed by the PRC government may limit our ability to use revenues generated in Renminbi to fund our expenditures
denominated in foreign currencies or our business activities outside China. Under China&#8217;s existing foreign exchange regulations,
Renminbi may be freely converted into foreign currency for payments relating to current account transactions, which include among other
things dividend payments and payments for the import of goods and services, by complying with certain procedural requirements. Our Mainland
China Subsidiaries are able to pay dividends in foreign currencies to us without prior approval from the related government agencies,
by complying with certain procedural requirements. Our Mainland China Subsidiaries may also retain foreign currency in their respective
current account bank accounts for use in payment of international current account transactions. However, we cannot assure you that the
PRC government will not at its discretion take measures in the future to restrict access to foreign currencies for current account transactions.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Conversion
of Renminbi into foreign currencies, and of foreign currencies into Renminbi, for payments relating to capital account transactions,
which principally includes investments and loans, generally requires the approval of China&#8217;s State Administration of Foreign Exchange
(&#8220;SAFE&#8221;) or other relevant PRC governmental authorities. Any foreign loans procured by our Mainland China Subsidiaries is
required to be registered with SAFE or its local branches or satisfy relevant requirements. According to the relevant PRC regulations
on foreign-invested enterprises in China, capital contributions to our Mainland China Subsidiaries are subject to the approval of or
filing with State Administration for Market Regulation in its local branches, the Ministry of Commerce in its local branches and registration
with a local bank authorized by SAFE. For these capital account transactions, we must take the steps legally required under the PRC laws,
for example, we will open a special foreign exchange account, remit the offering proceeds into such special foreign exchange account,
and apply for settlement of the foreign exchange. The timing of the process is difficult to estimate because the efficiencies of different
SAFE branches can vary materially. In light of the various requirements imposed by PRC regulations on loans to, and direct investment
in, mainland China entities by offshore holding companies, we cannot assure you that we will be able to complete the necessary government
registrations or obtain the necessary government approvals on a timely basis, if at all, with respect to future loans by us to our Mainland
China Subsidiaries or with respect to future capital contributions by us to our Mainland China Subsidiaries. If we fail to complete such
registrations or obtain such approvals, our ability to use the proceeds from this offering and to capitalize or otherwise fund our mainland
China operations may be negatively affected, which could materially and adversely affect our liquidity, our ability to fund and expand
our business and our Common Shares. On the other hand, restrictions on the convertibility of the Renminbi for capital account transactions
could affect the ability of our Mainland China Subsidiaries to make investments overseas or to obtain foreign currency through debt or
equity financing, including by means of loans or capital contributions from us. We cannot assure you that the registration process will
not delay or prevent the conversion of Renminbi for use outside of China. &#160;Currently, we have installed cash management policies
or procedures in place that dictate how funds are transferred, under an umbrella of corporate policies and financial reporting policies.
Even though our policies do not specifically address the limitations, as discussed above, on the amount of funds the Company can transfer
out of China, if we decide to transfer cash out of China in the future, all relevant transfers will be conducted in compliance with such
limitations. Please see &#8220;Risk Factor <i>&#8212; </i><span style="text-decoration: underline">Risks Related to Doing Business in China</span> <i>&#8212; China&#8217;s economic,
political and social conditions, as well as changes in any government policies, laws and regulations, could have a material adverse effect
on our business&#8221;; &#8220;</i>Risk Factor <i>&#8212; </i><span style="text-decoration: underline">Risks Related to Doing Business in China</span> <i>&#8212; We may rely on
dividends and other distributions on equity paid by our subsidiaries, including those based in mainland China, for our cash and financing
requirements we may have, and any limitation on the ability of our Mainland China Subsidiaries to make payments to us could have a material
and adverse effect on our ability to conduct our business&#8221;; &#8220;</i>Risk Factor <i>&#8212; </i><span style="text-decoration: underline">Risks Related to Doing Business
in China</span> <i>&#8212; PRC regulation of loans and direct investment by offshore holding companies to mainland China entities may delay
or prevent us from using the proceeds of this Offering to make loans or additional capital contributions to our Mainland China Subsidiary,
which could materially and adversely affect our liquidity and our ability to fund and expand our business&#8221;; &#8220;</i>Risk Factor
<i>&#8212; </i><span style="text-decoration: underline">Risks Related to Doing Business in China</span> <i>&#8212; Governmental control of currency conversion may limit our ability
to use our revenues effectively and the ability of our Mainland China Subsidiaries to obtain financing&#8221;; and </i>&#8216;Risk Factor
<i>&#8212; </i><span style="text-decoration: underline">Risks Related to Doing Business in China</span> <i>&#8212; We must remit the offering proceeds to China before they may
be used to benefit our business in China, the process of which may be time-consuming, and we cannot assure that we can finish all necessary
governmental registration processes in a timely manner.</i>&#8221;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>&#160;</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i></i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition, the transfer of funds among our Mainland China Subsidiaries are subject to the Provisions of the Supreme People&#8217;s Court
on Several Issues Concerning the Application of Law in the Trial of Private Lending Cases (2020 Revision, the &#8220;Provisions on Private
Lending Cases&#8221;), which was implemented on August 20, 2020 to regulate the financing activities between natural persons, legal persons
and unincorporated organizations. The Provisions on Private Lending Cases does not prohibit using cash generated from one subsidiary
to fund the operations of another subsidiary in China. &#160;As of the date of this annual report, no cash generated from one subsidiary
has been used to fund another subsidiary&#8217;s operations, expect for the financing obtained by the Company be transferred to operating
entities for their operations. We have not been notified of any other restriction which could limit our Mainland China Subsidiaries&#8217;
ability to transfer cash between subsidiaries in China, and do not anticipate any difficulties or limitations in our ability to transfer
cash between subsidiaries. As of the date of this annual report, no cash generated from one subsidiary has been used to fund another
subsidiary&#8217;s operations; for that reason, our cash management policies do not specifically address this type of transfers between
subsidiaries. We do not anticipate any occasions where cash generated from one subsidiary needs to be transferred to another subsidiary
and will comply with PRC laws discussed above should we decide to conduct such a transfer.&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>&#160;</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Cash
flow between Dogness and the Subsidiaries primarily consists of transfers from Dogness to these Subsidiaries for short-term working capital
loan, which is mainly used in payment of operating expenses and investments. To date, there are no other assets transferred between Dogness
and the Subsidiaries except for the below cash transfers:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
    the year ended June 30, 2021, Dogness transferred $505,850 to the Delaware subsidiary, Dogness Group LLC, for short term working
    capital loan purpose and transferred $2,581,533 to HK Dogness for short term working capital loan purpose. The source of funds was
    the registered direct public offering we completed on January 20,2021 with net proceeds of $6.6 million. For the year ended June
    30, 2021, Dogness also received cash repayment transferred from HK Dogness in the amount of $304.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
    the year ended June 30, 2022, Dogness transferred $186,500 to the Delaware subsidiary, Dogness Group LLC, for working capital loan
    purpose and transferred $15,577,896 to HK Dogness for working capital loan purpose. The source of the funds was mainly from the equity
    financing and the exercise of warrants in fiscal 2022. For the year ended June 30, 2022, Dogness also received cash payment transferred
    from HK Dogness in the amount of $1,999,787.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
    the year ended June 30, 2023, Dogness transferred $13.3 million to HK Dogness for working capital loan purpose. The source of the
    funds was mainly from the equity financing and the exercise of warrants in fiscal 2022. </span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
the future, cash proceeds raised from overseas financing activities may be transferred by Dogness to the Subsidiaries via capital contribution
or shareholder loans, as the case may be.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>A.
Selected Financial Data</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
the table below, we provide you with historical selected financial data for the fiscal years ended June 30, 2023, 2022, and 2021. This
information is derived from our consolidated financial statements included elsewhere in this annual report. Historical results are not
necessarily indicative of the results that may be expected for any future period. When you read this historical selected financial data,
it is important that you read it along with the historical financial statements and related notes and &#8220;Item 5. Operating and Financial
Review and Prospects&#8221; included elsewhere in this annual report. Our audited consolidated financial statements are prepared and
presented in accordance with Generally Accepted Accounting Principles in the United States of America, or U.S. GAAP.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">13,225,261</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(1,227,449</td><td style="text-align: left">)</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">$</td><td style="text-align: right">(0.18</td><td style="text-align: left">)</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Balance
sheet data:</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="text-align: justify">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">14,003,843</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">97,871,328</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">100,796,722</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">93,845,408</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">63,551,261</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">69,023,927</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">9,317,966</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">6,485,021</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">21,262,335</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">10,769,734</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">8,072,423</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">21,526,023</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">12,320,746</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">28,943,003</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">12,043,333</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">8,072,423</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: justify">Total equity</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">76,345,305</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">88,475,976</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">64,902,405</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">51,507,928</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">60,951,504</td><td style="text-align: left">&#160;</td></tr>
  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Exchange
Rate Information</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
financial information is presented in U.S. dollars. The financial position and results of the operations of HK Dogness, HK Jiasheng,
Dongguan Dogness, Dongguan Jiasheng, Meijia and Intelligence Guangzhou are determined using the Chinese Renminbi (&#8220;RMB&#8221;),
the local currency, as the functional currency. Dogness Japan uses Japanese Yen as the functional currency (the shares held in Dogness
Japan were sold on November 28, 2020 during the fiscal year ended June 30, 2021), while Dogness Overseas and Dogness Group use U.S Dollar
as their functional currency.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
results of operations and the consolidated statements of cash flows denominated in foreign currencies are translated at the average rate
of exchange during the reporting period. Assets and liabilities denominated in foreign currencies at the balance sheet date are translated
at the applicable rates of exchange in effect at that date. The equity denominated in the functional currency is translated at the historical
rate of exchange at the time of capital contribution. Because cash flows are translated based on the average translation rate, amounts
related to assets and liabilities reported on the consolidated statements of cash flows will not necessarily agree with changes in the
corresponding balances on the consolidated balance sheets. Translation adjustments arising from the use of different exchange rates from
period to period are included as a separate component of accumulated other comprehensive income included in consolidated statements of
changes in equity. Gains and losses from foreign currency transactions are included in the consolidated statement of income and comprehensive
income.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
relevant exchange rates are listed below:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: white">
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: #CCEEFF">
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: white">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
make no representation that any RMB or U.S. dollar amounts could have been, or could be, converted into U.S. dollars or RMB, as the case
may be, at any particular rate, or at all. The PRC government imposes control over its foreign currency reserves in part through direct
regulation of the conversion of RMB into foreign exchange and through restrictions on foreign trade. We do not currently engage in currency
hedging transactions.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table sets forth information concerning exchange rates between the RMB and the U.S. dollar for the periods indicated.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
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  <tr style="vertical-align: bottom">
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">2022</span></td><td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">6.8983</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">6.7328</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">7.3055</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">6.3094</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">2023
    (<b>through October 10, 2023</b>)</span></td><td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">7.2954</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">7.0406</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">7.3430</span></p></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">6.7030</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of October 10, 2023, the exchange rate is RMB 7.2954 to $1.00.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>B.
Capitalization and Indebtedness</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable for annual reports on Form 20-F.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>C.
Reasons for the Offer and Use of Proceeds</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable for annual reports on Form 20-F.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>D.
Risk Factors</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Before
you decide to purchase our Class A Common Shares, you should understand the high degree of risk involved. You should consider carefully
the following risks and other information in this report, including our consolidated financial statements and related notes. If any of
the following risks actually occur, our business, financial condition and operating results could be adversely affected. As a result,
the trading price of our Class A Common Shares could decline, perhaps significantly.</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Please
also read carefully the section below entitled &#8220;Cautionary Note Regarding Forward-Looking Statements.&#8221;</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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    <div style="break-before: page; margin-top: 6pt"><p style="margin: 0pt">&#160;</p></div>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>&#160;</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i></i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Summary
of Major Risk Factors</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>PRC
    government interference</i>. The Chinese government may intervene or influence the operation of our Hong Kong and mainland China
    operating entities and exercise significant oversight and discretion over the conduct of their business and may intervene in or influence
    their operations at any time with little advance notice, or may exert more control over offerings conducted overseas and/or foreign
    investment in China-based issuers, which could result in a material change in our operations and/or the value of our Class A Common
    Shares. Any actions by the Chinese government to exert more oversight and control over offerings that are conducted overseas and/or
    foreign investment in China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer
    Securities to investors and cause the value of such securities to significantly decline or be worthless.</b> See Risk Factors &#8211;
    Risks Related to Doing Business in China <i>&#8211; &#8220;China&#8217;s economic, political and social conditions, as well as changes
    in any government policies, laws and regulations may be quick with little advance notice and, could have a material adverse effect
    on our business and the value of our Class A Common Shares</i>&#8221; and &#8220;<i>The Chinese government exerts substantial influence
    over the manner in which we must conduct our business activities and may intervene or influence our operations at any time, which
    could result in a material change in our operations and the value of our Class A Common Shares&#8221; </i>and &#8220;<i>The Chinese
    government exerts oversight and control over overseas offerings and listing conducted by China-based issuers under the Listing Records
    Rules and/or the Confidentiality Provisions, which could significantly limit or completely hinder our ability to offer or continue
    to offer our Class A Common Shares to investors and could cause the value of our Class A Common Shares to significantly decline or
    become worthless</i>&#8221;.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Uncertain
    PRC legal enforcement</i>. The mainland China legal system is based on written statutes. Prior court decisions may be cited for reference
    but have limited precedential value. We conduct our business primarily through our subsidiaries established in China. These subsidiaries
    are generally subject to laws and regulations applicable to foreign investment in China. However, since these laws and regulations
    are relatively new and the mainland China legal system continues to rapidly evolve, the interpretations of many laws, regulations
    and rules are not always uniform and enforcement of these laws, regulations and rules involves uncertainties, which may limit legal
    protections available to us.</b> See Risk Factors &#8211; Risks Related to Doing Business in China <i>&#8211; &#8220;Uncertainties
    with respect to the mainland China legal system could have a material adverse effect on us</i>&#8221;.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Shareholder
    enforcement risk</i>. Since we conduct a significant portion of our operations in mainland China, the majority of our assets are
    located in mainland China, and all of our directors, officers or senior management other than Yunhao Chen, are located in mainland
    China, it may be more difficult for shareholders to enforce liabilities and enforce judgments on those individuals. Our PRC legal
    counsel, Guangdong Jiamao Law Firm, has advised us that mainland China does not have treaties providing for the reciprocal
    recognition and enforcement of judgments of courts with the Cayman Islands and many other countries and regions. Therefore, recognition
    and enforcement in mainland China of judgments of a court in any of these jurisdictions outside mainland China in relation to any
    matter not subject to a binding arbitration provision may be difficult or impossible.</b> See Risk Factors &#8211; Risks Related
    to Doing Business in China &#8211; &#8220;You may experience difficulties in effecting service of legal process, enforcing foreign
    judgments or bringing original actions in mainland China against us or Hong Kong or other foreign laws, and the ability of U.S. authorities
    to bring actions in mainland China may also be limited&#8221;.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Repatriation
    of offering proceeds to PRC</i>. In utilizing the proceeds of this offering in the manner described in &#8220;Use of Proceeds,&#8221;
    as an offshore holding company of our PRC operating subsidiary, we may decide to make loans or additional contributions to our PRC
    subsidiary or the VIE. Certain governmental registrations, submissions or approvals need to be completed or obtained in this regard.
    Failure to complete such registrations, submissions or obtain such approvals, our ability to use the proceeds from our initial public
    offering and to capitalize or otherwise fund our PRC operations may be negatively affected.</b> See Risk Factors &#8211; Risks Related
    to Doing Business in China &#8211; &#8220;<i>We must remit the offering proceeds to China before they may be used to benefit our
    business in China, the process of which may be time-consuming, and we cannot assure that we can finish all necessary governmental
    registration processes in a timely manner&#8221;</i> and &#8220;<i>PRC regulation of loans and direct investment by offshore holding
    companies to mainland China entities may delay or prevent us from using the proceeds of this Offering to make loans or additional
    capital contributions to our Mainland China Subsidiary, which could materially and adversely affect our liquidity and our ability
    to fund and expand our business&#8221;</i>.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Restriction
    on currency conversion. </i>The PRC government imposes control on the convertibility of the RMB into foreign currencies and, in certain
    cases, the remittance of currency out of mainland China. We receive a majority of our revenues in Renminbi, which currently is not
    a freely convertible currency. Restrictions on currency conversion imposed by the PRC government may limit our ability to use revenues
    generated in Renminbi to fund our expenditures denominated in foreign currencies or our business activities outside mainland China.
    </b>See Risk Factors &#8211; Risks Related to Doing Business in China &#8211; &#8220;<i>Governmental control of currency conversion
    may limit our ability to use our revenues effectively and the ability of our Mainland China Subsidiaries to obtain financing</i>&#8221;.
    </span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Restrictions
    on dividend payment.</i> As a holding company, we rely principally on dividends and other distributions on equity from our subsidiaries,
    including those based in China, for our cash requirements, including for services of any debt we may incur. Our Mainland China Subsidiaries&#8217;
    ability to distribute dividends is based upon their distributable earnings. Current PRC regulations permit our Mainland China Subsidiaries
    to pay dividends to their respective shareholders only out of their accumulated profits, if any, determined in accordance with PRC
    accounting standards and regulations. In addition, if our Mainland China Subsidiaries incur debt on their own behalf in the future,
    the instruments governing the debt may restrict their ability to pay dividends or make other payments to us. Any limitation on the
    ability of our Mainland China Subsidiaries to distribute dividends or other payments to their respective shareholders could materially
    and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends
    or otherwise fund and conduct our business</b>. See Risk Factors &#8211; Risks Related to Doing Business in China &#8211; &#8220;<i>We
    may rely on dividends and other distributions on equity paid by our subsidiaries, including those based in the PRC, for our cash
    and financing requirements we may have, and any limitation on the ability of our Mainland China Subsidiaries to make payments to
    us could have a material and adverse effect on our ability to conduct our business</i>&#8221;.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Possibility
    to be classified as &#8220;Resident Enterprise.&#8221;</i> Under the Enterprise Income Tax Law, Dogness may be classified as a &#8220;Resident
    Enterprise&#8221; of China. Such classification will likely result in unfavorable tax consequences to us and our shareholders outside
    of mainland China, including repayment of any underpayments and penalties for underpayment. </b>See Risk Factors &#8211; Risks Related
    to Doing Business in China &#8211; &#8220;<i>We may be classified as a &#8220;resident enterprise&#8221; for mainland China enterprise
    income tax purposes; such classification could result in unfavorable tax consequences to us and our non-mainland China shareholders&#8221;</i>.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Risks
Related to Our Business</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
face risks related to health epidemics that could impact our sales and operating results.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
business could be adversely affected by the effects of a widespread outbreak of contagious disease, including the recent outbreak of
respiratory illness caused by a novel coronavirus first identified in Wuhan, Hubei Province, China. Any outbreak of contagious diseases,
and other adverse public health developments, particularly in China, could have a material and adverse effect on the business operations
of us and our Subsidiaries. These could include disruptions or restrictions on our ability to resume the general shipping agency services,
as well as temporary closures of our facilities and ports or the facilities of our customers and third-party service providers. Any disruption
or delay of our customers or third-party service providers would likely impact our operating results and the ability of the Company to
continue as a going concern. In addition, a significant outbreak of contagious diseases in the human population could result in a widespread
health crisis that could adversely affect the economies and financial markets of China and many other countries, resulting in an economic
downturn that could affect demand for our services and significantly impact our operating results.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>The
coronavirus disease 2019 (COVID-19) has had a significant impact on our operations since January 2020 and could materially adversely
affect our business and financial results for the remaining months of the 2023 calendar year.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
ability to manufacture and/or sell our products may be impaired by damage or disruption to our manufacturing, warehousing or distribution
capabilities, or to the capabilities of our suppliers, logistics service providers or distributors as a result of the impact from the
COVID-19. This damage or disruption could result from events or factors that are impossible to predict or are beyond our control, such
as raw material scarcity, pandemics, government shutdowns, disruptions in logistics, supplier capacity constraints, adverse weather conditions,
natural disasters, fire, terrorism or other events.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
COVID-19 pandemic, which has spread rapidly across the globe, resulted in adverse economic conditions and business disruptions. In reaction
to this outbreak, governments worldwide have imposed varying degrees of preventative and protective actions, such as temporary travel
bans, forced business closures, and stay-at-home orders, all in an effort to reduce the spread of the virus. Since this outbreak, business
activities in China and many other countries including U.S. have been disrupted by a series of emergency quarantine measures taken by
the government. 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 factory and operations beginning in early February until late March 2020, limited support from the employees,
delayed access to raw material supplies and inability to deliver products to customers on a timely basis, our business was negatively
impacted. While the spread of the disease has gradually returned under control in China, COVID-19 could still adversely affect the business
operation our Mainland China Subsidiaries and Hong Kong Subsidiaries and our financial results in the future. As a result, there is a
possibility that the Company&#8217;s revenues and operating cash flows may be significantly lower than expected for fiscal year 2023.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
and our Subsidiaries may incur liability for unpaid taxes, including interest and penalties.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
the normal course of business, we and our Subsidiaries may be subject to challenges from various PRC taxing authorities regarding the
amounts of taxes due. PRC taxing authorities may take the position that we or our Subsidiaries owe more taxes than it has paid. We recorded
tax liabilities of$1.0 million, $1.6 million, and $4.4 million as of June 30, 2023, 2022, and 2021, respectively, for the possible underpayment
of income and business taxes. It is possible that the tax liability of for past taxes may be higher than those amounts, if the PRC authorities
determine that penalties are applicable or that the correct amount has not been paid. Although the Company&#8217;s management believes
it may be able to negotiate with local PRC taxing authorities a reduction to any amounts that such authorities may believe are due and
a reduction to any interest or penalties thereon, we have no guarantee that we will be able to negotiate such a reduction. To the extent
we are able to negotiate such amounts, national-level taxing authorities may take the position that localities are without power to reduce
such liabilities, and such PRC taxing authorities may attempt to collect unpaid taxes, interest and penalties in amounts greatly exceeding
management&#8217;s estimates.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>If
our largest customers reduce their orders with us, such revenues would be very difficult to replace.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Although
we have also sold our products through distributors and trading companies, some of our largest customers are Petco and Pet Value, which
are by far the largest pet specialty chains in North America. Petco has around 1600 stores in the US and Pet Valu has around 600 stores
in Canada. There is not another brick-and-mortar customer that presents the opportunity that these customers present to us. As a result,
if we were to lose these accounts or if these customers purchased less of our products in the future, it would be difficult to replace
those lost revenues.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Our
smart products have only recently entered distribution.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">While
we are optimistic that our smart products such as collars, harnesses, feeders and robots will be important products for our company in
the future, we only recently begun to sell them and thus do not know whether they will prove popular with consumers. We have exhibited
these products at expos in multiple countries and have begun to receive orders, but our revenues for all smart products was approximately
$7.4 million, 13.5 million, and $7.8 million, during the years ended June 30, 2023, 2022, and 2021, respectively. As a result, we do
not have an accurate gauge of how well accepted they will be by consumers. If consumers do not appreciate our smart products, we may
not sell enough products to grow our market share in this new industry.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Our
smart products are not as well-known as those of our competitors.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">There
are a variety of competitors providing smart collars, smart feeders and smart treaters for dogs and cats that are more well-known than
our products. We are aware of more than a dozen competitors to our smart products, some of which have been on the market for several
years. Because smart collars are still a relatively new industry, we do not believe that there is a single leader. Nevertheless, we face
competition from more well-known products like the Whistle GPS Pet Tracker and Tractive, as well as products from more well-established,
better capitalized companies in the United States such as Garmin, which produces varieties of dog training and tracking devices. Similarly,
companies such as PetSafe, Petzi, Petcube, Arf Pets, and Furbo market food and treat dispensers with functionalities that in some cases
are similar to our products. If we are unable to achieve recognition for our technology or if consumers opt to use products from companies
they recognize more than our company, our smart collar and harness products may not be well accepted.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Our
smart collars and harnesses are currently between generations.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
debuted our C2 and H2 smart collars and harnesses in 2016. These products were designed to operate over 2G telephone technology. While
this platform was sufficient to meet the needs of the products, 2G speeds lag far behind currently available 4G and now 5G technology.
As a result, our C2 and H2 products have thus far obtained a very limited customer base. For this reason, we have been researching and
developing our next generation of smart collars and harnesses to operate with today&#8217;s higher internet speeds in mind. We are close
to the roll out of the C6 which relies on 4G network and C5 and C5 mini which rely on NB network. Before we are able to bring these products
to market fully, we anticipate that our sales of smart collars and harnesses, along with subscriptions for ongoing cellular services
for those products, will be nominal. If and when we are able to introduce our next generation of smart collars and harnesses, we are
unable to predict the extent to which consumers will be drawn to such new products.&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Our
smart collars rely on third-party cellular telephone companies and application developers for functionality.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">One
of the features of our smart collars is the ability to communicate between the owner&#8217;s cell phone and the collar, even when the
two are too far away to communicate directly. We achieve this by having a SIM card in the smart collar so that, so long as the collar
has a cell phone signal, it will communicate with the telephone. We cooperate with cell phone companies in our target markets to provide
cellular service to these SIM cards. If this cooperation were to end or if the cellular service we receive is not reliable or more expensive
than we anticipate, the market for our products could be harmed.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition, the Dogness smartphone App on which our smart collars rely are still under development and test by a company, Dogness Network
Technology Co., Ltd (&#8220;Dogness Network&#8221;), in which we have a minority interest. Our company owns 10% of Dogness Network. Dogness
Network plans to derive its revenues from subscriptions for services provided through the Dogness smartphone App in the near future,
and we will purchase such products from Dogness Network and resell to our customers. We may benefit only by virtue of our 10% interest
in Dogness Network. If Dogness Network were to stop supporting the application or impair its functionality, our smart collars and harnesses
could become unusable or have decreased value to end users.&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">To
the extent we were unable to cooperate with such third parties in the future, we would need to locate and cooperate with other service
providers, and we cannot guarantee that we would be able to do so under terms that are satisfactory to us, if at all.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Our
software platform may not interface with applications consumers want to be integrated.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
the connected home, consumers are increasingly aware of the interconnection among applications and devices, such as speakers that can
turn on lights or adjust the temperature. Some customers purchase products based on how they will interact with other services and products
that the customers already use. If we are unable to anticipate and accommodate these desires, customers may choose other products that
do interact with their preferred services. Although we may incorporate such functionality in future generations of our products, not
all of our current products integrate into Apple&#8217;s, Google&#8217;s or Amazon&#8217;s smart home platforms. Our Dogness CAM feeder,
App feeder, and App mini feeder work with Amazon Alexa.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are also dependent on third party application stores that may prevent us from timely updating our current products or uploading new products.
In addition, our products interoperate with servers, mobile devices and software applications predominantly through the use of protocols,
many of which are created and maintained by third parties. We therefore depend on the interoperability of our products with such third-party
services, mobile devices and mobile operating systems, as well as cloud-enabled hardware, software, networking, browsers, database technologies
and protocols that we do not control. Any changes in such technologies that degrade the functionality of our products or give preferential
treatment to competitive services could adversely affect adoption and usage of our platform. Also, we may not be successful in developing
or maintaining relationships with key participants in the mobile industry or in developing products that operate effectively with a range
of operating systems, networks, devices, browsers, protocols and standards. In addition, we may face different fraud, security and regulatory
risks from transactions sent from mobile devices than we do from personal computers. If we are unable to effectively anticipate and manage
these risks, or if it is difficult for our customers to access and use our platform, our business, results of operations and financial
condition may be harmed.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i></i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Price
increases in raw materials and sourced products could harm the Company&#8217;s financial results.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
primary raw materials are plastic, leather, nylon, polyester, chemical fiber blended fabric, metal, GPPS and HIPS, most of which are
extracted from crude oil. These raw materials are subject to price volatility and inflationary pressures. Our success is dependent, in
part, on our continued ability to reduce our exposure to increases in those costs through a variety of programs, including sales price
adjustments based on adjustments in such raw material costs, while maintaining and improving margins and market share. We also rely on
third-party manufacturers as a source for a minor portion of components for our products. These manufacturers are also subject to price
volatility and labor cost and other inflationary pressures, which may, in turn, result in an increase in the amount we pay for sourced
products. Raw material and sourced product price increases may more than offset our productivity gains and price increases and may adversely
impact our financial results.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Our
plan to vertically integrate our production may not provide the benefits we foresee.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Over
the last several years, we have increasingly produced our products in-house. We have made this strategic decision because of our belief
that it will facilitate our control over the costs of components in our products. The price of components is extremely important where
the per-unit sales price is as low as it is in our industry. Thus, we believe it is important to control costs as much as possible.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">That
being said, when we produce components in-house that we previously purchased from a third-party supplier, we may not benefit from the
economies of scale that a dedicated third-party supplier could see. Moreover, we invest in infrastructure for such production, such as
buying machines and leasing additional facility space; in the event new technology is developed to produce components of our products
more cheaply than we can with our existing infrastructure, we could find that our operating results are negatively impacted, compared
with what we would see if we were purchasing from third parties. In such case, our products could be more expensive than those of our
competitors that purchase from third-party suppliers, which could make our products less attractive to customers.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Our
reliance on third party logistics providers may put us at risk of service failures for our customers.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
rely on third parties to ship our products from China to our customers. We compete based on price, quality and reliability, so a failure
to deliver our products on time to our large customers could harm our reputation. To the extent we are unable to meet their demand for
products or do not deliver products on time, we stand a substantial risk of losing key accounts. Because we rely on third parties for
logistics services, we may be unable to avoid supply chain failures, even if we are able to meet our manufacturing obligations to customers.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>If
we fail to protect our intellectual property rights, it could harm our business and competitive position.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
rely on a combination of patent, trademark, domain name and trade secret laws and non-disclosure agreements and other methods to protect
our intellectual property rights. Our Mainland China Subsidiaries own 135 patents and 188 trademarks in China and 66 patents and 47 trademarks
outside China, &#160;all of which have been properly registered with regulatory agencies such as the State Intellectual Property Office
and Trademark Office of China&#8217;s State Administration for Industry and Commerce (&#8220;SAIC&#8221;). This intellectual property
has allowed our products to earn market share in the pet products industry.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
process of seeking patent protection can be lengthy and expensive, our patent applications may fail to result in patents being issued,
and our existing and future patents may be insufficient to provide us with meaningful protection or commercial advantage. Our patents
and patent applications may also be challenged, invalidated or circumvented.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
also rely on trade secret rights to protect our business through non-disclosure provisions in employment agreements with employees. If
our employees breach their non-disclosure obligations, we may not have adequate remedies in China, and our trade secrets may become known
to our competitors.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
accordance with Chinese intellectual property laws and regulations, we will have to renew our trademarks once the terms expire. However,
patents are not renewable. Some of our patents, particularly utility mode and design patents, have only 10 years of protection and will
end in the near future. Once these patents expire, our prodCompany: Please update if the numbers have changeducts may lose some market
share if they are copied by our competitors. Then, our business revenue might suffer some loss as well.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Implementation
of PRC intellectual property-related laws has historically been lacking, primarily because of ambiguities in the PRC laws and enforcement
difficulties. Accordingly, intellectual property rights and confidentiality protections in China may not be as effective as in the United
States or other western countries. Furthermore, policing unauthorized use of proprietary technology is difficult and expensive, and we
may need to resort to litigation to enforce or defend patents issued to us or to determine the enforceability, scope and validity of
our proprietary rights or those of others. Such litigation and an adverse determination in any such litigation, if any, could result
in substantial costs and diversion of resources and management attention, which could harm our business and competitive position.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Our
Chinese patents and registered marks may not be protected outside of China due to territorial limitations on enforceability.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
general, patent and trademark rights have territorial limitations in law and are valid only within the countries in which they are registered.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">At
present, Chinese enterprises may register their trademarks overseas through two methods. One is to file an application for trademark
registration in each single country or region in which protection is desired, while the other is to apply via the Madrid system for international
trademark registration. By the second way, under the provisions of the Madrid Agreement concerning the International Registration of
Marks (the &#8220;Madrid Agreement&#8221;) or the Protocol Relating to the Madrid Agreement concerning the International Registration
of Marks (the &#8220;Madrid Protocol&#8221;), applicants may designate their marks in one or more member countries via the Madrid system
for international registration.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of the date of the filing, we have registered 188 trademarks &#160;in China. We have also registered our key trademarks in Japan, Australia,
Korea, Hong Kong, Taiwan and the United States.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Similar
with trademarks, Chinese enterprises may also register their patents overseas through two methods. One is to file an application for
patent registration in each single country or region, and the other is to file international application with the China Intellectual
Property Office or the International Bureau of World Intellectual Property Organization under the Patent Cooperation Treaty. However,
such international application may relate to invention or utility model patents, but does not include industrial design patents.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Currently,
most of our patents and trademarks are registered in China. If we do not register them in other jurisdictions, they may not be protected
outside of China. As a result, our business and competitive position could be harmed.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
may be exposed to intellectual property infringement and other claims by third parties which, if successful, could disrupt our business
and have a material adverse effect on our financial condition and results of operations.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
success depends, in large part, on our ability to use and develop our technology and know-how without infringing third party intellectual
property rights. If we sell our branded products internationally, and as litigation becomes more common in China, we face a higher risk
of being the subject of claims for intellectual property infringement, invalidity or indemnification relating to other parties&#8217;
proprietary rights. Our current or potential competitors, many of which have substantial resources and have made substantial investments
in competing technologies, may have or may obtain patents that will prevent, limit or interfere with our ability to make, use or sell
our branded products in either China or other countries, including the United States and other countries in Asia. The validity and scope
of claims relating to patents in our industry involve complex scientific, legal and factual questions and analysis and, as a result,
may be highly uncertain. In addition, the defense of intellectual property suits, including patent infringement suits, and related legal
and administrative proceedings can be both costly and time consuming and may significantly divert the efforts and resources of our technical
and management personnel. Furthermore, an adverse determination in any such litigation or proceedings to which we may become a party
could cause us to:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">pay
    damage awards;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">seek
    licenses from third parties;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">pay
    ongoing royalties;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">redesign
    our branded products; or</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">be
    restricted by injunctions,</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">each
of which could effectively prevent us from pursuing some or all of our business and result in our customers or potential customers deferring
or limiting their purchase or use of our products, which could have a material adverse effect on our financial condition and results
of operations.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Outstanding
bank loans may reduce our available funds.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of June 30, 2023, we had approximately $5.4 million in outstanding bank loans, with expected repayment of approximately $3.8 million
in one year, $0.7 million in two years and $0.9 million in three to seven years&#160;&#160;. The loans are guaranteed by the fixed assets
of the Company&#8217;s subsidiaries and are also personally guaranteed by our Chief Executive Officer and certain of his family members.
While we believe we have sufficient capital resources to repay these bank loans with support from Mr. Silong Chen, our Chief Executive
Officer, there can be no guarantee that we will be able to pay all amounts when due or to refinance the amounts on terms that are acceptable
to us or at all. If we are unable to make our payments when due or to refinance such amounts, our property could be foreclosed and our
business could be negatively affected.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">While
we do not believe they will impact our liquidity, the terms of the debt agreements impose significant operating and financial restrictions
on us. These restrictions could also have a negative impact on our business, financial condition and results of operations by significantly
limiting or prohibiting us from engaging in certain transactions, including but not limited to: incurring or guaranteeing additional
indebtedness; transferring or selling assets currently held by us; and transferring ownership interests in certain of our subsidiaries.
The failure to comply with any of these covenants could cause a default under our other debt agreements. Any of these defaults, if not
waived, could result in the acceleration of all of our debt, in which case the debt would become immediately due and payable. If this
occurs, we may not be able to repay our debt or borrow sufficient funds to refinance it on favorable terms, if any.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>If
the village cooperative from which we rent our factory in Dongguan fails to provide ownership certificates or construction approvals
on demand, our ability to use our facilities may be impaired.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
Mainland China Subsidiaries lease our production facility from Dongguan Dongcheng District Tongsha Huanggongkeng Co-op (&#8220;Huanggongkeng&#8221;).
We understand that, as is not uncommon in our area, Huanggongkeng did not obtain prior government approval before constructing the facilities
and thus may be unable to provide evidence of government approval. If the local authority were to request proof of such approval, operations
at our facility could be interrupted until Huanggongkeng was able to provide evidence of such approvals. If Huanggongkeng were unable
to rectify this issue, we could find our operations halted indefinitely.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>If
the value of our property decreases, we may not be able to refinance our current debt.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">All
of our current debt is secured by either mortgages on real and other business property or guarantees by some of our shareholders. If
the value of our real property decreases, we may find that banks are unwilling to loan money to us secured by our business property.
A drop in property value could also prevent us from being able to refinance that loan when it becomes due on acceptable terms or at all.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
may require additional financing in the future and our operations could be curtailed if we are unable to obtain required additional financing
when needed.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
may need to obtain additional debt or equity financing to fund future capital expenditures and initiatives. Additional debt financing
may include conditions that would restrict our freedom to operate our business, such as conditions that:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
limit our ability to pay dividends or require us to seek consent for the payment of dividends;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
increase our vulnerability to general adverse economic and industry conditions;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
require us to dedicate a portion of our cash flow from operations to payments on our debt, thereby reducing the availability of our cash
flow to fund capital expenditures, working capital and other general corporate purposes; and</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
limit our flexibility in planning for, or reacting to, changes in our business and our industry.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i></i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
cannot guarantee that we will be able to obtain any additional financing on terms that are acceptable to us, or at all.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>The
loss of any of our key customers could reduce our revenues and our profitability.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
key customers are principally retail pet specialty stores and mass merchandisers. For the year ended June 30, 2023, sales to our four
largest customers amounted in the aggregate to approximately 15.4%, 11.6%, 8.8% and 5.3% &#160;&#160;of our total revenue. For the year
ended June 30, 2022, sales to our four largest customers accounted for 23.4%, 6.7%, 6.7% and 5.7% of our total revenue. For the year
ended June 30, 2021, sales to our three largest customers amounted in the aggregate to approximately 32.0%, 9.1% and 6.9% of our total
revenue. There can be no assurance that we will maintain or improve the relationships with these customers, or that we will be able to
continue to supply these customers at current levels or at all. Any failure to pay by these customers could have a material negative
effect on our company&#8217;s business. In addition, having a relatively small number of customers may cause our quarterly results to
be inconsistent, depending upon when these customers pay for outstanding invoices. During the years ended June 30, 2023, 2022 and 2021,
we had two, &#160;&#160;one and one customer that accounted for 10% or more of our revenues.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Our
bank accounts are not fully insured or protected against loss.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
maintain our cash with various banks and trust companies located in mainland China. Our cash accounts in mainland China are not insured
or otherwise protected. Should any bank or trust company holding our cash deposits become insolvent, or if we are otherwise unable to
withdraw funds, we would lose the cash on deposit with that particular bank or trust company.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
are substantially dependent upon our senior management and key research and development personnel.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are highly dependent on our senior management to manage our business and operations and our key research and development personnel for
the development of new products and the enhancement of our existing products and technologies. In particular, we rely substantially on
our Chief Executive Officer, Mr. Silong Chen.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">While
we provide the legally required personal insurance for the benefit of our employees, we do not maintain key person life insurance on
any of our senior management or key personnel. The loss of any one of them would have a material adverse effect on our business and operations.
Competition for senior management and our other key personnel is intense, and the pool of suitable candidates is limited. We may be unable
to quickly locate a suitable replacement for any senior management or key personnel that we lose. In addition, if any member of our senior
management or key personnel joins a competitor or forms a competing company, they may compete with us for customers, business partners
and other key professionals and staff members of our company. Although each of our senior management and key personnel has signed a confidentiality
and non-competition agreement in connection with his employment with us, we cannot assure you that we will be able to successfully enforce
these provisions in the event of a dispute between us and any member of our senior management or key personnel.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
our efforts to develop new products, we compete for qualified personnel with technology companies and research institutions. Although
we have our own research and development team, we also rely heavily on our cooperation with another software development company, which
has been helping us develop our high-tech products. This relationship has become an important part of our company&#8217;s business development.
If this relationship becomes unstable or is terminated in the future, we may be unable to meet our business and financial goals.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Failure
to manage our growth could strain our management, operational and other resources, which could materially and adversely affect our business
and prospects.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
growth strategy includes increasing market penetration of our existing products, developing new products and increasing the number and
size of customers we serve. Pursuing these strategies has resulted in, and will continue to result in, substantial demands on management
resources. In particular, the management of our growth will require, among other things:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">continued
    enhancement of our research and development capabilities;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">stringent
    cost controls and sufficient liquidity;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">strengthening
    of financial and management controls;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">increased
    marketing, sales and support activities; and</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">hiring
    and training of new personnel.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
we are not able to manage our growth successfully, our business and prospects would be materially and adversely affected.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Because
we rely on Hong Kong entities to fulfill orders from many of our customers, we may be exposed to claims of value-added tax underreporting.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Many
of our international customers order our products by placing an order with our Hong Kong Subsidiaries. Our Hong Kong Subsidiaries then
procure the products from our Mainland China Subsidiaries. When these products are sold from our Mainland China Subsidiaries to our Hong
Kong Subsidiaries, the price paid is set at what we believe to be a fair value. Further, we have informed the applicable tax bureaus
of the pricing of products. Nevertheless, the tax bureau in the future may claim that we have engaged in transfer pricing to avoid payment
of value-added tax (&#8220;VAT&#8221;) because the price our Hong Kong Subsidiary charges to the customer may be higher than the price
our Mainland China Subsidiaries charge to our Hong Kong Subsidiaries. Under PRC law, the VAT is refundable on export, so we believe there
is limited risk in the event that we were called upon to pay VAT on such transfers from China to Hong Kong, but a failure to report proper
VAT payable could expose us to penalties and interest for failing to pay it on time.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
may be subject to penalties under relevant PRC laws and regulations due to failure to make full social security and housing fund contributions
for some of our employees.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
the past, contributions by some of our Mainland China Subsidiaries for some of their employees to the social security and housing funds
may not have been in compliance with relevant PRC regulations. Pursuant to the Regulation on the Administration of Housing Accumulation
Funds, as amended in 2002, the relevant housing fund authority may order an enterprise to pay outstanding contributions within a prescribed
time limit. Pursuant to the PRC Social Insurance Law promulgated in 2010, the social security authority may order an enterprise to pay
the outstanding contributions within a prescribed time limit, and may impose penalties if there is a failure to do so. To the extent
the relevant authorities determine we have underpaid, some of our Mainland China Subsidiaries may be required to pay outstanding contributions
and penalties to the extent they did not make full contributions to the social security housing funds.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Risks
Related to Our Corporate Structure and Operation</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Our
dual class structure concentrate a majority of voting power in our Chief Executive Officer, who is the only owner of our Class B Common
Shares.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
Class B Common Shares have ten votes per share, and our Class A Common Shares have one vote per share. Our directors, executive
officers, and their affiliates, beneficially hold in the aggregate approximately 73.80%&#160;of the voting power of our capital stock
as of June 30, 2023. Because of the ten-to-one voting ratio between our Class B and Class A Common Shares, the holder of our Class B
Common Shares collectively control a majority of the combined voting power of our Common Shares and therefore is able to control all
matters submitted to our shareholders for approval. The sole owner of such Class B Common Shares is our Chief Executive Officer, Mr.
Silong Chen, who owns 9,069,000 Class B Common Shares through Fine victory holding company Limited. This concentrated control may
limit or preclude your ability to influence corporate matters for the foreseeable future, including the election of directors,
amendments of our organizational documents, and any merger, consolidation, sale of all or substantially all of our assets, or other
major corporate transaction requiring shareholder approval. In addition, this may prevent or discourage unsolicited acquisition
proposals or offers for our capital stock that you may feel are in your best interest as one of our shareholders.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Future
transfers by holders of Class B Common Shares will generally result in those shares converting to Class A Common Shares, subject to limited
exceptions, such as certain transfers effected for estate planning purposes. The conversion of Class B Common Shares to Class A Common
Shares will have the effect, over time, of increasing the relative voting power of those holders of Class B Common Shares who retain
their shares in the long term.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>The
obligation to disclose information publicly may put us at a disadvantage to competitors that are private companies.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
a publicly listed company in the United States, we are required to file periodic reports with the Securities and Exchange Commission
upon the occurrence of matters that are material to our company and shareholders. In some cases, we will need to disclose material agreements
or results of financial operations that we would not be required to disclose if we were a private company. Our competitors may have access
to this information, which would otherwise be confidential. This may give them advantages in competing with our company. Similarly, as
a U.S.-listed public company, we will be governed by U.S. laws that our non-publicly traded competitors are not required to follow. To
the extent compliance with U.S. laws increases our expenses or decreases our competitiveness against such companies, our public listing
could affect our results of operations.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
are a &#8220;foreign private issuer,&#8221; and our disclosure obligations differ from those of U.S. domestic reporting companies. As
a result, we may not provide you the same information as U.S. domestic reporting companies or we may provide information at different
times, which may make it more difficult for you to evaluate our performance and prospects.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are a foreign private issuer and, as a result, we are not subject to the same requirements as U.S. domestic issuers. Under the Exchange
Act, we will be subject to reporting obligations that, to some extent, are more lenient and less frequent than those of U.S. domestic
reporting companies. For example, we are not required to issue quarterly reports or proxy statements. We are not required to disclose
detailed individual executive compensation information. Furthermore, our directors and executive officers will not be required to report
equity holdings under Section 16 of the Exchange Act and will not be subject to the insider short-swing profit disclosure and recovery
regime.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
a foreign private issuer, we are exempt from the requirements of Regulation FD (Fair Disclosure) which, generally, are meant to ensure
that select groups of investors are not privy to specific information about an issuer before other investors. However, we are still subject
to the anti-fraud and anti-manipulation rules of the SEC, such as Rule 10b-5 under the Exchange Act. Since many of the disclosure obligations
imposed on us as a foreign private issuer differ from those imposed on U.S. domestic reporting companies, you should not expect to receive
the same information about us and at the same time as the information provided by U.S. domestic reporting companies.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>As
a foreign private issuer, we are permitted to rely on exemptions from certain Nasdaq corporate governance standards applicable to U.S.
issuers, including the requirement that a majority of an issuer&#8217;s directors consist of independent directors. If we opt to rely
on such exemptions in the future, such decision might afford less protection to holders of our Class A Common Shares.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Section
5605(b)(1) of the Nasdaq Listing Rules requires listed companies to have, among other things, a majority of its board members to be independent,
and Section 5605(d) and 5605(e) require listed companies to have independent director oversight of executive compensation and nomination
of directors. As a foreign private issuer, however, we are permitted to follow home country practice in lieu of the above requirements.
Our Board of Directors could make such a decision to depart from such requirements by ordinary resolution.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
corporate governance practice in our home country, the British Virgin Islands, does not require a majority of our board to consist of
independent directors or the implementation of a nominating and corporate governance committee. Since a majority of our board of directors
would not consist of independent directors if we relied on the foreign private issuer exemption, fewer board members would be exercising
independent judgment and the level of board oversight on the management of our company might decrease as a result. In addition, we could
opt to follow British Virgin Islands law instead of the Nasdaq requirements that mandate that we obtain shareholder approval for certain
dilutive events, such as an issuance that will result in a change of control, certain transactions other than a public offering involving
issuances of 20% or greater interests in the company and certain acquisitions of the shares or assets of another company. For a description
of the material corporate governance differences between the Nasdaq requirements and British Virgin Islands law, see &#8220;Description
of Share Capital &#8212; Differences in Corporate Law&#8221;.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>An
insufficient amount of insurance could expose us to significant costs and business disruption.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">While
we have purchased insurance, including export transportation, product liability and account receivable insurance, to cover certain assets
and property of our business, the amounts and scope of coverage could leave our business inadequately protected from loss. For example,
our subsidiaries do not have coverage of business interruption insurance. If we were to incur substantial losses or liabilities due to
fire, explosions, floods, other natural disasters or accidents or business interruption, our results of operations could be materially
and adversely affected.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i></i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Our
failure to obtain prior approval of the China Securities Regulatory Commission (&#8220;CSRC&#8221;) for the listing and trading of our
Class A Common Shares on a foreign stock exchange could delay this offering or could have a material adverse effect upon our business,
operating results, reputation and trading price of our Class A Common Shares.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
August 8, 2006, six Chinese regulatory agencies, including the MOFCOM, jointly issued the M&amp;A Rules, which became effective on September
8, 2006 and amended on June 22, 2009. The M&amp;A Rules contains provisions that require that an offshore SPV formed for listing purposes
and controlled directly or indirectly by Chinese companies or individuals shall obtain the approval of the CSRC prior to the listing
and trading of such SPV&#8217;s securities on an overseas stock exchange. On September 21, 2006, the CSRC published procedures specifying
documents and materials required to be submitted to it by an SPV seeking CSRC approval of overseas listings. However, the application
of the M&amp;A Rule remains unclear with no consensus currently existing among leading Chinese law firms regarding the scope and applicability
of the CSRC approval requirement. We have not chosen to voluntarily request approval under the M&amp;A Rules. Based on the understanding
of the current PRC law, rules and regulations, we believe that the CSRC&#8217;s approval may not be required for the listing and trading
of our common shares on Nasdaq in the context of this offering, given that Dogness was not established by a merger with or an acquisition
of any mainland China domestic companies as defined under the M&amp;A Rules.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
the CSRC requires that we obtain its approval prior to the completion of this offering under the M&amp;A Rules, the offering will be
delayed until we obtain CSRC approval, which may take several months. There is also the possibility that we may not be able to obtain
such approval. If prior CSRC approval was required, we may face regulatory actions or other sanctions from the CSRC or other Chinese
regulatory authorities. These authorities may impose fines and penalties upon our operations in China, limit our operating privileges
in China, delay or restrict the repatriation of the proceeds from this offering into China, or take other actions that could have a material
adverse effect upon our business, financial condition, results of operations, reputation and prospects, as well as the trading price
of our Class A Common Shares. The CSRC or other Chinese regulatory agencies may also take actions requiring us, or making it advisable
for us, to terminate this offering prior to closing.&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Risks
Related to Ownership of Our Class A Common Shares</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>If
we are unable to implement and maintain effective internal control over financial reporting in the future, investors may lose confidence
in the accuracy and completeness of our financial reports and the market price of our Class A Common Shares may decline.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Prior
to our initial public offering in 2017, we were a private company with limited accounting personnel and other resources with which to
address our internal controls and procedures. Our independent registered public accounting firm has not conducted an audit of our internal
control over financial reporting. However, in preparing our consolidated financial statements in connection with this annual report,
we and our independent registered public accounting firm identified material weaknesses in our internal control over financial reporting,
as defined in the standards established by the Public Company Accounting Oversight Board of the United States, or PCAOB, and other control
deficiencies. One material weakness identified relates to (i) a lack of full-time accounting and financial reporting personnel with appropriate
knowledge of U.S. GAAP and SEC reporting and compliance requirements; (ii) a lack of an effective review process by management, which
led to material audit adjustments for the year ended June 30, 2020 and (iii) lack of risk assessment in accordance with the requirement
of COSO 2013 framework. Following the identification of the material weaknesses and control deficiencies, we have taken and plan to continue
to take remedial measures, including (i) hiring external financial consultants with experience in U.S. GAAP and SEC reporting obligations
(ii) hiring more qualified accounting personnel with relevant U.S. GAAP and SEC reporting experience and qualifications to strengthen
the financial reporting function and to set up a financial and system control framework; (iii) implementing regular and continuous U.S.
GAAP accounting and financial reporting training programs for our accounting and financial reporting personnel; (iv) setting up an internal
audit function as well as engaging an external consulting firm to assist us with assessment of Sarbanes-Oxley compliance requirements
and improvement of overall internal control;. However, the implementation of these measures may not fully address the material weaknesses
in our internal control over financial reporting. Our failure to correct the material weaknesses or our failure to discover and address
any other material weaknesses or control deficiencies could result in inaccuracies in our financial statements and could also impair
our ability to comply with applicable financial reporting requirements and related regulatory filings on a timely basis. Moreover, ineffective
internal control over financial reporting significantly hinders our ability to prevent fraud.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
a public company, we will be required to maintain internal control over financial reporting and to report any material weaknesses in
such internal control. In addition, we are required to furnish a report by management on the effectiveness of our internal control over
financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act. As of the date hereof, management has concluded that such controls
are ineffective.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of June 30, 2023. we are not an &#8220;accelerated filer&#8221; or a &#8220;large accelerated filer&#8221; under the definitions of the
Exchange Act rules and therefore our independent registered public accounting firm is not required to attest to the effectiveness of
our internal control over financial reporting. Our independent registered public accounting firm will be required to attest to that in
the event we become an &#8220;accelerated filer&#8221; or a &#8220;large accelerated filer&#8221; under the definitions of the Exchange
Act rules.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
we identify material weaknesses in our internal control over financial reporting, if we are unable to comply with the requirements of
Section 404 in a timely manner or assert that our internal control over financial reporting is effective, or if our independent registered
public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting when
required, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our Class A
Common Shares could be negatively affected, and we could become subject to investigations by the stock exchange on which our securities
are listed, the Securities and Exchange Commission, or the SEC, or other regulatory authorities, which could require additional financial
and management resources.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Recent
joint statement by the SEC and PCAOB, proposed rule changes submitted by Nasdaq, and an act passed by the US Senate all call for additional
and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially
the non-U.S. auditors who are not inspected by the PCAOB. These developments could add uncertainties to our offering.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
May 2013, the PCAOB announced that it had entered into a Memorandum of Understanding on Enforcement Cooperation with the CSRC, and the
PRC Ministry of Finance, which establishes a cooperative framework between the parties for the production and exchange of audit documents
relevant to investigations undertaken by the PCAOB, the CSRC or the PRC Ministry of Finance in the United States and the PRC, respectively.
The PCAOB continues to be in discussions with the CSRC, and the PRC Ministry of Finance to permit joint inspections in the PRC of audit
firms that are registered with PCAOB and audit Chinese companies that trade on U.S. exchanges.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
December 7, 2018, the SEC and the PCAOB issued a joint statement highlighting continued challenges faced by the U.S. regulators in their
oversight of financial statement audits of U.S.-listed companies with significant operations in China. The joint statement reflects a
heightened interest in an issue that has vexed U.S. regulators in recent years.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
April 21, 2020, SEC Chairman Jay Clayton and PCAOB Chairman William D. Duhnke III, along with other senior SEC staff, released a joint
statement highlighting the risks associated with investing in companies based in or have substantial operations in emerging markets including
China. The joint statement emphasized the risks associated with lack of access for the PCAOB to inspect auditors and audit work papers
in China and higher risks of fraud in emerging markets.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
May 20, 2020, the U.S. Senate passed the Holding Foreign Companies Accountable Act (&#8220;HFCA Act&#8221;) requiring a foreign company
to certify it is not owned or controlled by a foreign government if the PCAOB is unable to audit specified reports because the company
uses a foreign auditor not subject to PCAOB inspection. If the PCAOB is unable to inspect the company&#8217;s auditors for three consecutive
years, the issuer&#8217;s securities are prohibited to trade on a national exchange. On December 2, 2020, the U.S. House of Representatives
approved the HFCA Act. On December 18, 2020, the HFCA Act was signed into law.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
June 4, 2020, the U.S. President issued a memorandum ordering the President&#8217;s Working Group on Financial Markets, or the PWG, to
submit a report to the President within 60 days of the memorandum that includes recommendations for actions that can be taken by the
executive branch and by the SEC or PCAOB on Chinese companies listed on U.S. stock exchanges and their audit firms, in an effort to protect
investors in the U.S.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
August 6, 2020, the PWG released a report recommending that the SEC take steps to implement the five recommendations outlined in the
report. In particular, to address companies from jurisdictions that do not provide the PCAOB with sufficient access to fulfill its statutory
mandate, or NCJs, the PWG recommends enhanced listing standards on U.S. stock exchanges. This would require, as a condition to initial
and continued exchange listing, PCAOB access to work papers of the principal audit firm for the audit of the listed company. Companies
unable to satisfy this standard as a result of governmental restrictions on access to audit work papers and practices in NCJs may satisfy
this standard by providing a co-audit from an audit firm with comparable resources and experience where the PCAOB determines it has sufficient
access to audit work papers and practices to conduct an appropriate inspection of the co-audit firm. There is currently no legal process
under which such a co-audit may be performed in China. The report permits the new listing standards to provide for a transition period
until January 1, 2022 for listed companies, but would apply immediately to new listings once the necessary rulemakings and/or standard-setting
are effective. The measures in the PWG Report are presumably subject to the standard SEC rulemaking process before becoming effective.
On August 10, 2020, the SEC announced that SEC Chairman had directed the SEC staff to prepare proposals in response to the PWG Report,
and that the SEC was soliciting public comments and information with respect to these proposals. After we are listed on the Nasdaq Capital
Market, if we fail to meet the new listing standards before the deadline specified thereunder due to factors beyond our control, we could
face possible de-listing from the NASDAQ Capital Market, deregistration from the SEC and/or other risks, which may materially and adversely
affect, or effectively terminate, our Class A Common Shares trading in the United States.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
March 24, 2021, the SEC announced that it had adopted interim final amendments to implement congressionally mandated submission and disclosure
requirements of the Act. The interim final amendments will apply to registrants that the SEC identifies as having filed an annual report
on Forms 10-K, 20-F, 40-F or N-CSR with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction
and that the PCAOB has determined it is unable to inspect or investigate completely because of a position taken by an authority in that
jurisdiction. The SEC will implement a process for identifying such a registrant and any such identified registrant will be required
to submit documentation to the SEC establishing that it is not owned or controlled by a governmental entity in that foreign jurisdiction,
and will also require disclosure in the registrant&#8217;s annual report regarding the audit arrangements of, and governmental influence
on, such a registrant.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Furthermore,
the HFCA Act, which requires that the PCAOB be permitted to inspect the issuer&#8217;s public accounting firm within three years, may
result in the delisting of our Company in the future if the PCAOB is unable to inspect our accounting firm at such future time.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition, on June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act (&#8220;AHFCAA&#8221;),
which, if signed into law, would amend the HFCA Act and require the SEC to prohibit an issuer&#8217;s securities from trading on any
U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three consecutive years.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
November 5, 2021, the SEC approved the PCAOB&#8217;s Rule 6100, Board Determinations Under the Holding Foreign Companies Accountable
Act. Rule 6100 provides a framework for the PCAOB to use when determining, as contemplated under the HFCA Act, whether it is unable to
inspect or investigate completely registered public accounting firms located in a foreign jurisdiction because of a position taken by
one or more authorities in that jurisdiction. On December 16, 2021, the PCAOB issued a Determination Report which found that the PCAOB
was unable to inspect or investigate completely registered public accounting firms headquartered in: (1) mainland China, and (2) Hong
Kong.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
August 26, 2022, the CSRC, the Ministry of Finance of the PRC (the &#8220;MOF&#8221;), and the PCAOB signed a Statement of Protocol (the
&#8220;Protocol&#8221;), governing inspections and investigations of audit firms based in China and Hong Kong. On December 15, 2022,
the PCAOB determined that it was able to secure complete access to inspect and investigate registered public accounting firms headquartered
in mainland China and Hong Kong and vacated its previous Determinations to the contrary. However, should PRC authorities obstruct or
otherwise fail to facilitate the PCAOB&#8217;s access in the future, the PCAOB may consider the need to issue a new determination. On
December 29, 2022, the Accelerating Holding Foreign Companies Accountable Act was signed into law as part of the &#8220;Consolidated
Appropriations Act 2023&#8221; (the &#8220;Consolidated Appropriations Act&#8221;), reducing the number of consecutive non-inspection
years required for triggering the prohibitions under the HFCA Act from three years to two.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
auditor, the independent registered public accounting firm that issues the audit report included elsewhere in this prospectus, as an
auditor of companies that are traded publicly in the United States and a firm registered with the PCAOB, is subject to laws in the United
States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards.
Our auditor, Audit Alliance LLP, is located in Singapore, and is subject to inspection by the PCAOB on a regular basis. In the event
that, in the future, either there is any regulatory change or step taken by PRC regulators that does not permit Audit Alliance LLP to
provide audit documentations located in mainland China or Hong Kong to the PCAOB for inspection or investigation, you may be deprived
of the benefits of such inspection which could result in limitation or restriction to our access to the U.S. capital markets and trading
of our securities, including &#8220;over-the-counter&#8221; trading, may be prohibited, under the HFCA Act. The recent developments would
add uncertainties to our offering and we cannot assure you whether the national securities exchange we apply to for listing or regulatory
authorities would apply additional and more stringent criteria to us after considering the effectiveness of our auditor&#8217;s audit
procedures and quality control procedures, adequacy of personnel and training, or sufficiency of resources, geographic reach, or experience
as it relates to our audit.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Our
management team has limited experience in managing a U.S. public company and complying with laws applicable to such company, the failure
of which may adversely affect our business, financial conditions and results of operations.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
current management team has limited experience in managing a U.S. publicly traded company, interacting with public company investors
and complying with the increasingly complex laws pertaining to U.S. public companies. Prior to the completion of our initial public offering,
we mainly operated our businesses as a private company in mainland China. As a result of our IPO, our company became subject to significant
regulatory oversight and reporting obligations under the federal securities laws and the scrutiny of securities analysts and investors,
and our management currently has limited experience in complying with such laws, regulations and obligations. These obligations and constituents
will require significant attention from our senior management and could divert their attention away from the day-to-day management of
our business, which could adversely affect our business, financial conditions and results of operations.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>The
requirements of being a public company may strain our resources and divert management&#8217;s attention.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
a public company, we are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the &#8220;Exchange
Act&#8221;), the Sarbanes-Oxley Act, the Dodd-Frank Act, the listing requirements of the securities exchange on which we list, and other
applicable securities rules and regulations. Despite recent reforms made possible by the JOBS Act, compliance with these rules and regulations
will nonetheless increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and
increase demand on our systems and resources, particularly now we are no longer an &#8220;emerging growth company.&#8221; The Exchange
Act requires, among other things, that we file annual and current reports with respect to our business and operating results. In addition,
as long as we are listed on the Nasdaq Global Market, we are also required to file semi-annual financial statements.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
expect these rules and regulations to increase our legal, accounting and financial compliance costs and to make certain corporate activities
more time-consuming and costly. In addition, we will incur additional costs associated with our public company reporting requirements.
While it is impossible to determine the amounts of such expenses in advance, we expect that we will incur expenses of between $500,000
and $1 million per year that we did not experience prior to commencement of our initial public offering.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
a result of disclosure of information in filings required of a public company, our business and financial condition will become more
visible, which we believe may result in threatened or actual litigation, including by competitors and other third parties. If such claims
are successful, our business and operating results could be harmed, and even if the claims do not result in litigation or are resolved
in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and adversely
affect our business, brand and reputation and results of operations.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
also expect that being a public company and these rules and regulations will make it more expensive for us to obtain director and officer
liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These
factors could also make it more difficult for us to attract and retain qualified members of our board of directors, particularly to serve
on our audit committee and compensation committee, and qualified executive officers.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>The
market price of our Class A Common Shares may be volatile or may decline regardless of our operating performance.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
trading prices for our Class A Common Shares have fluctuated since we first listed our Class A Common Shares. Since our Class A Common
Shares became listed on the Nasdaq on December 20, 2017, the trading price of our Class A Common Shares has ranged from $0.43
to $8.98 per common share, and the last reported trading price on October 10, 2023 was $0.43 per common share. If you purchase
our Class A Common Shares, you may not be able to resell those shares at or above your purchase price. The market price of our Class
A Common Shares may fluctuate significantly in response to numerous factors, many of which are beyond our control, including:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
actual or anticipated fluctuations in our revenue and other operating results;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
actions of securities analysts who initiate or maintain coverage of us, changes in financial estimates by any securities analysts who
follow our company, or our failure to meet these estimates or the expectations of investors;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
announcements by us or our competitors of significant products or features, technical innovations, acquisitions, strategic partnerships,
joint ventures, or capital commitments;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
lawsuits threatened or filed against us; and</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
other events or factors, including those resulting from war or incidents of terrorism, or responses to these events.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market
prices of equity securities of many companies. Stock prices of many companies have fluctuated in a manner unrelated or disproportionate
to the operating performance of those companies. In the past, stockholders have filed securities class action litigation following periods
of market volatility. If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources
and the attention of management from our business, and adversely affect our business.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
do not intend to pay dividends for the foreseeable future.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
currently intend to retain any future earnings to finance the operation and expansion of our business, and we do not expect to declare
or pay any dividends in the foreseeable future. As a result, you may only receive a return on your investment in our Class A Common Shares
if the market price of our Class A Common Shares increases.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
are subject to liability risks stemming from our foreign status, which could make it more difficult for investors to sue or enforce judgments
against our company.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Most
of our operations and assets are located in the PRC. In addition, all of &#160;our executive officers and directors are non-residents
of the U.S., and much of the assets of such persons are located outside the U.S. As a result, it could be difficult for investors to
effect service of process in the U.S., or to enforce a judgment obtained in the U.S. against us or any of these persons.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition, British Virgin Islands companies may not have standing to initiate a shareholder derivative action in a federal court of the
United States. The circumstances in which any such action may be brought, and the procedures and defenses that may be available in respect
to any such action, may result in the rights of shareholders of a British Virgin Islands company being more limited than those of shareholders
of a company organized in the United States. Accordingly, shareholders may have fewer alternatives available to them if they believe
that corporate wrongdoing has occurred.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Any
final and conclusive monetary judgment obtained against a BVI company in the courts of a federal court of the United States (the &#8220;<b>Foreign
Court</b>&#8221;) for a definite sum, may be treated by the courts of the British Virgin Islands as a cause of action in itself so that
no retrial of the issues would be necessary provided that in respect of the judgment of the Foreign Court: (i) the Foreign Court issuing
the judgment had jurisdiction in the matter and a BVI company either submitted to such jurisdiction or was resident or carrying on business
within such jurisdiction and was duly served with process; (ii) the judgment given by the Foreign Court was not in respect of penalties,
taxes, fines or similar fiscal or revenue obligations of the BVI company; (iii) in obtaining judgment there was no fraud on the part
of the person in whose favour judgment was given or on the part of the Foreign Court; (iv) recognition or enforcement of the judgment
in the British Virgin Islands would not be contrary to public policy and (v) the proceedings pursuant to which judgment was obtained
were not contrary to natural justice.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Lastly,
under the law of the British Virgin Islands, there is little statutory law for the protection of minority shareholders. The principal
protection under statutory law is that shareholders may bring an action to enforce the constituent documents of the corporation, our
Memorandum and Articles of Association. Shareholders are entitled to have the affairs of the company conducted in accordance with the
general law and the Articles and Memorandum.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">There
are common law rights for the protection of shareholders that may be invoked, largely dependent on English company law, since the common
law of the British Virgin Islands for business companies is limited. Under the general rule pursuant to English company law known as
the rule in <i>Foss v. Harbottle</i>, a court will generally refuse to interfere with the management of a company at the insistence of
a minority of its shareholders who express dissatisfaction with the conduct of the company&#8217;s affairs by the majority or the board
of directors. However, every shareholder is entitled to have the affairs of the company conducted properly according to law and the constituent
documents of the corporation. As such, if those who control the company have persistently disregarded the requirements of company law
or the provisions of the company&#8217;s Memorandum and Articles of Association, then the courts will grant relief. Generally, the areas
in which the courts will intervene are the following: (1) an act complained of which is outside the scope of the authorized business
or is illegal or not capable of ratification by the majority; (2) acts that constitute fraud on the minority where the wrongdoers control
the company; (3) acts that infringe on the personal rights of the shareholders, such as the right to vote; and (4) where the company
has not complied with provisions requiring approval of a special or extraordinary majority of shareholders, which are more limited than
the rights afforded minority shareholders under the laws of many states in the United States.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Our
board of directors may decline to register transfers of Class A Common Shares in certain circumstances.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
board of directors may, in its sole discretion, decline to register any transfer of any Class A Common Share which is not fully paid
up or on which we have a lien. Our directors may also decline to register any transfer of any share unless (i) the instrument of transfer
is lodged with us, accompanied by the certificate for the shares to which it relates and such other evidence as our board of directors
may reasonably require to show the right of the transferor to make the transfer; (ii) the instrument of transfer is in respect of only
one class of shares; (iii) the instrument of transfer is properly stamped, if required; (iv) in the case of a transfer to joint holders,
the number of joint holders to whom the share is to be transferred does not exceed four; (v) the shares conceded are free of any lien
in favor of us; or (vi) a fee of such maximum sum as Nasdaq may determine to be payable, or such lesser sum as our board of directors
may from time to time require, is paid to us in respect thereof.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
our directors refuse to register a transfer they shall send to each of the transferor and the transferee notice of such refusal. The
registration of transfers may, on 14 days&#8217; notice being given by advertisement in such one or more newspapers or by electronic
means, be suspended and the register closed at such times and for such periods as our board of directors may from time to time determine,
provided, however, that the registration of transfers shall not be suspended nor the register closed for more than 30 days in any year.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>You
may be unable to present proposals before general meetings not called by shareholders.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">British
Virgin Islands law provides shareholders with only limited rights to requisition a general meeting and does not provide shareholders
with any right to put any proposal before a general meeting. However, these rights may be provided in a company&#8217;s articles of association.
Our Articles of Association allow our shareholders holding shares representing in aggregate not less than 30% of our voting rights in
issue, to requisition a meeting of our shareholders, in which case our directors are obliged to call such meeting and to put the resolutions
so requisitioned to a vote at such meeting.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Although
our Articles of Association do not provide our shareholders with any right to put any proposals before a general meetings not called
by such shareholders, any shareholder may submit a proposal to our Board of Directors for consideration of inclusion in a proxy statement.
Advance notice of at least seven (7) calendar days is required for the convening of our shareholders&#8217; meeting . A quorum required
for a meeting of shareholders consists of at least one shareholder present in person or by proxy, representing not less than one-half
of the total issued voting power of each class of shares entitled to vote as a class. In the event we do not have quorum at the time
set for the meeting, we are required to adjourn the meeting until the following week, at which time quorum will be satisfied if shares
representing at least one-third of the total issued voting power of our company are present in person or by proxy.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Risks
Related to Doing Business in China</span></b> &#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Adverse
changes in political, economic and other policies of the Chinese government could have a material adverse effect on the overall economic
growth of China, which could materially and adversely affect the growth of our business and our competitive position.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
majority of our business operations are conducted in China. Accordingly, our business, financial condition, results of operations and
prospects are affected significantly by economic, political and legal developments in China. We are subject to legal and operational
risks associated with being based in and having the majority of the company&#8217;s operations in mainland China and Hong Kong. China&#8217;s
economy differs from the economies of most developed countries in many respects, including with respect to the amount of government involvement,
level of development, growth rate, control of foreign exchange, and allocation of resources. The PRC government exercises significant
control over China&#8217;s economic growth through strategical allocation of resources, controlling the payment of foreign currency-denominated
obligations, setting monetary policy, and providing preferential treatment to particular industries or companies.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Chinese government may intervene or influence the operation of our Hong Kong and mainland China operating entities and exercise significant
oversight and discretion over the conduct of their business and may intervene in or influence their operations at any time with little
advance notice, or may exert more control over offerings conducted overseas and/or foreign investment in China-based issuers, which could
result in a material change in our operations and/or the value of our Class A Common Shares.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">While
the Chinese economy has experienced significant growth in the past decades, growth has been uneven, both geographically and among various
sectors of the economy. The growth of the Chinese economy may not continue at a rate experienced in the past, and the impact of COVID-19
on the Chinese economy may continue. Any prolonged slowdown in the Chinese economy may reduce the demand for our services and materially
and adversely affect our business and results of operations. Furthermore, any adverse change in the economic conditions in China, in
policies of the PRC government or in laws and regulations in China could have a material adverse effect on the overall economic growth
of China and market demand for our outsourcing services. Such developments could adversely affect our businesses, lead to reduction in
demand for our services and adversely affect our competitive position.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i></i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Uncertainties
with respect to the mainland China legal system could have a material adverse effect on us.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
mainland China legal system is based on written statutes. Prior court decisions may be cited for reference but have limited precedential
value. We conduct our business primarily through our subsidiaries established in China.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">These
subsidiaries are generally subject to laws and regulations applicable to foreign investment in China. However, since these laws and regulations
are relatively new and the mainland China legal system continues to rapidly evolve, the interpretations of many laws, regulations and
rules are not always uniform and enforcement of these laws, regulations and rules involves uncertainties, which may limit legal protections
available to us. Recently, the General Office of the Central Committee of the Communist Party of China and the General Office of the
State Council jointly issued the &#8220;Opinions on Severely Cracking Down on Illegal Securities Activities According to Law,&#8221;
or the Opinions, which was made available to the public on July 6, 2021. The Opinions emphasized the need to strengthen the administration
over illegal securities activities, and the need to strengthen the supervision over overseas listings by Chinese companies. Effective
measures, such as promoting the construction of relevant regulatory systems will be taken to deal with the risks and incidents of China-concept
overseas listed companies, and cybersecurity and data privacy protection requirements, etc. The Opinions and any related implementing
rules to be enacted may subject us to compliance requirement in the future. In addition, some regulatory requirements issued by certain
mainland China government authorities may not be consistently applied by other government authorities (including local government authorities),
thus making strict compliance with all regulatory requirements impractical, or in some circumstances impossible. For example, we may
have to resort to administrative and court proceedings to enforce the legal protection that we enjoy either by law or contract. However,
since mainland China administrative and court authorities have discretion in interpreting and implementing statutory and contractual
terms, it may be more difficult to predict the outcome of administrative and court proceedings and the level of legal protection we enjoy
than in more developed legal systems. These uncertainties may impede our ability to enforce the contracts we have entered into with our
business partners, customers and suppliers. In addition, such uncertainties, including any inability to enforce our contracts, together
with any development or interpretation of mainland China law that is adverse to us, could materially and adversely affect our business
and operations. Furthermore, intellectual property rights and confidentiality protections in China may not be as effective as in the
United States or other more developed countries. We cannot predict the effect of future developments in the mainland China legal system,
including the promulgation of new laws, changes to existing laws or the interpretation or enforcement thereof, or the preemption of local
regulations by national laws. These uncertainties could limit the legal protections available to us and other foreign investors, including
you. In addition, any litigation in China may be protracted and result in substantial costs and diversion of our resources and management
attention.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>China&#8217;s
economic, political and social conditions, as well as changes in any government policies, laws and regulations may be quick with little
advance notice and, could have a material adverse effect on our business and the value of our Class A Common Shares.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
business, financial condition, results of operations and prospects are subject, to a significant extent, to economic, political and legal
developments in China. For example, as a result of recent proposed changes in the cybersecurity regulations in China that would require
certain Chinese technology firms to undergo a cybersecurity review before being allowed to list on foreign exchanges, this may have a
material adverse effect on our business and the value of our Class A Ordinary Share.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">China&#8217;s
economy differs from the economies of most developed countries in many respects, including the amount of government involvement, level
of development, growth rate, control of foreign exchange and allocation of resources. While the PRC economy has experienced significant
growth in the past two to three decades, growth has been uneven, both geographically and among various sectors of the economy. Demand
for target services and products depends, in large part, on economic conditions in China. Any slowdown in China&#8217;s economic growth
may cause our potential customers to delay or cancel their plans to purchase our services and products, which in turn could reduce our
net revenues.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Although
China&#8217;s economy has been transitioning from a planned economy to a more market oriented economy since the late 1970s, the PRC government
continues to play a significant role in regulating industry development by imposing industrial policies. The PRC government also exercises
significant control over China&#8217;s economic growth through allocating resources, controlling the incurrence and payment of foreign
currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies.
Changes in any of these policies, laws and regulations may be quick with little advance notice and could adversely affect the economy
in China and could have a material adverse effect on our business and the value of our Class A Common Shares.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
PRC government has implemented various measures to encourage foreign investment and sustainable economic growth and to guide the allocation
of financial and other resources. However, we cannot assure you that the PRC government will not repeal or alter these measures or introduce
new measures that will have a negative effect on us, or more specifically, we cannot assure you that the PRC government will not initiate
possible governmental actions or scrutiny to us, which could substantially affect our operation and the value of our Common Shares may
depreciate quickly. China&#8217;s social and political conditions may change and become unstable. Any sudden changes to China&#8217;s
political system or the occurrence of widespread social unrest could have a material adverse effect on our business and results of operations.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>The
Chinese government exerts substantial influence over the manner in which we must conduct our business activities and may intervene or
influence our operations at any time, which could result in a material change in our operations and the value of our Class A Common Shares.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Chinese government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through
regulation and state ownership. Our ability to operate in China may be harmed by changes in its laws and regulations, including those
relating to securities regulation, data protection, cybersecurity and mergers and acquisitions and other matters. The central or local
governments of these jurisdictions may impose new, stricter regulations or interpretations of existing regulations that would require
additional expenditures and efforts on our part to ensure our compliance with such regulations or interpretations.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Government
actions in the future could significantly affect economic conditions in China or particular regions thereof, and could require us to
materially change our operating activities or divest ourselves of any interests we hold in Chinese assets. Our business may be subject
to various government and regulatory interference in the provinces in which we operate. We may incur increased costs necessary to comply
with existing and newly adopted laws and regulations or penalties for any failure to comply. Our operations could be adversely affected,
directly or indirectly, by existing or future laws and regulations relating to our business or industry.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Given
recent statements by the Chinese government indicating an intent to exert more oversight and control over offerings that are conducted
overseas and/or foreign investment in China-based issuers, any such action could significantly limit or completely hinder our ability
to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or become worthless.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Among
other things, China&#8217;s M&amp;A Rules and the Anti-Monopoly Law established additional procedures and requirements that could make
merger and acquisition activities by foreign investors more time-consuming and complex. Such regulation requires, among other things,
that State Administration for Market Regulation (SAMR) be notified in advance of any change-of-control transaction in which a foreign
investor acquires control of a mainland China domestic enterprise or a foreign company with substantial mainland China operations, if
certain thresholds are triggered. Moreover, the Anti-Monopoly Law requires that transactions which involve the national security, the
examination on the national security shall also be conducted according to the relevant provisions of the State. In addition, PRC Measures
for the Security Review of Foreign Investment which became effective in January 2021 require acquisitions by foreign investors of mainland
China companies engaged in military-related or certain other industries that are crucial to national security be subject to security
review before consummation of any such acquisition. We may pursue potential strategic acquisitions in China that are complementary to
our business and operations. Complying with the requirements of these regulations to complete such transactions could be time-consuming,
and any required approval processes, including obtaining approval or clearance from the MOFCOM, may delay or inhibit our ability to complete
such transactions, which could affect our ability to expand our business or maintain our market share.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Recently,
the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued
the Opinions on Severely Cracking Down on Illegal Securities Activities According to Law, or the Opinions, which was made available to
the public on July 6, 2021. The Opinions emphasized the need to strengthen the administration over illegal securities activities, and
the need to strengthen the supervision over overseas listings by Chinese companies. Effective measures, such as promoting the construction
of relevant regulatory systems, will be taken to deal with the risks and incidents of China-concept overseas listed companies. As of
the date of this prospectus, we have not received any inquiry, notice, warning, or sanctions from PRC government authorities in connection
with the Opinions.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
June 10, 2021, the Standing Committee of the National People&#8217;s Congress of China, or the SCNPC, promulgated the PRC Data Security
Law, which took effect in September 2021. The PRC Data Security Law imposes data security and privacy obligations on entities and individuals
carrying out data activities, and introduces a data classification and hierarchical protection system based on the importance of data
in economic and social development, and the degree of harm it will cause to national security, public interests, or legitimate rights
and interests of individuals or organizations when such data is tampered with, destroyed, leaked, illegally acquired or used. The PRC
Data Security Law also provides for a national security review procedure for data activities that may affect national security and imposes
export restrictions on certain data an information.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
early July 2021, regulatory authorities in China launched cybersecurity investigations with regard to several China-based companies that
are listed in the United States. The Chinese cybersecurity regulator announced on July 2 that it had begun an investigation of Didi Global
Inc. (NYSE: DIDI) and two days later ordered that the company&#8217;s app be removed from smartphone app stores. On July 5, 2021, the
Chinese cybersecurity regulator launched the same investigation on two other Internet platforms, China&#8217;s Full Truck Alliance of
Full Truck Alliance Co. Ltd. (NYSE: YMM) and Boss of KANZHUN LIMITED (Nasdaq: BZ). On July 24, 2021, the General Office of the Communist
Party of China Central Committee and the General Office of the State Council jointly released the Guidelines for Further Easing the Burden
of Excessive Homework and Off-campus Tutoring for Students at the Stage of Compulsory Education, pursuant to which foreign investment
in such firms via mergers and acquisitions, franchise development, and variable interest entities are banned from this sector.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
November 14, 2021, the CAC released the Regulations on the Network Data Security Management (Draft for Comments), or the Data Security
Management Regulations Draft, to solicit public opinion and comments. Pursuant to the Data Security Management Regulations Draft, data
processor holding more than one million users/users&#8217; individual information shall be subject to cybersecurity review before listing
abroad. Data processing activities refers to activities such as the collection, retention, use, processing, transmission, provision,
disclosure, or deletion of data. According to the latest amended Cybersecurity Review Measures, which was promulgated on December 28,
2021, and will become effective on February 15, 2022 and replace the Cybersecurity Review Measures promulgated on April 13, 2020, an
online platform operator holding more than one million users/users&#8217; individual information shall be subject to cybersecurity review
before listing abroad. Since the Cybersecurity Review Measures is new, the implementation and interpretation thereof is not yet clear.
As of the date of this prospectus, we have not been informed by any PRC governmental authority of any requirement that we file for approval
for this offering.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
August 17, 2021, the State Council promulgated the Regulations on the Protection of the Security of Critical Information Infrastructure,
or the Regulations, which took effect on September 1, 2021. The Regulations supplement and specify the provisions on the security of
critical information infrastructure as stated in the Cybersecurity Review Measures. The Regulations provide, among others, that protection
department of certain industry or sector shall notify the operator of the critical information infrastructure in time after the identification
of certain critical information infrastructure.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
August 20, 2021, the SCNPC promulgated the Personal Information Protection Law of the PRC, or the Personal Information Protection Law,
which took effect in November 2021. As the first systematic and comprehensive law specifically for the protection of personal information
in the PRC, the Personal Information Protection Law provides, among others, that (i) an individual&#8217;s consent shall be obtained
to use sensitive personal information, such as biometric characteristics and individual location tracking, (ii) personal information
operators using sensitive personal information shall notify individuals of the necessity of such use and impact on the individual&#8217;s
rights, and (iii) where personal information operators reject an individual&#8217;s request to exercise his or her rights, the individual
may file a lawsuit with a People&#8217;s Court. Given that the above mentioned newly promulgated laws, regulations and policies were
recently promulgated or issued, and have not yet taken effect (as applicable), their interpretation, application and enforcement are
subject to substantial uncertainties. See &#8220;Risk Factor <i>&#8212; We may be liable for improper use or appropriation of personal
information provided by our customers</i>&#8221; and &#8220;Risk Factors <i>&#8212; Our failure to obtain prior approval of the China
Securities Regulatory Commission (&#8220;CSRC&#8221;) for the listing and trading of our Class A Common Shares on a foreign stock exchange
could delay this offering or could have a material adverse effect upon our business, operating results, reputation and trading price
of our Class A Common Shares.</i>&#8221;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>The
Chinese government exerts oversight and control over overseas offerings and listing conducted by China-based issuers under the Listing
Records Rules and/or the Confidentiality Provisions, which could significantly limit or completely hinder our ability to offer or continue
to offer our Class A Common Shares to investors and could cause the value of our Class A Common Shares to significantly decline or become
worthless.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
February 17, 2023, with the approval of the State Council, the CSRC issued the Listing Records Rules, including the Trial Measures,
for the administration of overseas listing filing system, which has been implemented since March 31, 2023. Under the Listing Records
Rules, a company established in mainland China seeking securities offering and listing, by both direct or indirect means, in an
overseas market are required to undertake filing procedures with the CSRC for its overseas offering and listing activities. Further,
the Trial Measures set forth a list of circumstance under which overseas offering and listing by PRC domestic companies is prohibit,
including: (i) where such securities offering and listing is explicitly prohibited by the PRC laws; (ii) where the intended
securities offering and listing may endanger national security as reviewed and determined by competent PRC authorities under the
State Council in accordance with PRC laws; (iii) where the company established in mainland China , or its controlling shareholders
and the actual controller, have committed crimes such as corruption, bribery, embezzlement, misappropriation of property or
undermining the order of the socialist market economy during the latest three (3) years; (iv) where the company established in
mainland China seeking securities offering and listing is suspected of committing crimes or major violations of laws and
regulations, and is under investigation according to law, and no conclusion has yet been made thereof; and (v) where there are
material ownership disputes over equity held by the controlling shareholder of company established in mainland China or by other
shareholders that are controlled by the controlling shareholder and/or actual controller. In accordance with the Trial Measures, the
listing and trading of our Class A Common Shares on Nasdaq is deemed as an indirect overseas offering and listing by companies
established in China, and thus, we are subject to the Listing Records Rules and the relevant filing procedures as required. Further,
we believe, as of the date of this annual report, none of the circumstances prohibiting the overseas offering and listing by
companies established in China as listed above applies to us, and we can offer and continue to offer our Class A Common Shares on
Nasdaq. In accordance with the Notice on the Arrangement for the Filing of Overseas Offering and Listing by Domestic Companies
issued by the CSRC along with the Listing Records Rules on the same day, we are deemed as an &#8220;Existing Issuer&#8221; because
we had been listed overseas before March 31, 2023. Under such Notice, we are not required to undertake the initial filing procedure
immediately. However, we shall carry out filing procedures as required by the Trial Measures in a timely manner for subsequent
events, including any further follow-up offerings on Nasdaq, dual and/or secondary offering and listing on different overseas
markets, and occurrence of material events including change of control, investigations or sanctions imposed by overseas securities
regulatory agencies or other relevant competent authorities, change of listing status or transfer of listing segment, and voluntary
or mandatory delisting. If we or our Mainland China Subsidiaries in future fail to undertake filing procedures as stipulated in the
Trial Measures, or offer and list securities in an overseas market in violation of the Trial Measures, the CSRC may order
rectification, issue warnings to us and/or our Mainland China Subsidiaries, and impose a fine of between RMB 1,000,000 yuan and RMB
10,000,000 yuan. The CSRC may also inform its regulatory counterparts in the overseas jurisdictions, such as the SEC, via
cross-border securities regulatory cooperation mechanisms.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Further,
on February 24, 2023, the CSRC, together with Ministry of Finance, National Administration of State Secrets Protection, and National
Archives Administration of China, released the Provisions on Strengthening the Confidentiality and Archives Administration Related to
the Overseas Securities Offering and Listing by Domestic Enterprises (the &#8220;Confidentiality Provisions&#8221;), which came into
effect on March 31, 2023 with the Trial Measures. Under the Confidentiality Provisions, companies established in China seeking overseas
offering and listing, by both direct and indirect means, are required to institute a sound confidentiality and archives system. If such
companies established in China intend to, either directly or through its overseas listed entity, publicly disclose or provide to relevant
individuals or entities including securities companies, securities service providers and overseas regulators, any documents and materials
that contain state secrets or working secrets of government agencies, they shall obtain approval from competent authorities and complete
the relevant filing procedure with the competent secrecy administrative department prior to their disclosure or provision of such documents
and materials. Further, if they provide or publicly disclose documents and materials which may adversely affect national security or
public interests, they shall strictly follow the corresponding procedures in accordance with relevant laws and regulations. Any failure
or perceived failure by us or our subsidiaries to comply with the above confidentiality and archives administration requirements under
the Confidentiality Provisions and other relevant PRC laws and regulations may cause relevant entities to be held legally liable by competent
authorities, and referred to the judicial organ to be investigated for criminal liability if suspected of committing a crime.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Any
failure of us or our Mainland China Subsidiaries to fully comply with the Listing Records Rules may significantly limit or completely
hinder our ability to offer or continue to offer our Class A Common Shares on Nasdaq, cause significant disruption to our business operations,
severely damage our reputation, materially and adversely affect our financial condition and results of operations and cause our Class
A Common Shares to significantly decline in value or become worthless.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>The
holding company may be subject to approval or other requirement from PRC authorities, and, if required, we cannot assure you that we
will be able to obtain such approval or satisfy such requirement. If we failed to obtain such approval or satisfy such requirement, we
may not be able to continue listing on U.S. exchange, continue to offer securities to investors, or materially affect the interest of
the investors and the value of our Class A Common Shares may decrease or become worthless.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of the date of this annual report, we or our Subsidiaries have not received any requirement to obtain permission or approval from CSRC
or Cyberspace Administration of China. However, recently, the General Office of the Central Committee of the Communist Party of China
and the General Office of the State Council jointly issued the &#8220;Opinions on Severely Cracking Down on Illegal Securities Activities
According to Law,&#8221; or the Opinions, which was made available to the public on July 6, 2021. The Opinions emphasized the need to
strengthen the administration over illegal securities activities, and the need to strengthen the supervision over overseas listings by
Chinese companies. Subsequent laws and regulation have been published and implemented, including Listing Records Rules and Confidentiality
Provisions. Effective measures, such as promoting the construction of relevant regulatory systems will be taken to deal with the risks
and incidents of China-concept overseas listed companies, and cybersecurity and data privacy protection requirements and similar matters.
The Opinions and any related implementing rules to be enacted may subject us to compliance requirement in the future.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Given
the current regulatory environment in the PRC, we are still subject to the uncertainty of interpretation and enforcement of the rules
and regulations in the PRC, which can change quickly with little advance notice, and any future actions of the PRC authorities. It is
uncertain when and whether the Company will be required to obtain permission from the PRC government to list on U.S. exchanges (including
retroactively), and even if such permission is obtained, whether it will be denied or rescinded. As a result, our operations could be
adversely affected, directly or indirectly, by existing or future laws and regulations relating to our business or industry.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>PRC
laws and regulations governing our current business operations are sometimes vague and uncertain and any changes in such laws and regulations
may impair our ability to operate profitably.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">There
are substantial uncertainties regarding the interpretation and application of PRC laws and regulations including, but not limited to,
the laws and regulations governing our business and the enforcement and performance of our arrangements with customers in certain circumstances.
The laws and regulations are sometimes vague and may be subject to future changes, and their official interpretation and enforcement
may involve substantial uncertainty. The effectiveness and interpretation of newly enacted laws or regulations, including amendments
to existing laws and regulations, may be delayed, and our business may be affected if we rely on laws and regulations which are subsequently
adopted or interpreted in a manner different from our understanding of these laws and regulations. New laws and regulations that affect
existing and proposed future businesses may also be applied retroactively. We cannot predict what effect the interpretation of existing
or new PRC laws or regulations may have on our business.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
legal system in mainland China is a civil law system based on written statutes. Unlike the common law system, prior court decisions under
the civil law system may be cited for reference but have limited precedential value. Since these laws and regulations are relatively
new and the legal system in mainland China continues to rapidly evolve, the interpretations of many laws, regulations and rules are not
always uniform and the enforcement of these laws, regulations and rules involves uncertainties.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
1979, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters in general. The
overall effect of legislation over the past three decades has significantly enhanced the protections afforded to various forms of foreign
investments in China. However, China has not developed a fully integrated legal system, and recently enacted laws and regulations may
not sufficiently cover all aspects of economic activities in China. In particular, the interpretation and enforcement of these laws and
regulations involve uncertainties. Since PRC administrative and court authorities have significant discretion in interpreting and implementing
statutory provisions and contractual terms, it may be difficult to evaluate the outcome of administrative and court proceedings and the
level of legal protection we enjoy. These uncertainties may affect our judgment on the relevance of legal requirements and our ability
to enforce our contractual rights or tort claims. In addition, the regulatory uncertainties may be exploited through unmerited or frivolous
legal actions or threats in attempts to extract payments or benefits from us.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Furthermore,
the legal system in mainland China is based in part on government policies and internal rules, some of which are not published on a timely
basis or at all and may have retroactive effect. As a result, we may not be aware of our violation of any of these policies and rules
until sometime after the violation. In addition, any administrative and court proceedings in China may be protracted, resulting in substantial
costs and diversion of resources and management attention.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">From
time to time, we may have to resort to administrative and court proceedings to enforce our legal rights. However, since PRC administrative
and court authorities have significant discretion in interpreting and implementing statutory and contractual terms, it may be more difficult
to evaluate the outcome of administrative and court proceedings and the level of legal protection we enjoy than in more developed legal
systems. Furthermore, the legal system in mainland China is based in part on government policies and internal rules (some of which are
not published in a timely manner or at all) that may have retroactive effect. As a result, we may not be aware of our violation of these
policies and rules until sometime after the violation. Such uncertainties, including uncertainty over the scope and effect of our contractual,
property (including intellectual property) and procedural rights, and any failure to respond to changes in the regulatory environment
in China could materially and adversely affect our business and impede our ability to continue our operations.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Recently,
the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued
the &#8220;Opinions on Severely Cracking Down on Illegal Securities Activities According to Law,&#8221; or the Opinions, which was made
available to the public on July 6, 2021. The Opinions emphasized the need to strengthen the administration over illegal securities activities,
and the need to strengthen the supervision over overseas listings by Chinese companies. Subsequent laws and regulation have been published
and implemented, including Listing Records Rules and Confidentiality Provisions. Effective measures, such as promoting the construction
of relevant regulatory systems will be taken to deal with the risks and incidents of China-concept overseas listed companies, and cybersecurity
and data privacy protection requirements and similar matters. The Opinions and any related implementing rules to be enacted may subject
us to compliance requirement in the future.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Regulation
and censorship of information distribution over the Internet in China may adversely affect our business, and we may be liable for information
displayed on, retrieved from or linked to our website.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">China
has enacted laws and regulations governing Internet access and the distribution of products, services, news, information, audio-video
programs and other content through the Internet. The PRC government has prohibited the distribution of information through the Internet
that it deems to be in violation of PRC laws and regulations. If any of the content on our online platform is deemed to violate any content
restrictions by the PRC government, we would not be able to continue to display such content and could become subject to penalties, including
confiscation of income, fines, suspension of business and revocation of required licenses, which could materially and adversely affect
our business, financial condition and results of operations. We may also be subject to potential liability for any unlawful actions of
our customers or customers of our website or for content we distribute that is deemed inappropriate. It may be difficult to determine
the type of content that may result in liability to us, and if we are found to be liable, we may be prevented from operating our website
in China.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>China
Securities Regulatory Commission and other Chinese government agencies may exert more oversight and control over offerings that are conducted
overseas and foreign investment in China-based issuers, especially those in the technology filed. Additional compliance procedures may
be required, and, if required, we cannot predict whether we will be able to obtain such approval. If we are required to obtain PRC governmental
permissions to commence any sale of the securities, we will not commence the offering until we obtain such permissions. As a result,
we face uncertainty about future actions by the PRC government that could significantly affect our ability to offer or continue to offer
securities to investors and cause the value of our securities to significantly decline or be worthless.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
July 6, 2021, the General Office of the Communist Party of China Central Committee and the General Office of the State Council jointly
issued a document to crack down on illegal activities in the securities market and promote the high-quality development of the capital
market, which, among other things, requires the relevant governmental authorities to strengthen cross-border oversight of law-enforcement
and judicial cooperation, to enhance supervision over China-based companies listed overseas, and to establish and improve the system
of extraterritorial application of the PRC securities laws. Subsequent laws and regulation have been published and implemented, including
Listing Records Rules and related documents and notices, under which certain filing procedures are required to be conducted for foreign
listing. We are deemed as an &#8220;Existing Issuer&#8221; therefore are not required to undertake the initial filing procedure immediately.
However, we shall carry out filing procedures as required by the Trial Measures in a timely manner for subsequent events.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Since
the document as well as the subsequent laws and regulations published are relatively new, uncertainties still exist in relation to how
soon legislative or administrative regulation making bodies will respond and what existing or new laws or regulations or detailed implementations
and interpretations will be modified or promulgated, if any, and the potential impact such modified or new laws and regulations will
have on our future business, results of operations, and the value of our securities.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Further,
Chinese government continues to exert more oversight and control over Chinese technology firms. On July 2, 2021, Chinese cybersecurity
regulator announced, that it had begun an investigation of Didi Global Inc. (NYSE: DIDI) and two days later ordered that the company&#8217;s
application be removed from smartphone application stores. On July 5, 2021, the Chinese cybersecurity regulator launched the same investigation
on two other Internet platforms, China&#8217;s Full Truck Alliance of Full Truck Alliance Co. Ltd. (NYSE: YMM) and Boss of KANZHUN LIMITED
(Nasdaq: BZ).</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Therefore,
China Securities Regulatory Commission and other Chinese government agencies may exert more oversight and control over offerings that
are conducted overseas and foreign investment in China-based issuers, especially those in the technology filed. As of the date of this
annual report, we have not received any requirement to obtain approval of CSRC to continue listing on U.S. exchanges. Further, however,
given the current regulatory environment in the PRC, we are still subject to the uncertainty of interpretation and enforcement of the
rules and regulations in the PRC, which can change quickly with little advance notice, and any future actions of the PRC authorities,
additional compliance procedures may be required in connection with any offering of our securities and our business operations. If such
compliance procedures were required in the future in connection with any offering of our securities and our business operations, we cannot
predict whether we will be able to obtain such approval. If we are unable to obtain such permission we may be forced to abandon the offering.
As a result, we face uncertainty about future actions by the PRC government that could significantly affect our ability to offer or continue
to offer securities to investors and cause the value of our Class A Common Shares to significantly decline or be worthless.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
may be subject to PRC laws relating to the use, sharing, retention, security and transfer of confidential and private information, such
as personal information and other data. These laws continue to develop, and the PRC government may adopt other rules and restrictions
in the future. Non-compliance could result in penalties or other significant legal liabilities.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Cybersecurity Law, which was adopted by the National People&#8217;s Congress on November 7, 2016 and came into force on June 1, 2017,
and the Cybersecurity Review Measures, or the &#8220;Review Measures,&#8221; which were promulgated on April 13, 2020, amended on December
28, 2021 and will become effective on February 15, 2022, provide that personal information and important data collected and generated
by a critical information infrastructure operator in the course of its operations in China must be stored in China, and if a critical
information infrastructure operator purchases internet products and services that affect or may affect national security, it should be
subject to cybersecurity review by the CAC. In addition, a cybersecurity review is required where critical information infrastructure
operators, or the &#8220;CIIOs,&#8221; purchase network-related products and services, which products and services affect or may affect
national security. Due to the lack of further interpretations, the exact scope of what constitute a &#8220;CIIO&#8221; remains unclear.
Further, the PRC government authorities may have wide discretion in the interpretation and enforcement of these laws. In addition, Review
Measures stipulates that an online platform operator holding more than one million users/users&#8217; individual information shall be
subject to cybersecurity review before listing abroad. Cybersecurity Review Measures does not provide a definition of &#8220;online platform
operator&#8221;, therefore, we cannot assure you that we will not be deemed as an &#8220;online platform operator&#8221;. As of the date
of this prospectus, we have not received any notice from any authorities identifying us as a CIIO or requiring us to undertake a cybersecurity
review by the CAC. Further, as of the date of this prospectus, we have not been subject to any penalties, fines, suspensions, investigations
from any competent authorities for violation of the regulations or policies that have been issued by the CAC. On June 10, 2021, the Standing
Committee of the National People&#8217;s Congress promulgated the Data Security Law which took effect on September 1, 2021. The Data
Security Law requires that data shall not be collected by theft or other illegal means, and it also provides that a data classification
and hierarchical protection system shall be established. The data classification and hierarchical protection system protects data according
to its importance in economic and social development, and the damages it may cause to national security, public interests, or the legitimate
rights and interests of individuals and organizations if the data is falsified, damaged, disclosed, illegally obtained or illegally used,
which protection system is expected to be built by the state for data security in the near future. On November 14, 2021, CAC published
the Regulations on the Network Data Security Management (Draft for Comments), or the Data Security Management Regulations Draft to solicit
public opinion and comments. Under the Data Security Management Regulations Draft, which provides that an overseas initial public offering
to be conducted by a data processor processing the personal information of more than one million individuals shall apply for a cybersecurity
review. Data processor means an individual or organization that independently makes decisions on the purpose and manner of processing
in data processing activities, and data processing activities refers to activities such as the collection, retention, use, processing,
transmission, provision, disclosure, or deletion of data. We may be deemed as a data processor under the Data Security Management Regulations
Draft. However, the Data Security Management Regulations Draft has not been formally adopted. It is uncertain when the final regulation
will be issued and take effect, how it will be enacted, interpreted or implemented, and whether it will affect us. There remains uncertainty
as to how the Review Measures and the Data Security Management Regulations Draft will be interpreted or implemented and whether the PRC
regulatory agencies, including the CAC, may adopt new laws, regulations, rules, or detailed implementation and interpretation related
to the Review Measures and the Data Security Regulations Draft. If any such new laws, regulations, rules, or implementation and interpretation
come into effect, we expect to take all reasonable measures and actions to comply. We cannot assure you that PRC regulatory agencies,
including the CAC, would take the same view as we do, and there is no assurance that we can fully or timely comply with such laws should
they be deemed applicable to our operations. Any cybersecurity review could also result in negative publicity with respect to our Company
and diversion of our managerial and financial resources. There is no certainty as to how such review or prescribed actions would impact
our operations and we cannot guarantee that any clearance can be obtained or any actions that may be required for our listing on the
Nasdaq capital market and the offering as well can be taken in a timely manner, or at all.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition, according to the Personal Information Protection Law, where the purpose of the activity is to provide a product or service
to that natural person located within China, such activity shall comply with the Personal Information Protection Law. Further, the Data
Security Law provides that where any data handling activity carried out outside of the territory of China harms the national security,
public interests, or the legitimate rights and interests of citizens or organizations of China, legal liability shall be investigated
in accordance with such law. However, the Personal Information Protection Law and the Data Security Law are relatively new, there remains
uncertainty as to how the laws will be interpreted or implemented and whether the PRC regulatory agencies, including the CAC, may adopt
new laws, regulations, rules, or detailed implementation and interpretation related to the two laws.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
regulatory requirements with respect to cybersecurity and data privacy are constantly evolving and can be subject to varying interpretations,
and significant changes, resulting in uncertainties about the scope of our responsibilities in that regard. Failure to comply with the
cybersecurity and data privacy requirements in a timely manner, or at all, may subject us to government enforcement actions and investigations,
fines, penalties, suspension, or disruption of our operations, among other things.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
may be liable for improper use or appropriation of personal information provided by our customers.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
business can potentially involve collecting and retaining certain internal and customer data. We also maintain information about various
aspects of our operations as well as regarding our employees. The integrity and protection of our customer, employee and company data
is critical to our business. Our customers and employees expect that we will adequately protect their personal information. We are required
by applicable laws to keep strictly confidential the personal information that we collect, and to take adequate security measures to
safeguard such information.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
PRC Criminal Law, as amended by its Amendment 7 (effective on February 28, 2009) and Amendment 9 (effective on November 1, 2015), prohibits
institutions, companies, and their employees from selling or otherwise illegally disclosing a citizen&#8217;s personal information obtained
in performing duties or providing services or obtaining such information through theft or other illegal ways. On November 7, 2016, the
SCNPC issued the Cyber Security Law of the PRC, or Cyber Security Law, which became effective on June 1, 2017. Pursuant to the Cyber
Security Law, network operators must not, without users&#8217; consent, collect their personal information, and may only collect users&#8217;
personal information necessary to provide their services. Providers are also obliged to provide security maintenance for their products
and services and shall comply with provisions regarding the protection of personal information as stipulated under the relevant laws
and regulations.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Civil Code of the PRC (issued by the PRC National People&#8217;s Congress on May 28, 2020 and effective from January 1, 2021) provides
legal basis for privacy and personal information infringement claims under the Chinese civil laws. PRC regulators, including the CAC,
the Ministry of Industry and Information Technology, or MIIT, and the Ministry of Public Security, have been increasingly focused on
regulation in data security and data protection.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
PRC regulatory requirements regarding cybersecurity are evolving. For instance, various regulatory bodies in China, including the CAC,
the Ministry of Public Security and the State Administration for Market Regulation, or the SAMR (formerly known as State Administration
for Industry and Commerce, or the SAIC), have enforced data privacy and protection laws and regulations with varying and evolving standards
and interpretations. In April 2020, the Chinese government promulgated Cybersecurity Review Measures, which came into effect on June
1, 2020, was amended on December 28, 2021, and will become effective on February 15, 2022. According to the Cybersecurity Review Measures,
(i) operators of critical information infrastructure must pass a cybersecurity review when purchasing network products and services which
do or may affect national security; (ii) online platform operators who are engaged in data processing are also subject to the regulatory
scope; (iii) the CSRC is included as one of the regulatory authorities for purposes of jointly establishing the state cybersecurity review
working mechanism; (iv) online platform operators holding more than one million users/users&#8217; individual information and seeking
a listing outside China shall file for cybersecurity review; (v) the risks of core data, material data or large amounts of personal information
being stolen, leaked, destroyed, damaged, illegally used or illegally transmitted to overseas parties and the risks of critical information
infrastructure, core data, material data or large amounts of personal information being influenced, controlled or used maliciously shall
be collectively taken into consideration during the cybersecurity review process.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Certain
internet platforms in China have been reportedly subject to heightened regulatory scrutiny in relation to cybersecurity matters. As of
the date of this prospectus, we have not been informed by any PRC governmental authority of any requirement that we file for a cybersecurity
review. However, if we are deemed to be a critical information infrastructure operator or a company that is engaged in data processing
and holds personal information of more than one million users, we could be subject to PRC cybersecurity review.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of the date hereof, we are of the view that we are in compliance with the applicable PRC laws and regulations governing the data privacy
and personal information in all material respects, including the data privacy and personal information requirements of the Cyberspace
Administration of China, and we have not received any complaints from any third party, or been investigated or punished by any PRC competent
authority in relation to data privacy and personal information protection. However, as there remains significant uncertainty in the interpretation
and enforcement of relevant PRC cybersecurity laws and regulations, we could be subject to cybersecurity review, and if so, we may not
be able to pass such review in relation to this offering. In addition, we could become subject to enhanced cybersecurity review or investigations
launched by PRC regulators in the future. Any failure or delay in the completion of the cybersecurity review procedures or any other
non-compliance with the related laws and regulations may result in fines or other penalties, including suspension of business, website
closure, removal of our app from the relevant app stores, and revocation of prerequisite licenses, as well as reputational damage or
legal proceedings or actions against us, which may have material adverse effect on our business, financial condition or results of operations.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
June 10, 2021, the SCNPC promulgated the PRC Data Security Law, which took effect in September 2021. The PRC Data Security Law imposes
data security and privacy obligations on entities and individuals carrying out data activities, and introduces a data classification
and hierarchical protection system based on the importance of data in economic and social development, and the degree of harm it will
cause to national security, public interests, or legitimate rights and interests of individuals or organizations when such data is tampered
with, destroyed, leaked, illegally acquired or used. The PRC Data Security Law also provides for a national security review procedure
for data activities that may affect national security and imposes export restrictions on certain data an information.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
uncertainties remain regarding the interpretation and implementation of these laws and regulations, we cannot assure you that we will
comply with such regulations in all respects and we may be ordered to rectify or terminate any actions that are deemed illegal by regulatory
authorities. We may also become subject to fines and/or other sanctions which may have material adverse effect on our business, operations
and financial condition.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">While
we take various measures to comply with all applicable data privacy and protection laws and regulations, our current security measures
and those of our third-party service providers may not always be adequate for the protection of our customer, employee or company data.
We may be a target for computer hackers, foreign governments or cyber terrorists in the future.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Unauthorized
access to our proprietary internal and customer data may be obtained through break-ins, sabotage, breach of our secure network by an
unauthorized party, computer viruses, computer denial-of-service attacks, employee theft or misuse, breach of the security of the networks
of our third-party service providers, or other misconduct. Because the techniques used by computer programmers who may attempt to penetrate
and sabotage our proprietary internal and customer data change frequently and may not be recognized until launched against a target,
we may be unable to anticipate these techniques.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Unauthorized
access to our proprietary internal and customer data may also be obtained through inadequate use of security controls. Any of such incidents
may harm our reputation and adversely affect our business and results of operations. In addition, we may be subject to negative publicity
about our security and privacy policies, systems, or measurements. Any failure to prevent or mitigate security breaches, cyber-attacks
or other unauthorized access to our systems or disclosure of our customers&#8217; data, including their personal information, could result
in loss or misuse of such data, interruptions to our service system, diminished customer experience, loss of customer confidence and
trust, impairment of our technology infrastructure, and harm our reputation and business, resulting in significant legal and financial
exposure and potential lawsuits.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
must remit the offering proceeds to China before they may be used to benefit our business in China, the process of which may be time-consuming,
and we cannot assure that we can finish all necessary governmental registration processes in a timely manner.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
proceeds of any offering of our securities may be sent back to mainland China, and the process for sending such proceeds back to mainland
China may be time-consuming after the closing of the offering. We may be unable to use these proceeds to grow our business until our
Mainland China Subsidiaries receive such proceeds in mainland China. Any transfer of funds by us to our Mainland China Subsidiaries,
either as a shareholder loan or as an increase in registered capital, are subject to approval by or registration or filing with relevant
governmental authorities in China. Any foreign loans procured by our Mainland China Subsidiaries is required to be registered with China&#8217;s
State Administration of Foreign Exchange (&#8220;SAFE&#8221;) or its local branches or satisfy relevant requirements, and our Mainland
China Subsidiaries may not procure loans which exceed the difference between their respective total project investment amount and registered
capital or 2 times (which may be varied year by year due to the change of PRC&#8217;s national macro-control policy) of the net worth
of our Mainland China Subsidiary. According to the relevant PRC regulations on foreign-invested enterprises in China, capital contributions
to our Mainland China Subsidiaries are subject to the approval of or filing with State Administration for Market Regulation in its local
branches, the Ministry of Commerce in its local branches and registration with a local bank authorized by SAFE.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">To
remit the proceeds of the offering, we must take the steps legally required under the PRC laws, for example, we will open a special foreign
exchange account for capital account transactions, remit the offering proceeds into such special foreign exchange account and apply for
settlement of the foreign exchange. The timing of the process is difficult to estimate because the efficiencies of different SAFE branches
can vary materially.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
light of the various requirements imposed by PRC regulations on loans to, and direct investment in, entities in mainland China by offshore
holding companies, we cannot assure you that we will be able to complete the necessary government registrations or obtain the necessary
government approvals on a timely basis, if at all, with respect to future loans by us to our Mainland China Subsidiary or with respect
to future capital contributions by us to our Mainland China Subsidiary. If we fail to complete such registrations or obtain such approvals,
our ability to use the proceeds from any offering of our securities and to capitalize or otherwise fund our operations in mainland China
may be negatively affected, which could materially and adversely affect our liquidity, our ability to fund and expand our business and
our Common Shares.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>U.S.
regulators&#8217; ability to conduct investigations or enforce rules in China is limited.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
majority of our operations conducted outside of the U.S. As a result, it may not be possible for the U.S. regulators to conduct investigations
or inspections, or to effect service of process within the U.S. or elsewhere outside China on us, our subsidiaries, officers, directors
and shareholders, and others, including with respect to matters arising under U.S. federal or state securities laws. China does not have
treaties providing for reciprocal recognition and enforcement of judgments of courts with the U.S. and many other countries. As a result,
recognition and enforcement in China of these judgments in relation to any matter, including U.S. securities laws and the laws of the
Cayman Islands, may be difficult or impossible.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>You
may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing original actions in mainland
China against us or Hong Kong or other foreign laws, and the ability of U.S. authorities to bring actions in mainland China may also
be limited.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are an exempted company with limited liability incorporated under the laws of the British Virgin Island, we conduct a significant portion
of our operations in mainland China and the majority of our assets are located in mainland China. In addition, all of our directors,
officers or senior management other than Yunhao Chen, are located in mainland China. As a result, it may be more difficult for our Shareholders
to enforce liabilities and enforce judgments on those individuals. Our PRC legal counsel, Guangdong Jiamao Law Firm, has advised
us that mainland China does not have treaties providing for the reciprocal recognition and enforcement of judgments of courts with the
Cayman Islands and many other countries and regions. Therefore, recognition and enforcement in mainland China of judgments of a court
in any of these jurisdictions outside mainland China in relation to any matter not subject to a binding arbitration provision may be
difficult or impossible.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
July 14, 2006, Hong Kong and the mainland China entered into the Arrangement on Reciprocal Recognition and Enforcement of Judgments in
Civil and Commercial Matters by the Courts of the PRC and of the Hong Kong Special Administrative Region Pursuant to Choice of Court
Agreements Between Parties Concerned, or the 2006 Arrangement, pursuant to which a party with a final court judgment rendered by a Hong
Kong court requiring payment of money in a civil and commercial case pursuant to a choice of court agreement in writing may apply for
recognition and enforcement of the judgment in mainland China . Similarly, a party with a final judgment rendered by a court in mainland
China requiring payment of money in a civil and commercial case pursuant to a choice of court agreement in writing may apply for recognition
and enforcement of the judgment in Hong Kong. A choice of court agreement in writing is defined as any agreement in writing entered into
between parties after the effective date of the 2006 Arrangement in which a Hong Kong court or a court in mainland China is expressly
designated as the court having sole jurisdiction for the dispute. Therefore, it is not possible to enforce a judgment rendered by a Hong
Kong court in mainland China if the parties in dispute have not agreed to enter into a choice of court agreement in writing. The 2006
Arrangement became effective on August 1, 2008.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Subsequently
on January 18, 2019, Hong Kong and mainland China entered into the Arrangement on Reciprocal Recognition and Enforcement of Judgments
in Civil and Commercial Matters between the Courts of the Mainland and of the Hong Kong Special Administrative Region, or the Arrangement,
pursuant to which, among other things, the scope of application was widened to cover both monetary and non-monetary judgments in most
civil and commercial matters, including effective judgments on civil compensation in criminal cases. In addition, the requirement of
a choice of court agreement in writing has been removed. It is no longer necessary for parties to agree to enter into a choice of court
agreement in writing, as long as it can be shown that there is a connection between the dispute and the requesting place, such as place
of the defendant&#8217;s residence, place of the defendant&#8217;s business or place of performance of the contract or tort. The 2019
Arrangement shall apply to judgments in civil and commercial matters made on or after its effective date by the courts of both sides.
The 2006 Arrangement shall be terminated on the same day when the 2019 Arrangement comes into effect. If a &#8220;written choice of court
agreement&#8221; has been signed by parties according to the 2006 Arrangement prior to the effective date of the 2019 Arrangement, the
2006 Arrangement shall still apply. Although the 2019 Arrangement has been signed, its effective date has yet to be announced. Therefore,
there are still uncertainties about the outcomes and effectiveness of enforcement or recognition of judgments under the 2019 Arrangement.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Furthermore,
shareholder claims that are common in the U.S., including securities law class actions and fraud claims, generally are difficult to pursue
as a matter of law or practicality in China. For example, in China, there are significant legal and other obstacles to obtaining information
needed for shareholder investigations or litigation outside China or otherwise with respect to foreign entities. Although the local authorities
in China may establish a regulatory cooperation mechanism with the securities regulatory authorities of another country or region to
implement cross-border supervision and administration, such regulatory cooperation with the securities regulatory authorities in the
U.S. have not been efficient in the absence of mutual and practical cooperation mechanism. According to Article 177 of the PRC Securities
Law which became effective in March 2020, no overseas securities regulator is allowed to directly conduct investigation or evidence collection
activities within the territory of mainland China. Accordingly, without the consent of the competent PRC securities regulators and relevant
authorities, no organization or individual may provide the documents and materials relating to securities business activities to overseas
parties.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
face uncertainty regarding the PRC tax reporting obligations and consequences for certain indirect transfers of the stock of our operating
company.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
to the Notice on Strengthening Administration of Enterprise Income Tax for Share Transfers by Non-PRC Resident Enterprises issued by
the PRC State Administration of Taxation (&#8220;SAT&#8221;) on December 10, 2009, or Circular 698, where a foreign investor transfers
the equity interests of a mainland China resident enterprise indirectly by way of the sale of equity interests of an overseas holding
company, or an Indirect Transfer, and such overseas holding company is located in a tax jurisdiction that: (i) has an effective tax rate
less than 12.5% or (ii) does not tax foreign income of its residents, the foreign investor should report such Indirect Transfer to the
competent tax authority of mainland China PRC resident enterprise.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
February 3, 2015, the SAT issued the Announcement of the State Administration of Taxation on Several Issues Concerning the Enterprise
Income Tax on Indirect Property Transfer by Non-Resident Enterprises, or SAT Bulletin 7. SAT Bulletin 7 supersedes the rules with respect
to the Indirect Transfer under SAT Circular 698. SAT Bulletin 7 has introduced a new tax regime that is significantly different from
the previous one under SAT Circular 698. SAT Bulletin 7 extends the mainland China&#8217;s tax jurisdiction to not only Indirect Transfers
set forth under SAT Circular 698 but also transactions involving transfer of other taxable assets through offshore transfer of a foreign
intermediate holding company. In addition, SAT Bulletin 7 provides clearer criteria than SAT Circular 698 for assessment of reasonable
commercial purposes and has introduced safe harbors for internal group restructurings and the purchase and sale of equity through a public
securities market. SAT Bulletin 7 also brings challenges to both foreign transferor and transferee (or other person who is obligated
to pay for the transfer) of taxable assets. Where a non-resident enterprise transfers taxable assets indirectly by disposing of the equity
interests of an overseas holding company, which is an Indirect Transfer, the non-resident enterprise, being the transferor, or the transferee,
or the mainland China entity that directly owns the taxable assets, may report such Indirect Transfer to the relevant tax authority.
Using a &#8220;substance over form&#8221; principle, the PRC tax authority may disregard the existence of the overseas holding company
if it lacks a reasonable commercial purpose and was established for the purpose of reducing, avoiding or deferring mainland China tax.
As a result, gains derived from such Indirect Transfer may be subject to mainland China enterprise income tax, and the transferee or
other person who is obligated to pay for the transfer is obligated to withhold the applicable taxes, currently at a rate of 10% for the
transfer of equity interests in a mainland China resident enterprise. Both the transferor and the transferee may be subject to penalties
under PRC tax laws if the transferee fails to withhold the taxes and the transferor fails to pay the taxes.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
October 17, 2017, the SAT issued the Announcement of the State Administration of Taxation on Matters Concerning Withholding of Income
Tax of Non-resident Enterprises at Source, or SAT Bulletin 37, which, among others, repealed the SAT Circular 698 on December 1, 2017.
SAT Bulletin 37 further details and clarifies the tax withholding methods in respect of income of non-resident enterprises under SAT
Circular 698. And certain rules stipulated in SAT Bulletin 7 are replaced by SAT Bulletin 37. Where the non-resident enterprise fails
to declare the tax payable pursuant to Article 39 of the PRC Enterprise Income Tax Law, the tax authority may order it to pay the tax
due within required time limits, and the non-resident enterprise shall declare and pay the tax payable within such time limits specified
by the tax authority; however, if the non-resident enterprise voluntarily declares and pays the tax payable before the tax authority
orders it to do so within required time limits, it shall be deemed that such enterprise has paid the tax in time.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
face uncertainties as to the reporting and other implications of certain past and future transactions where taxable assets in mainland
China are involved, such as offshore restructuring. Our company may be subject to filing obligations or taxed if our company is transferor
in such transactions, and may be subject to withholding obligations if our company is transferee in such transactions, under SAT Bulletin
7 and SAT Bulletin 37. For transfer of shares in our company by investors who are not resident enterprises in mainland China, our Mainland
China Subsidiary may be requested to assist in the filing under SAT Bulletin 7 and SAT Bulletin 37. As a result, we may be required to
expend valuable resources to comply with SAT Bulletin 7 and SAT Bulletin 37 or to request the relevant transferors from whom we purchase
taxable assets to comply with these circulars, or to establish that our company should not be taxed under these circulars, which may
have a material adverse effect on our financial condition and results of operations.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>PRC
regulations relating to the establishment of offshore special purpose companies by mainland China residents may subject our mainland
China resident shareholders to personal liability and limit our ability to acquire mainland China companies or to inject capital into
our Mainland China Subsidiary, limit our Mainland China Subsidiary ability to distribute profits to us, or otherwise materially and adversely
affect us.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
July 2014, SAFE has promulgated the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents&#8217; Offshore
Investment and Financing and Roundtrip Investment Through Special Purpose Vehicles, or SAFE Circular 37, to replace the Notice on Relevant
Issues Concerning Foreign Exchange Administration for Domestic Residents&#8217; Financing and Roundtrip Investment Through Offshore Special
Purpose Vehicles, or SAFE Circular 75, which ceased to be effective upon the promulgation of SAFE Circular 37. SAFE Circular 37 requires
mainland China residents (including mainland China individuals and mainland China corporate entities as well as foreign individuals that
are deemed as mainland China residents for foreign exchange administration purpose) to register with SAFE or its local branches in connection
with their direct or indirect offshore investment activities. SAFE Circular 37 further requires amendment to the SAFE registrations in
the event of any changes with respect to the basic information of the offshore special purpose vehicle, such as change of a mainland
China individual shareholder, name and operation term, or any significant changes with respect to the offshore special purpose vehicle,
such as increase or decrease of capital contribution, share transfer or exchange, or mergers or divisions. SAFE Circular 37 is applicable
to our shareholders who are mainland China residents and may be applicable to any offshore acquisitions that we make in the future.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
any mainland China shareholder who makes direct or indirect investments in offshore special purpose vehicles, or SPV, fails to make the
required registration or to update the previously filed registration, the subsidiaries of such SPV in China may be prohibited from distributing
its profits or the proceeds from any capital reduction, share transfer or liquidation to the SPV, and the SPV may also be prohibited
from making additional capital contribution into its subsidiary in China. On February 28, 2015, the SAFE promulgated a Notice on Further
Simplifying and Improving Foreign Exchange Administration Policy on Direct Investment, or SAFE Notice 13, which became effective on June
1, 2015. Under SAFE Notice 13, applications for foreign exchange registration of inbound foreign direct investment and outbound overseas
direct investment, including those required under the SAFE Circular 37, will be filed with qualified banks instead of the SAFE. The qualified
banks will directly examine the applications and accept registrations under the supervision of the SAFE.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Of
our current shareholders, five pre-IPO shareholders are individual Chinese residents to whom Notice 37 applies. The remaining pre-IPO
shareholders are enterprises and Hong Kong residents, to whom Notice 37 does not apply; provided, however, that to the extent the shareholders
of such enterprises are themselves Chinese residents, Notice 37 would apply to such individuals. As of the date hereof, none of the shareholders
who are Chinese residents who hold such shares directly or through a Hong Kong enterprise has submitted registration under Notice 37.
Although such individuals have promised to complete registration at the time they pay the company&#8217;s capital contribution prior
to completion of this offering, there can be no assurance such registration will be completed in a timely manner. &#160;We have requested
mainland China residents whom we know hold direct or indirect interests in our company to make the necessary applications, filings and
amendments as required under Notice 37 and other related rules. However, we cannot assure you that the registration will be duly and
timely completed with the local SAFE branch or qualified banks. In addition, we may not be informed of the identities of all of the mainland
China residents holding direct or indirect interests in our company. As a result, we cannot assure you that all of our shareholders or
beneficial owners who are mainland China residents or entities have complied with, and will in the future make or obtain any applicable
registrations or approvals required by, SAFE regulations. Failure by such shareholders or beneficial owners to comply with SAFE regulations,
or failure by us to amend the foreign exchange registrations of our Mainland China Subsidiary, could subject us to fines or legal sanctions,
restrict our overseas or cross-border investment activities, limit our subsidiaries&#8217; ability to make distributions or pay dividends
or affect our ownership structure, which could adversely affect our business and prospects.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Furthermore,
as the interpretation and implementation of these foreign exchange regulations has been constantly evolving, it is unclear how these
regulations, and any future regulation concerning offshore or cross-border transactions, will be interpreted, amended and implemented
by the relevant governmental authorities. For example, we may be subject to a more stringent review and approval process with respect
to our foreign exchange activities, such as remittance of dividends and foreign-currency-denominated borrowings, which may adversely
affect our financial condition and results of operations. In addition, if we decide to acquire a company established in mainland China,
we cannot assure you that we or the owners of such company, as the case may be, will be able to obtain the necessary approvals or complete
the necessary filings and registrations required by the foreign exchange regulations. This may restrict our ability to implement our
acquisition strategy and could adversely affect our business and prospects.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
may rely on dividends and other distributions on equity paid by our subsidiaries, including those based in the PRC, for our cash and
financing requirements we may have, and any limitation on the ability of our Mainland China Subsidiaries to make payments to us could
have a material and adverse effect on our ability to conduct our business.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
a holding company, we rely principally on dividends and other distributions on equity from our subsidiaries, including those based in
China, for our cash requirements, including for services of any debt we may incur.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
Mainland China Subsidiaries&#8217; ability to distribute dividends is based upon their distributable earnings. Current PRC regulations
permit our Mainland China Subsidiaries to pay dividends to their respective shareholders only out of their accumulated profits, if any,
determined in accordance with PRC accounting standards and regulations. In addition, each of our Mainland China Subsidiaries, as a Foreign
Invested Enterprise, or FIE, is required to draw 10% of its after-tax profits each year, if any, to fund a common reserve, and it may
stop drawing its after-tax profits if the aggregate balance of the common reserve has already accounted for over fifty percent (50%)
of its registered capital. These reserves are not distributable as cash dividends. In addition, if our Mainland China Subsidiaries incur
debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other
payments to us. Any limitation on the ability of our Mainland China Subsidiaries to distribute dividends or other payments to their respective
shareholders could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our
business, pay dividends or otherwise fund and conduct our business. Currently, we have installed cash management policies or procedures
in place that dictate how funds are transferred, under an umbrella of corporate policies and financial reporting policies. Even though
our policies do not specifically address the limitations, as discussed above, on the amount of funds the Company can transfer out of
China, if we decide to transfer cash out of China in the future, all relevant transfers will be conducted in compliance with such limitations.
As of the date of this annual report, none of the Mainland China Subsidiaries has made any dividends or distributions to Dogness.&#160;&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>PRC
regulation of loans and direct investment by offshore holding companies to mainland China entities may delay or prevent us from using
the proceeds of this Offering to make loans or additional capital contributions to our Mainland China Subsidiary, which could materially
and adversely affect our liquidity and our ability to fund and expand our business.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are an offshore holding company conducting our operations in China through our subsidiaries established in China and Hong Kong. We may
make loans to our Mainland China Subsidiaries subject to the approval from governmental authorities and limitation of amount, or we may
make additional capital contributions to our wholly foreign-owned subsidiaries in China.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Any
loans to our wholly foreign-owned subsidiaries in China, which are treated as foreign-invested enterprises under PRC law, are subject
to PRC regulations and foreign exchange loan registrations. For example, loans by us to our wholly foreign-owned subsidiaries in China
to finance their activities must be registered with the local counterpart of SAFE. In addition, a foreign invested enterprise shall use
its capital pursuant to the principle of authenticity and self-use within its business scope. The capital of a foreign invested enterprise
shall not be used for the following purposes: (i) directly or indirectly used for payment beyond the business scope of the enterprises
or the payment prohibited by relevant laws and regulations; (ii) directly or indirectly used for investment in securities or investments
other than banks&#8217; principal-secured products unless otherwise provided by relevant laws and regulations; (iii) the granting of
loans to non-affiliated enterprises, except where it is expressly permitted in the business license; and (iv) paying the expenses related
to the purchase of real estate that is not for self-use (except for the foreign-invested real estate enterprises).</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">SAFE
promulgated the Notice of the State Administration of Foreign Exchange on Reforming the Administration of Foreign Exchange Settlement
of Capital of Foreign-invested Enterprises, or SAFE Circular 19, effective June 2015, in replacement of the Circular on the Relevant
Operating Issues Concerning the Improvement of the Administration of the Payment and Settlement of Foreign Currency Capital of Foreign-Invested
Enterprises, the Notice from the State Administration of Foreign Exchange on Relevant Issues Concerning Strengthening the Administration
of Foreign Exchange Businesses, and the Circular on Further Clarification and Regulation of the Issues Concerning the Administration
of Certain Capital Account Foreign Exchange Businesses. According to SAFE Circular 19, the flow and use of the RMB capital converted
from foreign currency-denominated registered capital of a foreign-invested company is regulated such that RMB capital may not be used
for the issuance of RMB entrusted loans, the repayment of inter-enterprise loans or the repayment of banks loans that have been transferred
to a third party. Although SAFE Circular 19 allows RMB capital converted from foreign currency-denominated registered capital of a foreign-invested
enterprise to be used for equity investments within China, it also reiterates the principle that RMB converted from the foreign currency-denominated
capital of a foreign-invested company may not be directly or indirectly used for purposes beyond its business scope. SAFE promulgated
the Notice of the State Administration of Foreign Exchange on Reforming and Standardizing the Foreign Exchange Settlement Management
Policy of Capital Account, or SAFE Circular 16, effective on June 9, 2016, which reiterates some of the rules set forth in SAFE Circular
19, but changes the prohibition against using RMB capital converted from foreign currency-denominated registered capital of a foreign-invested
company to issue RMB entrusted loans to a prohibition against using such capital to issue loans to non-associated enterprises. Violations
of SAFE Circular 19 and SAFE Circular 16 could result in administrative penalties. SAFE Circular 19 and SAFE Circular 16 may significantly
limit our ability to transfer any foreign currency we hold, including the net proceeds from this offering, to our Mainland China Subsidiaries,
which may adversely affect our liquidity and our ability to fund and expand our business in China. On October 23, 2019, the SAFE promulgated
the Notice of the State Administration of Foreign Exchange on Further Promoting the Convenience of Cross-border Trade and Investment,
or the SAFE Circular 28, which, among other things, allows all foreign-invested companies to use Renminbi converted from foreign currency-denominated
capital for equity investments in China, as long as the equity investment is genuine, does not violate applicable laws, and complies
with the negative list on foreign investment. However, since the SAFE Circular 28 is newly promulgated, it is unclear how SAFE and competent
banks will carry this out in practice.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
light of the various requirements imposed by PRC regulations on loans to and direct investment in mainland China entities by offshore
holding companies, we cannot assure you that we will be able to complete the necessary government registrations or obtain the necessary
government approvals on a timely basis, if at all, with respect to future loans to our Mainland China Subsidiaries or future capital
contributions by us to our wholly foreign-owned subsidiaries in China. As a result, uncertainties exist as to our ability to provide
prompt financial support to our Mainland China Subsidiaries when needed. If we fail to complete such registrations or obtain such approvals,
our ability to use the proceeds we expect to receive from any offering of our securities and to capitalize or otherwise fund our mainland
China operations may be negatively affected, which could materially and adversely affect our liquidity and our ability to fund and expand
our business.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Governmental
control of currency conversion may limit our ability to use our revenues effectively and the ability of our Mainland China Subsidiaries
to obtain financing.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
PRC government imposes control on the convertibility of the RMB into foreign currencies and, in certain cases, the remittance of currency
out of China. We receive a majority of our revenues in Renminbi, which currently is not a freely convertible currency. Restrictions on
currency conversion imposed by the PRC government may limit our ability to use revenues generated in Renminbi to fund our expenditures
denominated in foreign currencies or our business activities outside China. Under China&#8217;s existing foreign exchange regulations,
Renminbi may be freely converted into foreign currency for payments relating to current account transactions, which include among other
things dividend payments and payments for the import of goods and services, by complying with certain procedural requirements. Our Mainland
China Subsidiaries are able to pay dividends in foreign currencies to us without prior approval from SAFE, by complying with certain
procedural requirements. Our Mainland China Subsidiaries may also retain foreign currency in their respective current account bank accounts
for use in payment of international current account transactions. However, we cannot assure you that the PRC government will not at its
discretion take measures in the future to restrict access to foreign currencies for current account transactions.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Conversion
of Renminbi into foreign currencies, and of foreign currencies into Renminbi, for payments relating to capital account transactions,
which principally includes investments and loans, generally requires the approval of SAFE and other relevant PRC governmental authorities.
Restrictions on the convertibility of the Renminbi for capital account transactions could affect the ability of our Mainland China Subsidiaries
to make investments overseas or to obtain foreign currency through debt or equity financing, including by means of loans or capital contributions
from us. We cannot assure you that the registration process will not delay or prevent our conversion of Renminbi for use outside of China.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
may be classified as a &#8220;resident enterprise&#8221; for mainland China enterprise income tax purposes; such classification could
result in unfavorable tax consequences to us and our non-mainland China shareholders.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Enterprise Income Tax Law provides that enterprises established outside of mainland China whose &#8220;de facto management bodies&#8221;
are located within mainland China are considered mainland China tax resident enterprises and will generally be subject to the uniform
25% enterprise income tax rate on their global income. In 2009, the SAT issued the Circular of the State Administration of Taxation on
Issues Concerning the Identification of Chinese-Controlled Overseas Registered Enterprises as Resident Enterprises in Accordance with
the Actual Standards of Organizational Management, known as SAT Circular 82, which was partially amended by Announcement on Issues concerning
the Determination of Resident Enterprises Based on the Standards of Actual Management Institutions issued by SAT on January 29, 2014,
and further partially amended by Decision on Issuing the Lists of Invalid and Abolished Tax Departmental Rules and Taxation Normative
Documents issued by SAT on December 29, 2017. SAT Circular 82, as amended, provides certain specific criteria for determining whether
the &#8220;de facto management body&#8221; of a Chinese-controlled offshore-incorporated enterprise is located in China, which include
all of the following conditions: (i) the location where senior management members responsible for an enterprise&#8217;s daily operations
discharge their duties; (ii) the location where financial and human resource decisions are made or approved by organizations or persons;
(iii) the location where the major assets and corporate documents are kept; and (iv) the location where more than half (inclusive) of
all directors with voting rights or senior management have their habitual residence. SAT Circular 82 further clarifies that the identification
of the &#8220;de facto management body&#8221; must follow the substance over form principle. In addition, SAT issued SAT Bulletin 45
on July 27, 2011, effective from September 1, 2011 and partially amended on April 17, 2015, June 28, 2016, and June 15, 2018, respectively,
providing more guidance on the implementation of SAT Circular 82. SAT Bulletin 45 clarifies matters including resident status determination,
post-determination administration and competent tax authorities. Although both SAT Circular 82 and SAT Bulletin 45 only apply to offshore
enterprises controlled by mainland China enterprises or mainland China enterprise groups, not those controlled by mainland China individuals
or foreign individuals, the determining criteria set forth in SAT Circular 82 and SAT Bulletin 45 may reflect SAT&#8217;s general position
on how the &#8220;de facto management body&#8221; test should be applied in determining the tax resident status of offshore enterprises,
regardless of whether they are controlled by mainland China enterprises or mainland China enterprise groups or by mainland China or foreign
individuals.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Currently,
there are no detailed rules or precedents governing the procedures and specific criteria for determining de facto management bodies which
are applicable to our company or our overseas subsidiaries. We do not believe that Dogness meets all of the conditions required for mainland
China resident enterprise. The Company is a company incorporated outside mainland China. As a holding company, its key assets are its
ownership interests in its subsidiaries, and its key assets are located, and its records (including the resolutions of its board of directors
and the resolutions of its shareholders) are maintained, outside mainland China. For the same reasons, we believe our other entities
outside of mainland China are not mainland China resident enterprises either. However, the tax resident status of an enterprise is subject
to determination by the PRC tax authorities and uncertainties remain with respect to the interpretation of the term &#8220;de facto management
body.&#8221; There can be no assurance that the PRC government will ultimately take a view that is consistent with ours.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">However,
if the PRC tax authorities determine that Dogness is a mainland China resident enterprise for enterprise income tax purposes, we may
be required to withhold a 10% withholding tax from dividends we pay to our shareholders that are non-resident enterprises. Such 10% tax
rate could be reduced by applicable tax treaties or similar arrangements between China and the jurisdiction of our shareholders. For
example, for shareholders eligible for the benefits of the tax treaty between China and Hong Kong, the tax rate is reduced to 5% for
dividends if relevant conditions are met. In addition, non-resident enterprise shareholders may be subject to a 10% PRC tax on gains
realized on the sale or other disposition of Common Shares, if such income is treated as sourced from within mainland China. It is unclear
whether our non-mainland China individual shareholders would be subject to any PRC tax on dividends or gains obtained by such non-mainland
China individual shareholders in the event we are determined to be a mainland China resident enterprise. If any PRC tax were to apply
to such dividends or gains, it would generally apply at a rate of 20% unless a reduced rate is available under an applicable tax treaty.
However, it is also unclear whether non-mainland China shareholders of the Company would be able to claim the benefits of any tax treaties
between their country of tax residence and mainland China in the event that the Company is treated as a mainland China resident enterprise.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Provided
that our British Virgin Islands holding company, Dogness, is not deemed to be a mainland China resident enterprise, our shareholders
who are not mainland China residents will not be subject to PRC income tax on dividends distributed by us or gains realized from the
sale or other disposition of our shares. However, under Circular 7, where a non-resident enterprise conducts an &#8220;indirect transfer&#8221;
by transferring taxable assets, including, in particular, equity interests in a mainland China resident enterprise, indirectly by disposing
of the equity interests of an overseas holding company, the non-resident enterprise, being the transferor, or the transferee or the mainland
China entity which directly owned such taxable assets may report to the relevant tax authority such indirect transfer. Using a &#8220;substance
over form&#8221; principle, the PRC tax authority may disregard the existence of the overseas holding company if it lacks a reasonable
commercial purpose and was established for the purpose of reducing, avoiding or deferring PRC tax. As a result, gains derived from such
indirect transfer may be subject to mainland China enterprise income tax, and the transferee would be obligated to withhold the applicable
taxes, currently at a rate of 10% for the transfer of equity interests in a mainland China resident enterprise. We and our non-mainland
China resident investors may be at risk of being required to file a return and being taxed under Circular 7, and we may be required to
expend valuable resources to comply with Bulletin 37, or to establish that we should not be taxed under Circular 7 and Bulletin 37.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition to the uncertainty in how the new resident enterprise classification could apply, it is also possible that the rules may change
in the future, possibly with retroactive effect. If we are required under the Enterprise Income Tax law to withhold mainland China income
tax on our dividends payable to our foreign shareholders, or if you are required to pay mainland China income tax on the transfer of
our shares under the circumstances mentioned above, the value of your investment in our shares may be materially and adversely affected.
These rates may be reduced by an applicable tax treaty, but it is unclear whether, if we are considered a mainland China resident enterprise,
holders of our shares would be able to claim the benefit of income tax treaties or agreements entered into between China and other countries
or areas. Any such tax may reduce the returns on your investment in our shares.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Any
failure to comply with PRC regulations regarding the registration requirements for employee stock incentive plans may subject the PRC
plan participants or us to fines and other legal or administrative sanctions.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
February 2012, SAFE promulgated the Notices on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating
in Stock Incentive Plans of Overseas Publicly-Listed Companies, replacing earlier rules promulgated in March 2007. Pursuant to these
rules, mainland China citizens and non-mainland China citizens who reside in China for a continuous period of not less than one year
who participate in any stock incentive plan of an overseas publicly listed company, subject to a few exceptions, are required to register
with SAFE through a domestic qualified agent, which could be the Mainland China Subsidiary of such overseas-listed company, and complete
certain other procedures. In addition, an overseas-entrusted institution must be retained to handle matters in connection with the exercise
or sale of stock options and the purchase or sale of shares and interests. We and our executive officers and other employees who are
mainland China citizens or who have resided in mainland China for a continuous period of not less than one year and who are granted options
or other awards under our equity incentive plan will be subject to these regulations when our company becomes an overseas listed company
upon the completion of this offering. Failure to complete the SAFE registrations may subject them to fines and legal sanctions and may
also limit our ability to contribute additional capital into our Mainland China Subsidiary and limit our Mainland China Subsidiary&#8217;
ability to distribute dividends to us. We also face regulatory uncertainties that could restrict our ability to adopt additional incentive
plans for our directors, executive officers and employees under PRC law. .&#8221;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition, SAT has issued certain circulars concerning employee share options and restricted shares. Under these circulars, our employees
working in China who exercise share options or are granted restricted shares will be subject to mainland China individual income tax.
Our Mainland China Subsidiaries have obligations to file documents related to employee share options or restricted shares with relevant
tax authorities and to withhold individual income taxes of those employees who exercise their share options. If our employees fail to
pay or we fail to withhold their income taxes according to relevant laws and regulations, we may face sanctions imposed by the tax authorities
or other PRC government authorities.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Failure
to make adequate contributions to various mandatory social security plans as required by PRC regulations may subject us to penalties.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Under
the PRC Social Insurance Law and the Administrative Measures on Housing fund, We are required to participate in various government sponsored
employee benefit plans, including certain social insurance, housing funds and other welfare-oriented payment obligations, and contribute
to the plans in amounts equal to certain percentages of salaries, including bonuses and allowances, of our employees up to a maximum
amount specified by the local government from time to time at locations where we operate our businesses. The requirement of employee
benefit plans has not been implemented consistently by the local governments in China given the different levels of economic development
in different locations. If the local governments deem our contribution to be not sufficient, we may be subject to late contribution fees
or fines in relation to any underpaid employee benefits, our financial condition and results of operations may be adversely affected.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Currently,
certain of our affiliated entities are making contributions to the plans based on the basic salary of our employees which may not be
adequate in strict compliance with the relevant regulations. As of the date of this annual report, the accumulated impact in this regard
was immaterial to our financial condition and results of operations. We have not received any order or notice from the local authorities
nor any claims or complaints from our current and former employees regarding our current practice in this regard. &#160;As the interpretation
of implementation of labor-related laws and regulations are still involving, we cannot assure you that our practice in this regard will
not be violate any labor-related laws and regulations regarding including those relating to the obligations to make social insurance
payments and contribute to the housing funds and other welfare-oriented payments. If we deemed to have violated relevant labor laws and
regulations, we could be required to provide additional compensation to our employees and subject to penalties, and our business, financial
condition and results of operations will be adversely affected.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Enforcement
of stricter labor laws and regulations may increase our labor costs as a result.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">China&#8217;s
overall economy and the average wage have increased in recent years and are expected to continue to grow. The average wage level for
our employees has also increased in recent years. We expect that our labor costs, including wages and employee benefits, will continue
to increase. Unless we are able to pass on these increased labor costs to our customers who pay for our services, our profitability and
results of operations may be materially and adversely affected. The PRC Labor Contract Law and its implementing rules impose requirements
concerning contracts entered into between an employer and its employees and establishes time limits for probationary periods and for
how long an employee can be placed in a fixed-term labor contract. We cannot assure you that our employment policies and practices do
not, or will not, violate the Labor Contract Law or its implementing rules and that we will not be subject to related penalties, fines
or legal fees. If we are subject to large penalties or fees related to the Labor Contract Law or its implementing rules, our business,
financial condition and results of operations may be materially and adversely affected. In addition, according to the Labor Contract
Law and its implementing rules, if we intend to enforce the non-compete provision with an employee in a labor contract or non-competition
agreement, we have to compensate the employee on a monthly basis during the term of the restriction period after the termination or ending
of the labor contract, which may cause extra expenses to us. Furthermore, the Labor Contract Law and its implementation rules require
certain terminations to be based upon seniority rather than merit, which significantly affects the cost of reducing workforce for employers.
In the event we decide to significantly change or decrease our workforce in mainland China, the Labor Contract Law could adversely affect
our ability to enact such changes in a manner that is most advantageous to our circumstances or in a timely and cost effective manner,
thus our results of operations could be adversely affected.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>If
the chops of our Mainland China Subsidiaries are not kept safely, are stolen or are used by unauthorized persons or for unauthorized
purposes, the corporate governance of these entities could be severely and adversely compromised.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
China, a company chop or seal serves as the legal representation of the company towards third parties even when unaccompanied by a signature.
Each legally registered company in China is required to maintain a company chop, which must be registered with the local Public Security
Bureau. In addition to this mandatory company chop, companies may have several other chops which can be used for specific purposes. The
chops of our Mainland China Subsidiaries are generally held securely by personnel designated or approved by us in accordance with our
internal control procedures. To the extent those chops are not kept safely, are stolen or are used by unauthorized persons or for unauthorized
purposes, the corporate governance of these entities could be severely and adversely compromised and those corporate entities may be
bound to abide by the terms of any documents so chopped, even if they were chopped by an individual who lacked the requisite power and
authority to do so. In addition, if the chops are misused by unauthorized persons, we could experience disruption to our normal business
operations. We may have to take corporate or legal action, which could involve significant time and resources to resolve while distracting
management from our operations.</span></p>

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4. Information on the Company</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>A.
History and Development of the Company</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Dogness
(International) Corporation (&#8220;Dogness&#8221;) was incorporated as a British Virgin Islands company limited by shares under the
BVI Business Companies Act(As Revised), on July 11, 2016. Dogness has an indefinite term. Dogness was established to operate principally
as a holding company. Dogness and its subsidiaries (collectively the &#8220;Company&#8221;) are principally engaged in the design and
manufacture of pet products, including leashes and smart products, and lanyards in the China. Most products are exported to the U.S.
and Europe and sold to pet stores, including major pet store chains. The share capital of Dogness was US$200,000, divided into 100,000,000
Common Shares of par value US$0.002 each. In connection with the incorporation of Dogness, 15,000,000 Common Shares were issued to Silong
Chen, Dogness&#8217; founder and Chief Executive Officer.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Mr.
Silong Chen, the founding shareholder of the Company, sold 5,931,000 of his Common Shares to a total of nine (9) unrelated private investors
for aggregated proceeds of&#8201; $18,843,000, at a weighted average price of&#8201; $3.18 per share. After the sale, Mr. Silong Chen,
the founding shareholder of the Company owned 60.46% equity interest of the Company.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">After
such Common Shares were sold, the shareholders unanimously agreed to establish two classes of Common Shares: (a) 90,931,000 authorized
Class A Common shares, of which 16,844,631 Class A Common Shares are issued and outstanding, (b) 9,069,000 authorized Class B Common
Shares, all of which are issued and outstanding. Mr. Chen, through Fine victory holding company Limited, is the only holder of Class
B Common Shares.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Dogness
(Hongkong) Pet&#8217;s Products Co., Limited (&#8220;HK Dogness&#8221;) was incorporated in Hong Kong on March 10, 2009 as a private
company limited by shares. In a private company limited by shares&#8201;&#8212;&#8201;which is the most common way to establish a limited
company in Hong Kong&#8201;&#8212;&#8201;the liability of members is limited by the articles of association to the amount unpaid on
the shares held by such members. By comparison, in a company limited by guarantee, no share capital is required and member liability
is limited by the articles of association to the amount that the members respectively undertake to contribute in the event the company
is wound up; this type of limited company is more common for non-profit organizations.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">HK
Dogness was established to operate principally as a trading company. The share capital of HK Dogness is HK$10,000, divided into 10,000
shares of HK$1.00 each. In connection with the formation of HK Dogness, all 10,000 shares were issued to Silong Chen, Dogness&#8217;
founder and Chief Executive Officer. On August 15, 2016, Silong Chen transferred his shares in HK Dogness to a third party who held on
Mr. Chen&#8217;s behalf in preparation for the subsequent transfer to Dogness; however, Silong Chen continued to control such shares.
After such interim transfer, the shares in HK Dogness were transferred to Dogness on January 9, 2017.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Jiasheng
Enterprise (Hongkong) Co., Limited (&#8220;HK Jiasheng&#8221;) was incorporated in Hong Kong on July 12, 2007 as a private company limited
by shares. HK Jiasheng was established to operate principally as a trading company. The share capital of HK Jiasheng is HK$10,000, divided
into 10,000 shares of HK$1.00 each. In connection with the formation of HK Jiasheng, all 10,000 shares were issued to Silong Chen, Dogness&#8217;
founder and Chief Executive Officer.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Dogness
Intelligent Technology (Dongguan) Co., Ltd. (&#8220;Dongguan Dogness&#8221;) was incorporated in China on October 26, 2016. Dongguan
Dogness was established to operate principally as a holding company. Dongguan Dogness has RMB 10 million in registered capital. In connection
with the formation of Dongguan Dogness, Silong Chen, Dogness&#8217; founder and Chief Executive Officer, became the sole shareholder
of Dongguan Dogness.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Dongguan
Jiasheng Enterprise Co., Ltd. (&#8220;Dongguan Jiasheng&#8221;) was incorporated in China on May 15, 2009. Dongguan Jiasheng was established
to develop and manufacture pet leash and lanyard products. Dongguan Jiasheng has RMB 10,000,000 in registered capital. In connection
with the formation of Dongguan Jiasheng, Silong Chen, Dogness&#8217; founder and Chief Executive Officer, became the sole shareholder
of Dongguan Dogness.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
reorganization of the legal structure was completed on January 9, 2017. The reorganization involved the incorporation of Dogness, a BVI
holding company, and Dongguan Dogness, a mainland China holding company; and the transfer of HK Dogness, HK Jiasheng, and Dongguan Jiasheng
(collectively, the &#8220;Transferred Entities&#8221;) from the Controlling Shareholder to Dogness and Dongguan Dogness. Prior to the
reorganization, the Transferred Entities&#8217; equity interests were 100% controlled by the Controlling Shareholder.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">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 (&#8220;WFOE&#8221;) in mainland China. On January 9, 2017,
the Controlling Shareholder transferred his 100% equity interests in HK Dogness and HK Jiasheng to Dogness. After the reorganization,
Dogness owns 100% equity interests of subsidiaries listed above.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
January 2018, the Company formed a Delaware limited liability company, Dogness Group LLC (&#8220;Dogness Group&#8221;), with its operation
focusing primarily on product sales in the U.S. In February 2018, Dogness Overseas Ltd (&#8220;Dogness Overseas&#8221;) was established
in the British Virgin Islands as a holding company, which owns all of the interests in Dogness Group. All of the equity of Dogness Overseas
is owned by Dogness (International) Corporation.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
March 16, 2018, the Dongguan Dogness entered into a share purchase agreement to acquire 100% of the equity interests in Zhangzhou Meijia
Metal Product Co., Ltd (&#8220;Meijia&#8221;) from its original shareholder, Long Kai (Shenzhen) Industrial Co., Ltd (&#8220;Longkai&#8221;),
for a total cash consideration of approximately $11.1 million (or RMB 71.0 million). After the acquisition, Mejia became Dongguan Dogness&#8217;
wholly-owned subsidiary. The acquisition of Meijia enabled the Company to build its own facility instead of leasing manufacturing facilities
and to expand its production capacity sustainably to meet increased customer demand. Meijia plant has reached its fully production capacity
as of June 30, 2021.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
July 6, 2018, a new entity called Dogness Intelligence Technology Co., Ltd. (&#8220;Intelligence Guangzhou&#8221;), was incorporated
under PRC laws in Guangzhou City, Guangdong Province, China with a total registered capital of RMB 80 million (approximately $11.0 million).
One of the Company&#8217;s subsidiaries, Dongguan Jiasheng, owns 58% of Intelligence, As of the date of this report, Dongguan Jiasheng
has not yet made the payment of the registered capital. Intelligence Guangzhou will be the research and manufacturing facility for the
Company&#8217;s fast growing intelligent pet products. On August 10, 2022, the Board approved to sell the Company&#8217;s 58% ownership
interest in Dogness Intelligence Technology Co., Ltd. to a third party for a price of $0.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Dogness
Pet Culture (Dongguan) Co., Ltd. (&#8220;Dogness Culture&#8221;) was incorporated on December 14, 2018 with registered capital of RMB
10 million (approximately $1.5 million). The capital was not paid and there were no active business operations. On January 15, 2020,
the Company&#8217;s subsidiary, Dongguan Dogness, entered into an agreement with one of the original shareholders of Dogness Culture,
who is related to Mr. Silong Chen, the Chief Executive Officer, to acquire 51.2% ownership interest of Dogness Culture for a nominal
fee. Dongguan Dogness thereafter contributed cash consideration of RMB 5.12 million (approximately $0.79 million) on April 16, 2020 along
with other shareholders&#8217; capital contributions of RMB 4.88 million (approximately $0.67 million). Dogness Culture is focusing on
developing and expanding pet food market in China in the near future. On July 19, 2023, the Board approved the liquidation, dissolution,
and termination of Dogness culture following the signing of a termination agreement among Dogness&#8217;s Culture&#8217;s shareholders
on May 8, 2023. As of the date of this annual report, Dogness Culture is in the process of being liquidated.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
February 5, 2019, in order to expand into the Japanese market and expedite the development of new smart pet products, Dogness Japan Co.
Ltd. (&#8220;Dogness Japan&#8221;) was incorporated in Japan. The Company invested $142,000 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&#8217;s 51% ownership interest to the remaining
shareholder of Dogness Japan.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">At
the completion of these transactions, (i) Dogness holds 100% of the equity of each of Dogness Overseas, HK Jiasheng and HK Dogness; (ii)
Dogness Overseas owns 100% of the equity of Dogness Group; (iii) HK Dogness holds 100% of the equity of Dongguan Dogness; (iv) Dongguan
Dogness holds 100% of the equity of Dongguan Jiasheng, Meijia and 51.2% of the equity of Dogness Culture; and (v) Dongguan Jiasheng owns
58% of the equity of Intelligence and. By virtue of these ownership relationships, Dogness is the parent, directly or indirectly, of
each of Meijia, HK Jiasheng, HK Dogness, Dongguan Dogness, Dogness Group, and Dongguan Jiasheng, and such entities&#8217; financial results
are consolidated with those of Dogness; provided that only 58% of the equity of Intelligence Guangzhou is so consolidated.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>B.
Business Overview</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Overview</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Technology
can bring pets and their caregivers closer together. At Dogness we combine our research and development expertise with customer feedback
to make products that improve pets&#8217; lives. We create and manufacture fun, useful and high-quality products for everyone to experience.
We believe that high technology pet products must be accessible and reliable to capture pet lovers&#8217; imagination and to enhance
their pets&#8217; lives.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Dogness
has been making the highest quality collars, harnesses, and traditional and retractable leashes since 2003, featuring stylish design
and rugged engineering. Beginning with smart collars and harnesses in 2016, based on the belief that internet-connected products could
improve the lives of pets and their caregivers, Dogness developed a suite of smart products, moving past these first products into smart
feeders, fountains, treat dispensers and robots to interact with pets.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Dogness
focuses on connected pet care, to link pets and pet caregivers and ultimately to integrate the &#8220;Smart Pet Ecosystem&#8221; into
a single cohesive platform that integrates smart technology into pets&#8217; lives. The Smart Pet Ecosystem has four major areas: smart
pet technology, pet care, leashes and collars, and pet health and wellness.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Smart
Pet Technology</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Through
a single platform, the Dogness mobile app, the Company&#8217;s smart products allow pet owners to remotely see, hear, speak, feed, play,
and interact with their pets in different ways. We accomplish all of this with a tool the owner likely already has, a smart phone. The
Dogness app is available for both Android and iOS and communicates with the smart product anywhere the phone and smart product both have
Wi-Fi or cellular service. If your dog will listen to you from across the room, you can tell her to roll over from around the world.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Dogness
Smart Wearables: </i>Our smart wearable collars and harnesses feature integrated electronics, which allows us to pair high quality collars
with a lightweight smart component and LED lights. We have focused on the important details for dog owners, allowing owners to locate
their pets, direct their pets&#8217; movements, communicate with their dogs, provide tailored instantaneous feedback to problem barking
and keep track of exercise and other biodata.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Dogness
Smart iPet Robot</i>: Pet owners will be able to see their pets through a camera, hear their pets through a built-in microphone, interact
with their pets by feeding them treats, and play with their pets through an interactive laser pointer. Pet owners have full control over
the 360-degree mobility of the robot through the Dogness app and can securely take and save pictures and videos of their dogs.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Dogness
Mini Treat Robot</i>: Space-conscious pet owners can see their pets through a stationary tilting camera that securely records photo and
video, hear their pets through a built-in microphone, interact with their pets by feeding them treats, and play with them through an
interactive laser pointer.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Dogness
Smart CAM Feeder</i>: Pet owners can now ensure that their pets are well-fed and on-schedule. Able to hold around 6.5 pounds of dry food,
the smart feeder helps pet owners ensure the health of their pets, even when away from home. Pet owners can see their pets&#8217; eating
habits night and day through a built-in camera with night vision and call their pets to the feeder through a voice recording that can
be programmed to be played at meal times.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>&#160;</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Dogness
Wide-view CAM Feeder</i>: In addition to the original Smart CAM Feeder, this 2022 version of CAM feeder holds around 4 pounds of dry
food. The camera is updated and wide-angled so that the pet owner can see not only their pets and the room, but the bowl and the food
in it.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Dogness
Cube App Feeder and Programmable Feeder</i>: This 2022 version of the App Feeder and Programmable Feeder holds about 4 pounds of dry
food. The food container is semi-transparent which enables the pet owners to check on the food level without opening the container.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Dogness
Smart Fountain</i>: The smart fountain ensures that pets stay hydrated with a source of clean filtered water from a patented filtering
technology. Additional features include an oxygenating, free-falling, recirculating water stream for optimal freshness, the ability to
increase or decrease the flow of water, a replaceable carbon water filter and a nano filter to maintain water freshness, a submersible
pump for quiet operation, dishwasher-safe material, and an easily assembled and disassembled design.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Dogness
App Fountain</i>: This brand new App fountain is newly developed with App controlling the water level, UV sterilization, lights and</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Dogness
Wireless Sensor Fountain</i>: This brand new wireless fountain is USB rechargeable and operates with sensors. It does not use the long
cable that&#8217;s common on traditional fountains and makes the fountain portable.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Dogness
Smart Fountain Mini and Smart Fountain Plus</i>: In addition to our Smart Fountain, we have developed the Smart Fountain Mini (1L capacity)
and Smart Fountain Plus (3.2L capacity) for additional options for pet owners. The Smart Fountain Mini enables our products to be used
in smaller spaces, while the Smart Fountain Plus ensures an even larger reservoir for pets. Both fountains maintain a constant flow of
water, so pets can drink water that is as fresh as from the faucet. The Smart Fountains have a three-stage filtering system, which ensures
the water flowing out is filtered, fresh and clean.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Dogness
Smart CAM Treater</i>: Allows pet owners to see their pets night and day through a 160-degree full HD camera with night vision, hear
their pets through a built-in microphone, interact with their pets by speaking to them through a built-in speaker, and play with their
pets by tossing them treats.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Dogness
App Feeder and App Feeder Mini</i>: Pet owners can ensure that their pets are well-fed and on-schedule. Able to hold around 6.5 pounds
of dry food, the App feeder enables pet owners to set up their pet&#8217;s feeding schedule from the App via their mobile phone, even
when away from home. App Feeder Mini holds around 2.0 pounds of dry food and is suitable for cats and small dogs.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Dogness
Smart Vacuumed Pet Food Storage Containers</i>: Dogness proprietary vacuum food storage container was designed to use an intelligent,
constant pressure vacuum locking method, which significantly upgrades and modernizes conventional food storage, by completely isolating
mildew and moisture in the air, keeping pet food fresh and crispy for longer, and bringing a higher quality to pets&#8217; healthy lives.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Dogness
C6 GPS Tracker &#8220;Discover&#8221;</i>: Pet owners can have peace of mind knowing where their pets are anytime when they open the
GPS Tracker App on their mobile phones. The Trackers are 4G compatible and allow the owners to keep track of the location of their pets.
They can also set up virtual fences and the GPS Tracker App will alert the pet parents if their pets are beyond the fences. The Trackers
also monitor and provide the pets&#8217; activity level statistics.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>&#160;</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Dogness
C5 and C5 mini Trackers</i>: These smaller versions of the trackers have similar features of C6 but uses NB instead of 4G. It features
longer battery time with smaller size and weight.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Pet
Care</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
pet care products currently focus on high quality pet shampoos. We launched these shampoo products in August 2018.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have two lines of shampoos, which are focused on and tailored to Chinese online and offline consumption. Our One on One Service line
is focused on consumer purchasers and consists of dog and cat shampoo products that feature natural plant and amino acid composition.
In addition to universal-purpose products, we have also developed seven breed-tailored shampoo products for golden retrievers, poodles,
huskies, bulldogs, border collies and corgis. Our Professional Bathing &amp; Spa line is focused on professional purchasers, like dog
and cat groomers. These products consist of bathing products, hair conditioners and essential oil products.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Leashes
and Collars</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Traditional
Product Lines</i>: We produce collars, harnesses and leashes in seven main series (Classic, Elegance, Luxury, LED, Holiday, Special Function,
and Cat series). Given the choices available to customers, we currently manufacture between 500 and 600 traditional products and can
add additional options to meet customer preferences. Our traditional product lines use leather, nylon, Teflon-coated fabrics and other
materials to suit consumer preferences. Not only do we produce these products; we also design fabric patterns and invent improved components
such as a comfort curved buckle for collars and locking closing mechanism for leashes.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Retractable
Leashes</i>: In addition to our newest smart products, we have devoted significant effort to designing and manufacturing some of the
finest retractable leashes available. Retractable leashes balance freedom for the dog with control for the owner. If used well, a retractable
leash promotes good communication between the two, as the dog has exactly as much room to roam as the owner permits, and this amount
can be adjusted to suit the environment and circumstances. Dogness also offers an updated retractable leash to enhance the pet walking
experience. The new leash allows pet owners to attach Dogness accessories to their retractable leashes, which currently include an LED
light for better visibility in low light settings; a convenience box to store items such as doggie bags, treats, or keys; and a Bluetooth
speaker to listen to music or answer calls.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Other
Products</i>: In addition to collars, leashes and harnesses, we also produce lanyards for use by humans and ornaments that attach to
collars. As to the lanyards, we produce such lanyards using our fabric weaving machines. Because we have our production in-house, we
can design lanyards that match a customer&#8217;s need, in terms of color, size, quantity and pattern. Our hanging ornament series uses
high-quality electroplating techniques to create fashionable accents for pet collars. We make a variety of patterns in bright and vibrant
colors, as well as custom bells for cat collars.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Upcoming
New Products</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Dogness
expects to launch additional products, including convenient indoor pet toilets, air purifiers, and other products.&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Pet
Health and Wellness</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">One
of our new research areas is pet-focused health and wellness products. One of our subsidiaries is currently serving as a distributor
of a few premium pet food brands from overseas. While we do not currently offer our own branded products for sale in this category, we
are currently developing supplements and nutrition products in consultation with veterinarians and pharmacists and anticipate introducing
these products in the future.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Operations</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Dogness
has marketing and sales networks all over the world and has businesses in Dallas, Dongguan, Hong Kong and Zhangzhou. Senior management,
R&amp;D and production, marketing, customer service and finance operate from Dogness&#8217; headquarters in Dongguan, Guangdong Province,
which also serves as the manufacturing base for smart products and dog leashes. Dogness Group LLC in Dallas, Texas, USA serves as the
sales and service center for all international markets. The company&#8217;s factory in Zhangzhou, Fujian serves as a material production
base, responsible for sample dyeing, ribbon dyeing and electroplating. One of Dogness&#8217; competitive advantages comes from integrating
the whole industrial chain, including retraction ropes, textiles, printing and dyeing, mold development, and hardware and plastics. In
addition, Dogness&#8217; subsidiary in the United States has R&amp;D and design centers for pet smart products, forming a complete supply
chain system with manufacturing bases in China. We benefit from vertically integrated manufacturing operations, which allow us to design,
machine and assemble the vast majority of our products in house, so we can easily incorporate improvements in design.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Market
Background</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
company&#8217;s primary market is mainland China, with approximately 36.0%,&#160; 46.3%, and 56.3% of our products being sold in China
in fiscal 2023, 2022, and 2021, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
terms of export sales, our company&#8217;s primary market is the United States, with approximately 35.4%,&#160; 29.6%, and 24.7% of our
products being sold in America in fiscal 2023, 2022, and 2021, respectively. The United States has one of the highest pet ownership rates
in the world. According to the 2023-2024 APPA National Pet Owners Survey, 66% of U.S. households own a pet, which equates to 86.9 million
households.<sup>1</sup></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pet
owners in the United States have increasingly seen their pets as extended members of the family. Accordingly, spending on pets has increased
steadily over the last decade. According to the APPA, in 2022, $136.8 billion was spent on pets in the U.S.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><sup>1
</sup>American Pet Products Association, Pet Industry Market Size, Trends &amp; Ownership Statistics. <span style="text-decoration: underline">https://www.americanpetproducts.org/press_industrytrends.asp</span></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><sup>2
</sup>American Pet Products Association, Pet Industry Market Size, Trends &amp; Ownership Statistics. <span style="text-decoration: underline">https://www.americanpetproducts.org/press_industrytrends.asp</span></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
sell the majority of our products through specialty pet store chain retailers and mass market retailers. Although there are more than
13,000 pet stores in the United States, the vast majority of pet stores are small operations, but a significant proportion of sales come
from the top few specialty retail chains, Petco and Pet Valu. Mass retailers like Target and Wal-Mart also play a key role in pet supply
sales, including in particular staples like pet food. These retailers have courted pet owners with the offer of one-stop-shopping, as
compared with making a special trip to a pet store.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Finally,
pet owners have increasingly turned to internet sites to purchase pet supplies. In addition to selling our products to many of the largest
specialty and mass retailers in the U.S., we are exploring opportunities to drive online sales as well.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Competitive
Strengths</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
believe we have the following competitive strengths. Some of our competitors may have these or other competitive strengths.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#9679;
</b><i>Advanced technology</i>. We have developed and made use of 201 patents &#160;in producing premium pet products.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#9679;
</b><i>Strong research and development</i>. We have leveraged our cooperation with and/or investments in Dogness Network Technology Co.,
Ltd (&#8220;Dogness Network&#8221;), Nanjing Rootaya Intelligence Technology Co., Ltd. (&#8220;Nanjing Rootaya&#8221;), Linsun Smart
Technology Co., Ltd (&#8220;Linsun&#8221;) and our own in-house research and development efforts to design high tech pet products for
our customers. Dogness Network, in which we have a 10% ownership interest, develops the smartphone apps that power our connected products,
including our feeders, treaters, robots and others. Nanjing Rootayahas designed some of our pet toys and innovative water and food bowl.
Linsun, in which we have a 13% ownership interest, helped create our smart feeders and treaters. Our subsidiary Dongguan Jiasheng is
responsible for the technology underlying our other smart products and innovation and improvement in traditional products.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#9679;
</b><i>Vertically integrated production</i>. We are increasingly manufacturing as much of our products internally and reducing reliance
on third party vendors. This allows us to control costs and ensure quality.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#9679;
</b><i>Economies of scale</i>. We are pleased to provide products to a variety of customers and to fill large orders for a number of
those customers. These large orders allow us to increase our efficiency, reduce costs and deliver high quality products quickly and to
our customers&#8217; exacting demands.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#9679;
</b><i>Strong reputation in pet products industry</i>. Our customer list is filled with sophisticated, multinational purchasers of pet</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Research
and Development</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
R&amp;D team has 15 d&#160;edicated employees who are focused on product development and design. Quality control has 8 employees and
is an important aspect of the teams&#8217; work and ensuring quality at every stage of the process has been a key driver in maintaining
and developing brand value for our Company.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Beginning
in 2016, we have been researching and testing new, more ecologically friendly materials, which we hope to use in place of PVC in certain
plastic applications.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
a result of these efforts, we became certified as a National High-Tech Enterprise by the State Intellectual Property Office in March
2015, and we renewed this certification in 2021. This certification entitles us to favorable tax rates of 15%, rather than the unified
rate of 25% we would pay if we were not certified.&#160;&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
research and development expenses were $931,078 i&#160;&#160;n fiscal 2023, $917,227 in fiscal 2022, and $540,613 in fiscal 2021, representing
5.3%, 3.4 %, and 2.2%, of our total revenues for 2023, 2022, and 2021, respectively. We expect our R&amp;D expenses to increase, as we
continue to conduct research and development activities, especially seeking to increase the use of environmentally-friendly materials,
and develop more new products to meet customer demands.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Intellectual
Property</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
use a combination of trade secret, copyright, trademark, patent and other rights to protect our intellectual property and our brand.
As of September 25, 2023, we have completed registration of 135 patents with the China State Intellectual Property Office. In addition,
we have registered 19 patents in Germany, 27 in Japan, 20 in the United States, 9 in Canada, 3 in Australia, and 8 in the European Union.
As of the date of this report, we have successfully obtained 201 patents (including 135 in China), which includes 28 invention patents,
68 utility patents, and 125 appearance patents.&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have completed registration of 188 trademarks&#160;, with the Trademark Office of the State Administration for Industry &amp; Commerce
of the PRC. In addition, we have registered our key trademark for Dogness in Japan, Australia, Korea, Hong Kong, Taiwan and the United
States. We have registered all of our patents and trademarks under Dongguan Jiasheng, Dongguan Dogness, Dogness Group, and HK Dogness.
Our trademarks will expire at various dates through November 12, 2030.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
key brands and logos are below:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: black"><img src="form20-f_001.jpg" alt="" style="border-bottom: Black 1.5pt solid; height: 200px; width: 576px" /></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
website is located at <span style="text-decoration: underline">www.dogness.com</span>.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>REGULATIONS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are subject to a variety of PRC and foreign laws, rules and regulations across a number of aspects of our business. This section summarizes
the principal PRC laws, rules and regulations relevant to our business and operations. Areas in which we are subject to laws, rules and
regulations outside of the PRC include intellectual property, competition, taxation, anti-money laundering and anti-corruption. While
there have been relatively few changes in applicable laws and regulations in recent years, law enforcement and regulatory agencies such
as SAFE have been tightening up their implementation. Some of the practices that were not following governmental procedure or requirements,
which many companies and individual persons had taken before but not been investigated or punished, are now under the close watch of
agencies and even been punished.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Laws
and Regulations in China Regarding Manufacturing, Producing, and Processing</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Laws
regulating pet products manufacturing, producing, and processing cover a broad range of subjects, particularly in the area of occupational
safety and health. We must comply with all levels of laws and regulations relating to matters such as safe working conditions, manufacturing
practices, environmental protection and discharging hazard control. Specifically, the major laws that apply to our Mainland China Subsidiaries
are as follows:</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
Company Law (amended in 2018), governing, among other matters, company registration, existence and business operation;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
Civil Code of the People&#8217;s Republic of China (2021), governing business practices with all other market participants;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
Labor Contract Law (amended in 2012), governing the relationship between company as an employer and its employees;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
Product Quality Law (amended in 2018), governing the relationship between company as a products provider and consumers in the market.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
believe we are in compliance with these laws and related regulations in all material respects. So far, our business does not belong to
special type of industry that requires operation license from government so that we do not need to get special license or approval for
our business operation. However, unanticipated changes in existing regulatory requirements or adoption of new requirements may force
us to incur more cost to maintain the licenses and failure to do so could materially adversely affect our business, financial condition
and results of operations.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Regulation
on Product Liability</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">China&#8217;s
Product Quality Law was published in 1993 and amended in 2000, 2009, and 2018. Under this law, producers and vendors of defective products
may incur liability for losses and injuries caused by such products. There are only three conditions by which producers or vendors can
have immunity from the defective product liability: 1) the defective products never be put into the market; 2) the defects do not exist
when the products are put into the market; 3) the exam techniques and skills are not able to find out the defects when the products be
put into the market. So far, our products quality is in conformity with the national requirements and we have passed the regulatory agency&#8217;s
examination and also successfully obtained the certificate of ISO 9001:2015 system.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition to Product Quality Law, there are also other Chinese laws that apply to the product liability. Under the Civil Code of the People&#8217;s
Republic of China which became effective on January 1, 2021, manufacturers or retailers of defective products that cause property damage
or physical injury to any person will be subject to civil liability. The Law on the Protection of the Rights and Interests of Consumers
(as amended in 2009), which was enacted to protect the legitimate rights and interests of end-users and consumers and to strengthen the
supervision and control of the quality of products. Although we are highly confident with our product quality, some defective product
may not be detected in time by us and accidently put into the market. If so, our defective products cause any personal injuries or damage
to assets, our customers have the right to claim compensation from us.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Under
this law, a customer who suffers injury from a defective product can claim damages from either the manufacturer or vendor of the
defective device. Under the Civil Code of the People&#8217;s Republic of China, where a personal injury is caused by a tort, the
tortfeasor shall compensate the victim for the reasonable costs and expenses for treatment and rehabilitation, as well as death
compensation and funeral costs and expenses if it causes the death of the victim. There is no cap on monetary damages the plaintiffs
may seek under this Law.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Regulation
on Foreign Exchange Control</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
principal regulations governing foreign currency exchange in China are the PRC Foreign Exchange Administration Regulations, or the Foreign
Exchange Administration Regulations, most recently amended on August 5, 2008. Under the Foreign Exchange Administration Regulations,
Renminbi is generally freely convertible for payments of current account items, such as trade and service-related foreign exchange transactions,
interest and dividend payments, but not freely convertible for capital account items, such as direct investment, loan or investment in
securities outside China, unless prior approval of State Administration of Foreign Exchange, or the SAFE, or its local office has been
obtained.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Circular on Reforming the Management Approach regarding the Foreign Exchange Capital Settlement of Foreign-invested Enterprise, or SAFE
Circular 19, which was promulgated by the SAFE on March 30, 2015 and was most recently amended on December 30, 2019, allows foreign-invested
enterprises, or FIEs, to settle their foreign exchange capital at their discretion. The Renminbi converted from the foreign exchange
capital will be kept in a designated account and if a FIE needs to make further payment from such account, it still needs to provide
supporting documents and proceed with the review process with the banks. Furthermore, SAFE Circular 19 stipulates that the use of capital
by FIEs shall follow the principles of authenticity and self-use within the business scope of enterprises. The capital of a FIE and capital
in Renminbi obtained by the FIEs from foreign exchange settlement shall not be used for the following purposes: (i) directly or indirectly
used for payments beyond the business scope of the enterprises or payments as prohibited by relevant laws and regulations; (ii) directly
or indirectly used for investment in securities unless otherwise provided by the relevant laws and regulations; (iii) directly or indirectly
used for granting entrust loans in Renminbi (unless permitted by the scope of business), repaying inter-enterprise borrowings (including
advances by the third-party) or repaying the bank loans in Renminbi that have been sub-lent to third parties; or (iv) directly or indirectly
used for expenses related to the purchase of real estate not for self-use (except for the foreign-invested real estate enterprises).</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Circular on Reforming and Regulating Policies on the Control over Foreign Exchange Settlement of Capital Accounts, or SAFE Circular 16,
which was promulgated by the SAFE and became effective on June 9, 2016, provides an integrated standard for conversion of foreign exchange
under capital account items (including but not limited to foreign currency capital and foreign debts) on a self-discretionary basis which
applies to all enterprises registered in China. SAFE Circular 16 reiterates the principle that Renminbi converted from foreign currency-denominated
capital of a company may not be directly or indirectly used for purposes beyond its business scope or prohibited by PRC Laws, while such
converted Renminbi shall not be provided as loans to its non-affiliated entities.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Circular on Further Promoting Cross-border Trade and Investment Facilitation, which was promulgated on October 23, 2019 by the SAFE and
became effective on the same date, further cancels restrictions on the domestic equity investment by non-investment-oriented foreign-funded
enterprises with their capital funds and provides that non-investment-oriented foreign-funded enterprises are allowed to make domestic
equity investment with their capital funds in accordance with the law on the premise that the existing special administrative measures
(negative list) for foreign investment access are not violated and the projects invested thereby in China are true and compliant.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
December 30, 2019, the MOFCOM and the SAMR, jointly promulgated the Measures for Information Reporting on Foreign Investment, which became
effective on January 1, 2020. Pursuant to these measures, where a foreign investor carries out investment activities in China directly
or indirectly, the foreign investor or the foreign-invested enterprise shall submit the investment information to the competent commerce
department.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
to the Circular on Further Simplifying and Improving the Foreign Currency Management Policy on Direct Investment, or the SAFE Circular
No. 13, became effective on June 1, 2015 and was amended on December 31, 2019, and other laws and regulations relating to foreign exchange,
when setting up a new foreign invested enterprise, the foreign invested enterprise shall register with the bank located at its registered
place after obtaining the business license, and if there is any change in capital or other changes relating to the basic information
of the foreign-invested enterprise, including without limitation any increase in its registered capital or total investment, the foreign
invested enterprise must register such changes with the bank located at its registered place after obtaining the approval from or completing
the filing with competent authorities. Pursuant to the relevant foreign exchange laws and regulations, the above-mentioned foreign exchange
registration with the banks will typically take less than four weeks upon the acceptance of the registration application.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Regulation
on Foreign Exchange Registration of Offshore Investment by mainland China Residents</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
October of 2005, SAFE promulgated a Notification known as &#8220;Notification 75&#8221;, in which SAFE requires mainland China residents
to register their direct establishment or indirect control of an offshore entity (referred to in Notice 37 as &#8220;special purpose
vehicle.&#8221;), where such offshore entity are established for the purpose of overseas financing, provided that mainland China residents
contribute their legally owned assets or equity into such entity. In July of 2014, this Notification was replaced by Notification 37,
&#8220;Notification on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents&#8217; Offshore Investment and Financing
and Returning Investment through Special Purpose Vehicles&#8221;, which expanded SAFE oversight scope to include overseas investment
registration as well. Meanwhile, Notification 37 also covers more areas such as mainland China residents paying capital contribution
with overseas assets or equity. Furthermore, Notification 37 requires amendment to the registration where any significant changes with
respect to the special purpose vehicle capitalization or structure of the mainland China resident itself&#8201;(such as capital increase,
capital reduction, share transfer or exchange, merger or spin off). Our shareholders including natural persons or legal persons/institutes
have been in compliance with such registration.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Regulation
on Dividend Distributions</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
Mainland China Subsidiaries, Dongguan Dogness and Dongguan Jiasheng, are wholly foreign-owned enterprises under the PRC law. The principal
regulations governing the distribution of dividends paid by wholly foreign-owned enterprises include: Corporate Law (1993) as amended
in 2005, 2013, and 2018; The Wholly Foreign-Owned Enterprise Law (1986), as amended in 2000; The Wholly Foreign-Owned Enterprise Law
Implementation Regulations (1990), as amended in 2001 and 2014; and the Enterprise Income Tax Law (2007) and its Implementation Regulations
(2007).</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Under
these regulations, wholly foreign-owned and joint venture enterprises in China may pay dividends only out of their accumulated profits,
if any, as determined in accordance with PRC accounting standards and regulations. In addition, an enterprise in China is required to
set aside at least 10% of its after-tax profit based on PRC accounting standards each year to its general reserves until its cumulative
total reserve funds reaches 50% of its registered capital. Our Company&#8217;s reserve fund has not yet reached this level. The board
of directors of a wholly foreign-owned enterprise has the discretion to allocate a portion of its after-tax profits to its employee welfare
and bonus funds. These reserve funds, however, may not be distributed as cash dividends.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
March 16, 2007, the National People&#8217;s Congress enacted the Enterprise Income Tax Law, and on December 6, 2007, the State Council
issued the Implementation Regulations on the Enterprise Income Tax Law, both of which became effective on January 1, 2008. Under this
law and its implementation regulations, dividends payable by a foreign-invested enterprise in mainland China to its foreign investor
who is a non-resident enterprise will be subject to a 10% (5% for Hong Kong residents) withholding tax, unless any such foreign investor&#8217;s
jurisdiction of incorporation has a tax treaty with mainland China that provides for a lower withholding tax rate.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>M&amp;A
Rules and Regulation on Overseas Listings</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
August 8, 2006, six PRC governmental agencies jointly promulgated the Regulations on Mergers and Acquisitions of Domestic Enterprises
by Foreign Investors, or the M&amp;A Rules, which became effective on September 8, 2006 and amended on June 22, 2009. The M&amp;A Rules,
among other things, requires that if an overseas company established or controlled by mainland China companies or individuals, or mainland
China Citizens, intends to acquire equity interests or assets of any other mainland China company affiliated with the mainland China
Citizens, such acquisition must be submitted to the MOFCOM for approval. The M&amp;A Rules also require offshore special purpose vehicles
formed to pursue overseas listing of equity interests in mainland China companies and controlled directly or indirectly by mainland China
companies or individuals to obtain the approval of the Chinese Securities Regulatory Commission, or the CSRC, prior to the listing and
trading of such special purpose vehicle&#8217;s securities on any stock exchange overseas.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Anti-Monopoly Law promulgated by the SCNPC on August 30, 2007 and effective on August 1, 2008 requires that transactions which are deemed
concentrations and involve parties with specified turnover thresholds must be cleared by MOFCOM before they can be completed. In addition,
on February 3, 2011, the General Office of the State Council promulgated a Notice on Establishing the Security Review System for Mergers
and Acquisitions of Domestic Enterprises by Foreign Investors, or Circular 6, which officially established a security review system for
mergers and acquisitions of domestic enterprises by foreign investors. Further, on August 25, 2011, MOFCOM promulgated the Regulations
on Implementation of Security Review System for the Merger and Acquisition of Domestic Enterprises by Foreign Investors, or the MOFCOM
Security Review Regulations, which became effective on September 1, 2011, to implement Circular 6. Under Circular 6, a security review
is required for mergers and acquisitions by foreign investors having &#8220;national defense and security&#8221; concerns and mergers
and acquisitions by which foreign investors may acquire the &#8220;de facto control&#8221; of domestic enterprises with &#8220;national
security&#8221; concerns. Under the MOFCOM Security Review Regulations, MOFCOM will focus on the substance and actual impact of the transaction
when deciding whether a specific merger or acquisition is subject to security review. If MOFCOM decides that a specific merger or acquisition
is subject to security review, it will submit it to the Inter-Ministerial Panel, an authority established under the Circular 6 led by
the NDRC, and MOFCOM under the leadership of the State Council, to carry out the security review. The regulations prohibit foreign investors
from bypassing the security review by structuring transactions through trusts, indirect investments, leases, loans, control through contractual
arrangements or offshore transactions. On February 7, 2021, the Anti-Monopoly Committee of the State Council promulgated the Anti-monopoly
Guidelines for the Platform Economy Sector, or the Anti-monopoly Guideline, aiming to improve anti-monopoly administration on online
platforms. The Anti-monopoly Guideline, operating as the compliance guidance under the existing PRC anti-monopoly regulatory regime for
platform economy operators, specifically prohibits certain acts of the platform economy operators that may have the effect of eliminating
or limiting market competition, such as concentration of undertakings.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Foreign
Investment Law</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
March 15, 2019, the National People&#8217;s Congress, or the NPC, formally adopted the Foreign Investment Law, which became effective
on January 1, 2020 and replaced the trio of laws regulating foreign investment in China, namely, the Sino-foreign Equity Joint Venture
Enterprise Law, the Sino-foreign Cooperative Joint Venture Enterprise Law and the Wholly Foreign-invested Enterprise Law, together with
their implementation rules and ancillary regulations. Meanwhile, the Regulations for the Implementation of the Foreign Investment Law
was promulgated by the State Council on December 26, 2019 and came into effect as of January 1, 2020, which clarified and elaborated
the relevant provisions of the Foreign Investment Law. The organization form, organization and activities of foreign-invested enterprises
shall be governed, among others, by the Company Law of PRC and the Partnership Enterprise Law of PRC. Foreign-invested enterprises established
before the implementation of the Foreign Investment Law may retain the original business organization and so on within five years after
the implementation of this Law.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">According
to the Foreign Investment Law, foreign investments are entitled to pre-entry national treatment and are subject to negative list management
system. The pre-entry national treatment means that the treatment given to foreign investors and their investments at the stage of investment
access shall not be less favorable than that of domestic investors and their investments. The negative list management system means that
the state implements special administrative measures for access of foreign investment in specific fields. Foreign investors shall not
invest in any forbidden fields stipulated in the negative list and shall meet the conditions stipulated in the negative list before investing
in any restricted fields. Foreign investors&#8217; investment, earnings and other legitimate rights and interests within the territory
of China shall be protected in accordance with the law, and all national policies on supporting the development of enterprises shall
equally apply to foreign-invested enterprises.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
to the Provisional Administrative Measures on Establishment and Modifications (Filing) for Foreign Investment Enterprises promulgated
by the MOFCOM, on October 8, 2016 and amended on July 30, 2017 and June 29, 2018, respectively, establishment and changes of foreign
investment enterprises which are not subject to the approval under the special entry management measures shall be filed with the relevant
commerce authorities. However, as the PRC Foreign Investment Law has taken effect, the MOFCOM and the State Administration for Market
Regulation, or the SAMR, jointly promulgated the Foreign Investment Information Report Measures, or the Information Report Measures,
on December 19, 2019, which has taken effect since January 1, 2020. According to the Information Report Measures, which repealed the
Provisional Administrative Measures on Establishment and Modifications (Filing) for Foreign Investment Enterprises, foreign investors
or foreign invested enterprises shall report their investment related information to the competent local counterpart of the MOFCOM through
Enterprise Registration System and National Enterprise Credit Information Notification System.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Regulation
on Foreign Debt</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A
loan made by a foreign entity as direct or indirect shareholder in a FIE is considered to be foreign debt in China and is regulated by
various laws and regulations, including the Regulation of the People&#8217;s Republic of China on Foreign Exchange Administration, the
Interim Provisions on the Management of Foreign Debts, the Statistical Monitoring of Foreign Debts Tentative Provisions, the Detailed
Rules for the Implementation of Provisional Regulations on Statistics and Supervision of External Debt, and the Administrative Measures
for Registration of Foreign Debts. Under these rules and regulations, a shareholder loan in the form of foreign debt made to a mainland
China entity does not require the prior approval of SAFE. However, such foreign debt must be registered with and recorded by SAFE or
its local branches within fifteen (15) business days after entering into the foreign debt contract. Pursuant to these rules and regulations,
the maximum amount of the aggregate of (i) the outstanding balance of foreign debts with a term not longer than one year, and (ii) the
accumulated amount of foreign debts with a term longer than one year, of a FIE shall not exceed the difference between its registered
total investment and its registered capital, or Total Investment and Registered Capital Balance.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
January 12, 2017, the People&#8217;s Bank of China, or PBOC, promulgated the Notice of the People&#8217;s Bank of China on Matters concerning
the Macro-Prudential Management of Full-Covered Cross-Border Financing, or PBOC Circular 9, which sets forth an upper limit for mainland
China entities, including FIEs and domestic enterprises, regarding their foreign debts. Pursuant to PBOC Circular 9, the outstanding
cross-border financing of an enterprise (the outstanding balance drawn, here and below) shall be calculated using a risk-weighted approach,
or Risk-Weighted Approach, and shall not exceed the specified upper limit, namely: risk-weighted outstanding cross-border financing &#8804;
the upper limit of risk-weighted outstanding cross-border financing. Risk-weighted outstanding cross-border financing = &#8721; outstanding
amount of RMB and foreign currency denominated cross- border financing * maturity risk conversion factor * type risk conversion factor
+&#8721; outstanding foreign currency denominated cross-border financing * exchange rate risk conversion factor. Maturity risk conversion
factor shall be 1 for medium- and long-term cross-border financing with a term of more than one year and 1.5 for short-term cross-border
financing with a term of one year or less. Type risk conversion factor shall be 1 for on-balance-sheet financing and 1 for off-balance-sheet
financing (contingent liabilities) for the time being. Exchange rate risk conversion factor shall be 0.5. The PBOC Circular 9 further
provides that the upper limit of risk-weighted outstanding cross-border financing for enterprises, or Net Asset Limits, shall be 200%
of its net assets. The PBOC Circular 9 does not supersede the Interim Provisions on the Management of Foreign Debts, but rather serves
as a supplement to it. PBOC Circular 9 provided for a one-year transitional period, or the Transitional Period, from its promulgation
date for FIEs, during which period FIEs could choose to calculate their maximum amount of foreign debt based on either (i) the Total
Investment and Registered Capital Balance, or (ii) the Risk-Weighted Approach and the Net Asset Limits. Under the PBOC Circular 9, after
the Transitional Period ends on January 11, 2018, the PBOC and SAFE will determine the cross-border financing administration mechanism
for the foreign-invested enterprises after evaluating the overall implementation of PBOC Circular 9. In addition, according to PBOC Circular
9, a foreign loan must be filed with SAFE through the online filing system of SAFE after the loan agreement is signed and at least three
business days prior to the borrower withdraws any amount from such foreign loan.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Employment
Laws</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
accordance with the PRC National Labor Law, which became effective in January 1995, as amended subsequently in 2009 and 2018, and the
PRC Labor Contract Law, which became effective in January 2008, as amended subsequently in December 2012, employers must enter into written
labor contracts with full-time employees in order to establish an employment relationship. All employers must pay their employees at
least with the local minimum wage standards. All employers are required to establish a work environment of safety and sanitation, strictly
abide by state rules and standards, and provide employees with appropriate workplace safety training. In addition, employers are obliged
to pay contributions to the social insurance plan and the housing fund plan for employees.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have entered into employment agreements with all of our full-time employees. We have contributed to the basic and minimum social insurance
plan. &#160;Due to a high employee turnover rate in our industry, however, it is difficult for us to comply fully with the law. Some
of our employees have even request not to participate in the social insurance plan because they do not want us to make deduction on their
salaries.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">While
we believe we have made adequate provision of such outstanding amounts of contributions to such plans in our financial statements, any
failure to make sufficient payments to such plans would be in violation of applicable PRC laws and regulations and, if we are found to
be in violation of such laws and regulations, we could be required to make up the contributions for such plans as well as to pay late
fees and fines.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>PRC
Enterprise Income Tax Law and Individual Income Tax Law</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
2007 China published Enterprise Income Tax Law (&#8220;EIT Law&#8221;) and its Implementation Rule, both of which came into effect since
January 1, 2008. Under the EIT Law and its Rule, enterprises are classified as resident enterprises and non-resident enterprises. Resident
enterprises typically pay an enterprise income tax at the rate of 25%. An enterprise established outside of mainland China with its &#8220;de
facto management bodies&#8221; located within the PRC is considered a &#8220;resident enterprise,&#8221; meaning that it can be treated
in a manner similar to a mainland China domestic enterprise for enterprise income tax purposes. The Rule defines &#8220;de facto management
body&#8221; as a managing body that in practice exercises &#8220;substantial and overall management and control over the production and
operations, personnel, accounting, and properties&#8221; of the enterprise.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
the other hand, the State Administration of Taxation provides certain specific criteria for determining whether the &#8220;de facto management
body&#8221; of a mainland China-controlled offshore enterprise is located within mainland China. Simply speaking, the criteria is more
focused on substantive rather than format. Pursuant to its Circular 82 of 2009, the criteria to determine &#8220;de facto management
body&#8221; include: (a) the senior management and core management departments in charge of its daily operations function have their
presence mainly in mainland China; (b) its financial and human resources decisions are subject to determination or approval by persons
or bodies in mainland China; (c) its major assets, accounting books, company seals, and minutes and files of its board and shareholders&#8217;
meetings are located or kept in mainland China; and (d) more than half of the enterprise&#8217;s directors or senior management with
voting rights habitually reside in mainland China. Furthermore, the SAT published Bulletin 45 in September 2011, which provides more
guidance on the implementation of the definition and provides for procedures and administration details on determining resident status
and administration on post-determination matters.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">However,
the SAT Circular 82 and Bulletin 45 only apply to offshore enterprises controlled by mainland China enterprises or mainland China enterprise
groups rather than those controlled by mainland China individuals or foreign individuals. So far there is no further criteria passed
yet and no applicable legal precedents either, therefore it remains unclear how the PRC tax authorities will determine the mainland China
tax resident treatment of a foreign company controlled by individuals. Under these existing criteria, it is possible that we will be
classified as a &#8220;resident enterprise&#8221; for mainland China enterprise income tax purposes. If so, it would likely result in
unfavorable tax consequences to our non-mainland China shareholders and have a material adverse effect on our results of operations and
the value of your investment.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Regulations
on Intellectual Property</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">China
joined WTO in 2001 and signed the treaty of TRIPS (Agreement on Trade-Related Aspects of Intellectual Property Rights), therefore China&#8217;s
IP laws are very much close to TRIPS.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Trademarks</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Trademarks
are protected by the PRC Trademark Law adopted in 1982 and lastly amended in 1993, 2001, and 2013 as well as the Implementation Regulation
of the PRC Trademark Law adopted by the State Council in 2002 and amended in 2014. The Trademark Office under the State Administration
for Industry and Commerce (&#8220;SAIC&#8221;) handles trademark registrations. Trademarks can be registered for a term of ten years
and can be repeatedly extended for another ten-year term at the time of expiry. The PRC Trademark Law has adopted a &#8220;first-to-file&#8221;
principle with respect to trademark registration. As of the date of this report, we have registered 181 trademarks (including 162 trademarks
in China), all of which are fully owned and in use by us. According to Chinese Trademark Law, if anyone has a dispute the officially
registered trademarks, he can file a petition to the review board of the Trademark Office, requesting a comprehensive review that may
result in the revoking the registered trademarks. So far, we have not received any such kind of petition and we strongly believe there
will not be such petition because our trademarks are firstly used as well as firstly registered by us.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Patents</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Inventions,
utility models, and designs with the features of novelty, inventiveness and practical applicability, are three kinds of patent defined
and protected under China&#8217;s Patent Law. The State Intellectual Property Office is responsible for examining and approving patent
applications. Once the application is approved, the applicants can have their patent under Chinese legal protection for a long term since
its application date, which is 20 years for invention and ten years for utility models and designs. As of the date of this report, we
have successfully obtained 135 patents (including 87 in China), which includes 15 invention patents, 50 utility patents, and 70 appearance
patents.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>C.
Organizational Structure</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Below
is a chart representing our current corporate structure:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><img src="form20-f_002.jpg" alt="A diagram of company&apos;s company&apos;s company&#10;&#10;Description automatically generated" style="height: 340px; width: 624px" /></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
registered office in the British Virgin Islands is at AMS Trustees Limited, Sea Meadow House, Blackburne Highway, P.O. Box 116, Road
Town, Tortola, British Virgin Islands, telephone +1 (284) 494-3399.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>D.
Property, Plants and Equipment</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">There
is no private land ownership in China. Individuals and entities are permitted to acquire land use rights for specific purposes. The land
use rights to the property on which our facilities are situated are held by the parties from which we lease such property.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">At
our facility in Dongguan, our company leases the factory building, office building, guard booth, power room and dormitory from Dongguan
Dongcheng District Tongsha Huanggongkeng Co-op, an unrelated third party. The total leased area spans 10,292 square meters. The lease
commenced May 1, 2009 has been renewed twice; the current expiration date is April 30, 2027. We estimate that the productive capacity
of our main factory is 8,500,000 pieces per year, and our current utilization rate is approximately 65%.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
registered office of Dogness Intelligent Technology (Dongguan) Co., LTD. is leased from Dongguan Jiasheng and consists of 500 square
meters on the site of our facility in Dongguan.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
March 14, 2018, Dogness Group purchased an office building of 6,373 square feet for $1.37 million in Dallas, Texas, which serves as the
office, quality control, testing area and drop shipment location for Dogness Group.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
March 16, 2018, the Company acquired all of the equity of Zhangzhou Meijia Metal Product Co., Ltd (&#8220;Meijia&#8221;). The Company
paid total consideration of approximately $10.0 million in connection with the acquisition of equity of Meijia. Meijia owns the land
use right to a land parcel of 19,144.54 square meters and a factory and office buildings of an aggregate of 18,912.38 square meters.
Except for holding the land use right and the buildings, Meijia has no substantial business operations, nor has it had any production
or sales activities since its inception. The Company plans to use this land use right and buildings as a production facility. The Company
originally budgeted approximately RMB 110 million ($17.0 million) to develop the facility. The actual costs were adjusted based on additional
work required for waterproofing, sewage pipeline and hazardous waste leakage prevention. As a result, total actual costs incurred as
of June 30, 2021, amounted to RMB 118.5 million ($18.4 million). The Meijia plant started test operations in August 2019 and started
normal production in December 2019 upon passing the final inspection conducted by the local government. The Meijia plant has reached
its designed production capacity in June 2021.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
July 2018, the Company entered a long-term lease that expires October 14, 2038 for 7,026 square meters of land and 5,000 square meters
of buildings in Dongguan city. The Company plans to use this new property as a warehousing facility, given limited storage capacity at
its other facilities. Lease expenses for this property were approximately $4.5 million, which amount was paid in full on October 9, 2018.
The total budget was approximately RMB263.5 million ($36.3 million). As of June 30, 2022, the Company had completed this project and
transferred all of the related CIP to fixed assets. As of June 30, 2023, the Company has made total payments of approximately RMB261.7
million ($36.1 million) in connection to this project, which resulted in future minimum capital expenditure payments of approximately
RMB1.8 million ($0.3 million), the Company plan to pay remaining payments within twelve months after June 30, 2023.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company&#8217;s subsidiary Dogness Culture (in the process of being liquidated as of the date of this report) also worked on a project
to decorate a pet themed retail store. Total budget was RMB 2.2 million ($0.3 million). This project was fully completed during the year
ended June 30, 2021. As of June 30, 2023, the Company has fully paid for the project.&#160;&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Fixed
assets at our properties consist of office equipment, buildings, structures, ancillary facilities, and equipment for production of metal,
plastic and nylon components of leashes, collars and lanyards, including jacquard machines, injection modeling equipment, die casting
machines, dying machines, and computerized sewing machines.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">None
of our property is affected by any environmental issues that may affect our use of the property.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="Ak_002"></span>Item
4A. Unresolved Staff Comments</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">None.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="Ak_003"></span>Item
5. Operating and Financial Review and Prospects</b>&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>The
following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated
financial statements and related notes that appear in this report. In addition to historical consolidated financial information, the
following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ
materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include
those discussed below and elsewhere in this report, particularly in &#8220;Risk Factors.&#8221;</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Overview
of Company</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Dogness
(International) Corporation (&#8220;Dogness&#8221; or the &#8220;Company&#8221;), is a company limited by shares established under the
laws of the British Virgin Islands (&#8220;BVI&#8221;) on July 11, 2016. We are not a Chinese operating company but a British Virgin
Islands holding company with operations conducted by our subsidiaries established in Delaware, mainland China, Hong Kong Special Administrative
Region of the People&#8217;s Republic of China and British Virgin Islands. 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.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Dongguan
Jiasheng Enterprise Co., Ltd. (&#8220;Dongguan Jiasheng&#8221;) was incorporated in mainland China on May 15, 2009, and was established
to develop and manufacture pet leash and lanyard products. Dongguan Jiasheng is the main operating entity and is engaged in the research
and development, manufacturing and distribution of various types of gift suspenders, pet belts ribbon, lace, elastic belt, computer jacquard
ribbon and high-grade textile lace. Dogness (Hongkong) Pet&#8217;s Products Co., Limited (&#8220;HK Dogness&#8221;) and Jiasheng Enterprise
(Hongkong) Co., Limited (&#8220;HK Jiasheng&#8221;) were incorporated in Hong Kong on March 10, 2009 and July 12, 2007, respectively,
and were established to operate principally as trading companies. The equity interests of Dongguan Jiasheng, HK Dogness, and HK Jiasheng
(collectively, the &#8220;Transferred Entities&#8221;) were 100% controlled by our founder and Chief Executive Officer, Mr. Silong Chen
(the &#8220;Controlling Shareholder&#8221;).</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A
reorganization of the legal structure was completed on January 9, 2017. The reorganization involved (i) the incorporation of the Company,
(ii) the incorporation of Dogness Intelligent Technology (Dongguan) Co., Ltd. (&#8220;Dongguan Dogness&#8221;), a holding company established
under PRC laws, 100% owned by HK Dogness, and considered a wholly foreign-owned entity (&#8220;WFOE&#8221;) in mainland China, and (iii)
the transfer of HK Dogness, HK Jiasheng and Dongguan Jiasheng (collectively, the &#8220;Transferred Entities&#8221;) from the Controlling
Shareholder to the Company and Dongguan Dogness. Specifically, on November 24, 2016, the Controlling Shareholder transferred his 100%
ownership interest in Dongguan Jiasheng to Dongguan Dogness. On January 9, 2017, the Controlling Shareholder transferred his 100% equity
interests in HK Dogness and HK Jiasheng to the Company. After the reorganization, the Company ultimately owns 100% of the equity interests
of the entities mentioned above. As of the date of this Report, the Controlling Shareholder owns 23.85% equity interest of the Company.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Since
the Company and its wholly-owned subsidiaries were 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.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
January 2018, the Company formed a Delaware limited liability company, Dogness Group LLC, with its operation focusing primarily on promoting
the Company&#8217;s pet products sales in the United States. In February 2018, Dogness Overseas Ltd, which is wholly owned by the Company,
was established in the British Virgin Islands as a holding company. Dogness Overseas Ltd owns all of the interests in Dogness Group LLC.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
March 16, 2018 (the &#8220;Acquisition Date&#8221;), the Company entered into a share purchase agreement to acquire 100% of the equity
interests in Zhangzhou Meijia Metal Product Co., Ltd (&#8220;Meijia&#8221;) from its original shareholder, Long Kai (Shenzhen) Industrial
Co., Ltd (&#8220;Longkai&#8221;), for a total cash consideration of approximately $11.1 million (or RMB71.0 million). After the acquisition,
Mejia became the Company&#8217;s wholly-owned subsidiary. Meijia owns the land use right to a land parcel of 19,144.54 square meters
and a factory and office buildings of an aggregate of 18,912.38 square meters. This Acquisition enables the Company to build its own
facility instead of leasing manufacturing facilities and expand its production capacity sustainably to meet increased customer demand.
Total budgeted capital expenditure to bring Meijia manufacturing facility into use was originally estimated to be completed at a cost
of RMB 110 million ($17.0 million). The actual costs have been adjusted based on additional works required for waterproofing, sewage
pipeline and hazardous waste leakage prevention. Meijia plant has reached its designed production capacity by June 2021.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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July 6, 2018, Dogness Intelligence Technology Co., Ltd. (&#8220;Intelligence Guangzhou&#8221;) 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 $11.0 million). One
of the Company&#8217;s subsidiaries, Dongguan Jiasheng, own<span style="background-color: white">ed</span> 58% of Intelligence Guangzhou, with the remaining 42% ownership interest
owned by two unrelated entities. Intelligence Guangzhou had immaterial operation since its inception and <span style="background-color: white">was expected to </span> conduct research and manufacturing
of the Company&#8217;s fast-growing intelligent pet products in the future. Due to the fact that Intelligence Guangzhou <span style="background-color: white">had </span> no business
activities since the incorporation and Dongguan Jiasheng <span style="background-color: white">had </span> not made any capital contribution, in August 2022, the Board approved to
sell the Company&#8217;s 58% ownership interest in Intelligence Guangzhou to a third party for a nominal price. The transaction was completed
on August 10, 2022.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Dogness
Pet Culture (Dongguan) Co., Ltd. (&#8220;Dogness Culture&#8221;) was incorporated on December 14, 2018 with registered capital of RMB
10 million (approximately $1.5 million). The capital was not paid and there were no active business operations. On January 15, 2020,
the Company&#8217;s subsidiary, Dongguan Dogness, entered into an agreement with the original shareholder of Dogness Culture, who is
related to Mr. Silong Chen, our Chief Executive Officer, to acquire 51.2% ownership interest of Dogness Culture for a nominal fee. The
remaining equity interest of 48.8% was also transferred to other two third parties for a nominal fee. Dongguan Dogness thereafter contributed
cash consideration of RMB 5.12 million (approximately $0.79 million) on April 16, 2020 along with other two shareholders&#8217; capital
contributions of RMB 4.88 million (approximately $0.76 million). Dogness Culture was focusing on developing and expanding pet food market
in China. On July 19, 2023, the Board approved the liquidation, dissolution, and termination of Dogness culture following the signing
of a termination agreement among Dogness&#8217;s Culture&#8217;s shareholders on May 8, 2023. As of the date of this annual report, Dogness Culture is in the process of being liquidated.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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recent years, we have invested large amounts of funds, to establish an environmentally friendly ribbon dying process, computer jacquard
department, screen printing department and thermal transfer printing department. The adoption of ISO 9001:2015 international quality
system enables us to be more effective in the various production processes to guarantee product quality, and ensure stable and efficient
production. We also have an in-house testing laboratory and frequently perform tests on all of our products to maintain a high level
of quality in both materials and workmanship.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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primary raw materials in production of our products are plastic, leather, nylon, polyester, chemical fiber blended fabric, metal, GPPS
and HIPS, most of which are extracted from crude oil. Thus, our cost of raw material is highly impacted by fluctuations in the price
of oil. Cost of revenues mainly includes costs of raw materials, costs of direct labor, utilities, depreciation expenses and other overhead.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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major products include traditional pet products, intelligent pet products, and climbing hooks and others products, such as mouth covers
and pet charms. We also provide ribbon dyeing service for external customers, as well as other services, such as pet grooming services.
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
the year ended June 30, 2023, our products were sold in 32 countries. Our major customers include Anyi trading, Costco, Trendspark, PetSmart,
Petco, Pet Value, Walmart, Target, IKEA, SimplyShe, Pets at Home, PETZL, and Petmate, etc. We also sold our products on popular online
shopping sites, including Amazon, Chewy, JD, Tmall and Taobao, and on those live streaming sales platforms hosted by influencers.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Export
sales accounted for 64.0%, 53.7% and 43.7% of the total sales for the years ended June 30, 2023, 2022 and 2021, respectively, while China
domestic sales accounted for 36.0%, 46.3% and 56.3% for the years ended June 30, 2023, 2022 and 2021, respectively. The breakdown of
the sales by geographic areas is shown below:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
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Company&#8217;s total revenue, respectively. For the year ended June 30, 2022, the Company&#8217;s four largest customers accounted
for 23.4%, 6.7%, 6.7% and 5.7% of the Company&#8217;s total revenue, respectively. For the year ended June 30, 2021, the
Company&#8217;s three largest customers accounted for 32.0%, 9.1% and 6.9% of the Company&#8217;s total revenue,
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Market
outlook</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
company&#8217;s operations will continue to be negatively affected by the ongoing trade dispute between China and the United States,
which may result in uncertainties in our export sales in the coming months.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">To
mitigate the impact of weak sales, we are focusing on developing new customers and markets, as well as developing a new generation of
intelligent pet products. We have expanded our sales channels from traditional trading to online shopping channels, which allows us to
gain direct access to more potential customers from domestic and international markets. This is particularly important to attract younger
generations who are more interested in our smart pet products. At the same time, we are implementing cost-saving measures to improve
production efficiency and profit margins.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Our
Growth Strategy</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are committed to enhancing profitability and cash flows through the following strategies:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><i>Develop
innovative products and services. </i>We focus on developing and strengthening our brand identity and emphasizing our unique offerings
for customers and promoting our strong value proposition. Through extensive and on-going customer research, we are gaining valuable insights
into the wants and needs of our customers and we are developing solutions and communication strategies to address them. We continually
seek opportunities to strengthen our merchandising capabilities, which allow us to provide a differentiated product assortment, including
our exclusive smart pet specialty products and our proprietary brand offerings, to deliver innovative solutions and value to our customers.
We believe developing innovative products will further differentiate us from our competitors, allow us to forge a strong relationship
with our customers, build loyalty, enhance our market position, increase transaction size and enhance operating margins.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>&#160;</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><i>Mergers
and Acquisitions. </i>When capital permits, we intend to capitalize on the challenges that smaller companies are encountering in our
industry by acquiring complementary companies at favorable prices. We believe that acquiring rather than building capacity is an option
that may be more beneficial to us if replacement costs are higher than purchase prices. We continue to look into acquiring smaller pet
product manufacturers in China as part of our expansion plans. Some of the companies we may seek to acquire are suppliers of the raw
materials or components we purchase to manufacture our products to further expand and integrate the industrial chain. If we do acquire
such companies, we will have greater control over our manufacturing cost. Our expansion strategy includes increasing our share in existing
pet specialty products markets, penetrating new markets and achieving operating efficiencies and economies of scale in merchandising,
distribution, information systems, procurement, and marketing, while providing a return on investment to our stockholders.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><i>Supply
Chain Efficiencies and Scale. </i>We intend to streamline our supply chain process and leverage our economies of scale. We seek suppliers
that will strategically partner with us to create long-term shareholder value. We also aim to scale our supply chain to accommodate growth,
cut costs and improve efficiency and drive continuous improvement, mitigate supply chain risks, and develop innovative approaches to
product development.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">From
a long-term perspective, we believe the above-mentioned strategic initiatives will still help our future sales growth. Through continuous
endeavor for product innovation, better management our capital expenditure and leveraging costs, we expect that we could further improve
our sales and product margins to produce profitability and return on investment for our shareholders in the near future.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Results
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i><span style="text-decoration: underline">Comparison
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table summarizes the results of our operations for the years ended June 30, 2023 and 2022, respectively, and provides information
regarding the dollar and percentage increase or (decrease) during such periods.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Revenues.
</i></b>Revenues decreased by approximately $9.5 million, or 35.1%, to approximately $17.6 million in fiscal 2023 from approximately
$27.1 million in fiscal 2022. The decrease in revenue was primarily attributable to the significant decreased sales in both domestic
and international markets.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Revenue
by Products and Services Type</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
breakdown of our revenue by products and services categories is as follows:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Traditional
pet products</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Revenue
from traditional pet products decreased by approximately $3.1 million, or 27.4%, from approximately $11.4 million in fiscal 2022, to
approximately $8.3 million in fiscal 2023. The decrease was mainly due to decrease in average selling price of $0.3 per unit in fiscal
2023 compared to fiscal 2022. Among the total revenue decrease, approximately $2.7 million was due to the decreased sales in Chinese
domestic market, as a result of fierce competition, while the remaining approximately $0.5 million decrease was from sales to customers
in overseas markets.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Intelligent
pet products</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Revenue
from intelligent pet products decreased by approximately $6.1 million, or 45.1%, from approximately $13.5 million in fiscal 2022 to approximately
$7.4 million in fiscal 2023. The decrease was mainly driven by a decrease in sales volume and a decrease in average selling price of
$10.8 per unit in fiscal 2023 compared to fiscal 2022. Among the total revenue decrease, approximately $3.2 million was due to the decreased
sales in Chinese domestic market, while the remaining approximately $2.9 million decrease was from sales to customers in overseas markets.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Climbing
hooks and others</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Revenue
from climbing hooks and others kept consistently at approximately $1.8 million in fiscal 2023 and 2022.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Dyeing
services</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
utilize our manufacturing capability and color dyeing technology to provide dyeing solutions to customers. We recognize revenue at the
point when dyeing solutions and related services are rendered, and the products after dyeing are delivered and accepted by the customers.
We earned dyeing services fees of $Nil and $342,561 in fiscal 2023 and 2022, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Sales
to related parties</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
the year ended June 30, 2019, we acquired 10% of the ownership interest in Dogness Network Technology Co., Ltd (&#8220;Dogness Network&#8221;),
for the purpose of working together to develop new products and new technologies in smart pet tech area.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
legal representative of Dogness Technology Co., Ltd (&#8220;Dogness Technology&#8221;) is Junqiang Chen, the relative of Mr. Silong Chen.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
sold certain intelligent pet products to Dogness Network and Dogness Technology, and accordingly reported related party sales of $1,700,173
and $2,212,579, which accounted for 9.7% and 8.2% of our total revenue in fiscal 2023 and 2022, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Cost
of revenue associated with the sales to these two related parties amounted to $1,162,314 and $1,301,180 in fiscal 2023 and 2022, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Revenue
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
breakdown of our revenue by geographic areas is as follows:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
breakdown of sales by products and services categories in international markets is as follows:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>International
sales</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
total sales in international markets decreased by approximately $3.3 million or 22.6% to approximately $11.3 million in fiscal 2023,
from approximately $14.5 million in fiscal 2022. The decrease in our international sales was the result of the soft landing of the world
economy post-pandemic, which was caused by inflation and interest rate hikes in the United States.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
had decreases in traditional pet products sales and intelligent pet products sales in fiscal 2023, compared to the same period
in 2022. Sales of our traditional pet products and intelligent pet products, decreased by 7.7% and 38.8%, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
continue to collaborate with large retail chains in the US and Canada to distribute our smart pet products under our own brand, rather
than just serving as an OEM supplier. Furthermore, we continue to expand our sales on online shopping platforms, such as Amazon and Chewy,
to reach more potential customers. We anticipate that these efforts, coupled with the global economic recovery and the release of our
new generation of intelligent pet products, will result in an increase in revenue in the near future. We believe that our new generation
of intelligent pet products will continue to be the primary source of revenue for our international sales.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
breakdown of sales by products and services categories in China&#8217;s domestic market is as follows:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
domestic sales decreased by approximately $6.2 million or 49.6% from approximately $12.6 million in fiscal 2022 to approximately $6.3
million in fiscal 2023. The decrease was mainly due to a decrease in customer orders caused by intense competition in the domestic market.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
domestic sales of traditional pet products and intelligent pet products, decreased by 50.6% and 53.1% in fiscal 2023 as compared to fiscal
2022.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Cost
of revenues</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
fiscal 2023, the cost of revenues amounted to approximately $13.9 million, compared to approximately $17.0 million in fiscal 2022. As
a percentage of revenues, the cost of goods sold increased by approximately 16.6 percentage points, reaching 79.2% in fiscal 2023 from
62.6% in fiscal 2022. The decreased cost of goods sold was the result of lower sales volume.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Gross
profit</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
gross profit decreased by approximately $6.5 million or 63.9%, to approximately $3.7 million in fiscal 2023 from approximately $10.1
million in fiscal 2022, primarily attributable to the decreased average selling price of our intelligent pet products. Overall gross
profit margin was 20.8%, a decrease of 16.6 percentage points, as compared to 37.4% in fiscal 2022.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Gross
profit by products and services type</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
breakdown of gross profit by product types is as follows:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">Gross
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decreased by 17.8 percentage points from 32.1% in fiscal 2022 to 14.3% in fiscal 2023, mainly due to a decrease of 27.3% in average selling
price and increased costs.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Expenses</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 15.1pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Selling
expenses.</i></b> <span style="background-color: white">Selling expenses primarily include expenses incurred for participating in various
trade shows to promote product sales, salary and sales commission expenses paid to the Company&#8217;s sales personnel, and shipping
and delivery expenses. Selling expenses increased by approximately $0.4 million or 19.3% from approximately $2.1 million in fiscal 2022
to approximately $2.5 million in fiscal 2023. The</span> increase was <span style="background-color: white">due to more marketing research
activities aimed at expanding our customer base. As a percentage of sales, our selling expenses were 14.1% and 7.7% of our total revenues
in fiscal 2023 and 2022, respectively.</span></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>General
and administrative expenses.</i></b> <span style="background-color: white">Our general and administrative expenses include employee salaries,
welfare and insurance expenses, depreciation and bad debt expenses, as well as consulting expenses. In fiscal 2023, general and administrative
expenses increased by approximately $3.1 million or 45.4% from approximately $6.7 million in fiscal 2022 to approximately $9.8 million
in fiscal 2023. The increase was mainly due to higher rental expenses, share base compensations and professional consultant fees. As
a percentage of sales, our general and administrative expenses were 74.1% and 24.9% of our total revenues in fiscal 2023 and 2022, respectively.</span></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Research
and development expenses</i>.</b> Our research and development expenses kept consistently at approximately $0.9 million in fiscal 2023
and 2022 As a percentage of sales, our research and development expenses were 7.0% and 3.4% of our total revenues for in fiscal 2023
and 2022, respectively. We expect research and development expenses to continue to increase as we expand our research and development
activities to increase the use of environmentally-friendly materials and develop more new high-tech products to meet customer demands.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Other
income (expense), net.</i></b> Other income primarily included interest income or expenses, foreign exchange gain or loss, rental
income from related parties, gain from disposition of a subsidiary and other income or expenses. Other income was approximately $0.9
million in fiscal 2023 as compared to approximately $0.2 million in fiscal 2022. The increase was mainly attributable to an increase
of approximately $0.6 million in foreign exchange gain in fiscal 2023 as compared to fiscal 2022.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Income
tax benefit.</i></b> Income tax benefit was approximately $1.3 million in fiscal 2023 as compared to approximately $2.8 million in fiscal
2022.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company may be subject to challenges from various PRC taxing authorities regarding the amounts of taxes due, although the Company&#8217;s
management believes the Company has paid or accrued for all taxes owed by the Company. According to PRC taxation regulation and administrative
practice and procedures, the statute of limitation on tax authority&#8217;s audit or examination of previously filed tax returns expires
three years from the date they were filed. The Company also obtained a written statement from the local tax authority that no additional
taxes are due as of June 30, 2023. Based on these facts, the Company reversed the accrued tax liabilities in the total amount of approximately
$3.4 million (or RMB24,370,181) relating to the tax liabilities accrued for the period from fiscal 2016 to fiscal 2019, resulting in
the decrease of accrued income tax liabilities from approximately $4.2 million to approximately $0.9 million as of June 30, 2023. The
Company continues to discuss with the local tax authority to try to settle the remaining tax liabilities as soon as practicable, mostly
related to its unpaid income tax and business tax.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Due
to uncertainties associated with the status of examinations, including the protocols of finalizing audits by the relevant tax authorities,
there is a high degree of uncertainty regarding the future cash outflows associated with the interest and penalties on these unpaid tax
balances. The final outcome of this tax uncertainty is dependent upon various matters including tax examinations, interpretation of tax
laws or expiration of status of limitation.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Net
(loss) income</i></b>. Net loss was approximately $7.5 million in fiscal 2023, as compared to net income of approximately $3.0 million
in fiscal 2022. The net loss was the result of decreased sales and gross profit, as well as increased operating expenses as discussed
above.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Other
comprehensive loss. </i></b>Foreign currency translation adjustments amounted to a loss of $6,204,254 and $3,203,448 in fiscal 2023 and
2022, respectively. The balance sheet amounts with the exception of equity at June 30, 2023 were translated at RMB7.2513 to $1.00 as
compared to RMB 6.6981 to $1.00 at June 30, 2022. The equity accounts were stated at their historical rate. The average translation rates
applied to the income statements accounts for the years ended June 30, 2023 and 2022 were RMB 6.9536 to $1.00 and RMB 6.4554 to $1.00,
respectively. The change in the value of the RMB relative to the U.S. dollar may affect our financial results reported in the U.S, dollar
terms without giving effect to any underlying change in our business or results of operation. The impact attributable to changes in revenue
and expenses due to foreign currency translation are summarized as follows.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
the year ended June 30, 2023, if using RMB7.2513 to $1.00 (foreign exchange rate as of June 30, 2023), rather than the average exchange
rate for year ended June 30, 2023, to translate our revenue, operating expense and net loss, our reported revenue, operation expense
and net loss would decrease by $721,476, $542,622 and $(306,056), respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
the year ended June 30, 2022, if using the RMB6.6981 to $1.00 (foreign exchange rate as of June 30, 2022), rather than the average exchange
rate for the year ended June 30, 2022, to translate our revenue, operating expense and net income, our reported revenue, operation expense
and net income would decrease by $979,555, $363,874 and negative $109,040, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i><span style="text-decoration: underline">Comparison
of Operation Results for the Years Ended June 30, 2022 and 2021</span></i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table summarizes the results of our operations for the years ended June 30, 2022 and 2021, respectively, and provides information
regarding the dollar and percentage increase or (decrease) during such periods.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Revenues.
</b>Revenues increased by approximately $2.8 million, or 11.4%, to approximately $27.1 million in fiscal 2022 from approximately $24.3
million in fiscal 2021. The increase in revenue was primarily attributable to the increased sales of our intelligent pet products which
have much higher average selling price than our traditional pet products. The increase was mainly due to following reasons:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">1)
We continue to shift our focus and resources to produce and promote the sales of higher margin intelligent pet products. As a result,
our sales volume for intelligent pet products increased by 14.1% for the year ended June 30, 2022 as compared to the year ended June
30, 2021</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">2)
We continue to upgrade our production lines for traditional pet products to improve the productivity and lower the production costs.
As a result, we are able to lower our selling price for traditional pet products, but still maintain desirable profit margins. Our sales
strategy for traditional pet products successfully retained our customers, attracted new customers, and increased awareness for our intelligent
pet products.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">3)
To mitigate the impact caused by COVID-19, we expanded our sales channels to more online shopping platforms, such as Amazon, Chewy, JD,
Tmall and Taobao, as well as the live streaming sales platforms hosted by influencers. These ecommerce sales normally have higher profit
margin than traditional sales channels.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
average selling price increase in by 22.2% during the year ended June 30, 2022 as compared to the year ended June 30, 2021. The increase
was largely due to increased sales of our intelligent pet products. Our sales of intelligent pet products account for approximately 49.8%
of the total sales in fiscal 2022, as compared to approximately 32.1% in fiscal 2021.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Revenue
by products and services type</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
breakdown of our revenue by products and services type is as follows:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>
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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Traditional
pet products</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Revenue
from traditional pet products decreased by approximately $2.9 million or 20.2% from approximately $14.3 million in fiscal 2021 to approximately
$11.4 million in fiscal 2022. The decrease was mainly due to decrease of 10.4% in sales volume and decrease in average selling price
of $0.1 per unit in fiscal 2022 compared to fiscal 2021.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Intelligent
pet products</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Revenue
from intelligent pet products increased by approximately $5.7 million or 73.0%, from approximately $7.8 million in fiscal 2021 to approximately
$13.5 million in fiscal 2022. The increase was driven by the increased average selling price of $10.4 per unit in fiscal 2022 due to
more higher selling price intelligent pet products we made, and increase of 14.1% in sales volume during fiscal 2022 compared to fiscal
2021.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
launched our intelligent pet products in March 2018, which include App-controlled pet feeders, pet water fountains, and smart pet toys.
Comparing with other products, intelligent pet products typically have higher selling price. As part of our strategic changes, we have
shifted our focus and resources from traditional pet products to new, smart, and high value innovative smart pet products. We have seen
significant increase of sales during fiscal year 2022 and are expected the sales of intelligent pet products will continue to be one
of the primary sources of revenue in the near future.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Climbing
hooks and others</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Revenue
from climbing hooks and others increased by approximately $0.4 million from approximately $1.3 million in fiscal 2021 to approximately
$1.8 million in fiscal 2022. The increase was mainly due to a 25.7% increase in sales volume, and a slight increase of the average selling
price of $0.1 per unit for fiscal 2022 as compared to fiscal 2021. We expect the sales for the climbing hooks and gears will continue
to increase after the pandemic due to the growth trend of participating the outdoors activities both domestically and globally.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Dyeing
services</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
fiscal 2021, we started to provide ribbon dyeing service to customers. We utilize our 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. We recognize revenue at the point when dyeing solutions and related services
are rendered, products after dyeing are delivered and accepted by the customers. We earned service fees of $342,561 and $817,145 in fiscal
2022 and 2021, respectively</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Sales
to related parties</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
the year ended June 30, 2019, we acquired 10% of the ownership interest in Dogness Network Technology Co., Ltd (&#8220;Dogness Network&#8221;),
for the purpose of working together to develop new products and new technologies in smart pet tech area.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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sold certain intelligent pet products to Dogness Network and Dogness Technology, and accordingly reported related party sales of $2,212,579
and $1,207,686, which accounted for 8.2% and 5.0% of our total revenue in fiscal 2022 and 2021, respectively.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Revenue
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
breakdown of sales by products and services categories in international markets is as follows:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>International
sales</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
total sales in international markets increased by approximately $3.9 million or 36.8% from approximately $10.6 million in fiscal 2021
to approximately $14.5 million in fiscal year 2022. We have seen sharp increase of consumer demand in U.S., Japan and other Asian countries
because of the stimulus plan and the strong recovery of the economy. Our sales to U.S. market increased by approximately $2.0 million
or 32.4% to approximately $8.0 million in fiscal 2022 from approximately $6.0 million for the fiscal 2021. Our sales to Japan and other
Asian countries and regions market increased by approximately $1.7 million or 131.0% to approximately $3.0 million for fiscal 2022 from
approximately $1.3 million for fiscal 2021. However, due to the ongoing negative impact of the outbreak and spread of COVID-19 around
the world, we still experienced weak market demand and received less sales orders from other international customers.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
terms of our international sales by product type and mix, sales of intelligent pet products and climbing hooks increased by 137.5% and
14.8%, respectively, in fiscal 2022 as compared to fiscal 2021. However, our sales of our traditional pet products decreased by 8.2%,
in fiscal 2022 as compared to fiscal 2021.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
fiscal 2021, we have started working with large retail chains in the US and Canada for the distribution of smart pet products under our
own brand rather than just serving as an OEM supplier. In addition, we started expanding our sales on online shopping platforms, such
as Amazon and Chewy to access more potential customers in a safely and timely manner. We expect that the revenue to be generated from
these efforts could mitigate, at least in part, offset the decreased OEM sales in the United States and Canada and the mitigate the impact
of the COVID-19. We also expect that the newly developed intelligent pet products will continue become the leading revenue source for
our international sales.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
breakdown of sales by products and services categories in China&#8217;s domestic market is as follows:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Domestic
sales</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
domestic sales decreased by approximately $1.1 million or 8.3% from approximately $13.7 million in fiscal 2021 to approximately $12.6
million in fiscal 2022. The decrease was mainly due to decreased revenue from traditional pet products.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">With
the booming of pet culture in China, more and more young consumers have become pet owners in Mainland China. There are growing demands
for smart pet products, including App-controlled smart pet food feeders, pet water fountains, pet tracking devices and smart pet toys.
In addition, the shopping channels are diversified due to the rapid change of technology and lifestyle. The younger generations are more
tech savvy and more willing to purchase products from popular online shopping sites, including Amazon, Chewy, JD, Tmall and Taobao, and
from live streaming sales platforms hosted by influencers. Therefore, during fiscal 2022, we increased our marketing activities and sales
efforts in domestic market, especially on those online shopping sites and channels. As a result, our domestic sales of intelligent pet
products increased approximately $1.3 million or 28.7% in fiscal 2022 as compared to fiscal 2021.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
the other hand, due to our strategic changes, we have shifted our focus and resource from traditional pet products to intelligent pet
products, our domestic sales of traditional pet products decreased approximately $2.3 million or 30.9% in fiscal 2022 as compared to
fiscal 2021.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Cost
of revenues</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Cost
of revenues decreased by approximately $1.8 million, or 11.8%, from approximately $15.2 million in fiscal 2021 to approximately $17.0
million in fiscal 2022. As a percentage of revenues, the cost of goods sold slightly increased by approximately 0.2 percentage points
to 62.6% in fiscal 2022 from 62.4% in fiscal 2021. We expect to continue to upgrade our production lines for both traditional and intelligent
pet products to improve the productivity and lower the production costs.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Gross
profit</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
gross profit increased by approximately $1.0 million or 10.7%, to approximately $10.1 million in fiscal 2022 from approximately $9.2
million in fiscal 2021 primarily attributable to the increased sales volume of our intelligent pet products which have much higher gross
profit than our traditional pet products. Overall gross profit margin was 37.4%, a decrease of 0.2 percentage points, as compared to
37.6% in fiscal 2021.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Gross
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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    <td style="text-align: left">&#160;</td><td style="text-align: right">(23,957</td><td style="text-align: left">)</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(11,315</td><td style="text-align: left">)</td><td>&#160;</td>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Gross
profit for traditional pet products decreased by approximately $1.1 million in fiscal 2022 as compared to fiscal 2021. Gross profit margin
decreased by 1.0 percentage points from 33.1% in fiscal 2021 to 32.1% in fiscal 2022, mainly because we lowered the average selling price
in fiscal 2022.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Gross
profit for intelligent pet products increased by approximately $1.9 million from approximately $4.0 million in fiscal 2021 to approximately
$5.9 million in fiscal 2022. Gross profit margin decreased by 7.4 percentage point from 51.2% in fiscal 2021 to 43.8% in fiscal 2022,
mainly driven by increased average unit cost of intelligent pet products due to improved manufacturing process.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Gross
profit for climbing hooks and others increased by approximately $0.1 million from approximately $0.4 million in fiscal 2021 to $0.5 million
in fiscal 2022, mainly driven by 25.7% increase in sales volume. Overall gross margin for climbing hook decreased by 1.2 percentage points
from 31.6% in fiscal 2021 to 30.4% in fiscal 2022.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Expenses</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Selling
expenses.</i></b> Selling expenses primarily included expenses incurred for participating in various trade shows to promote product sales,
salary and sales commission expenses paid to the Company&#8217;s sales personnel, and shipping and delivery expenses. Selling expenses
increased by $0.3 million, or 14.4% from approximately $1.8 million in fiscal 2021 to approximately $2.1 million in fiscal 2022. The
increase in selling expense was primarily due to increased Amazon online sales promotion fee approximately $0.2 million, As a percentage
of sales, our selling expenses were 7.7% and 7.5% of our total revenues in fiscal 2022 and 2021, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>General
and administrative expenses.</i></b> Our general and administrative expenses primarily include employee salary, welfare and insurance
expenses, depreciation and bad debt expenses as well as consulting expense. General and administrative expenses increased by approximately
$1.8 million or 36.5% from approximately $4.9 million in fiscal 2021 to approximately $6.7 million in fiscal 2022. The increase was mainly
due to increased professional consultant expense approximately $0.5 million, decoration and maintenance fee of approximately $0.5 million,
increased depreciation and amortization expenses of $0.4 million. As a percentage of sales, our general and administrative expenses were
24.9% and 20.3% of our total revenues in fiscal 2022 and 2021, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Research
and development expenses.</i></b> Our research and development expenses increased by approximately $0.4 million or 69.7% from approximately
$0.5 million in fiscal 2021 to $0.9 million in fiscal 2022. As a percentage of sales, our research and development expenses were 3.4%
and 2.2% of our total revenues in fiscal 2022 and 2021, respectively. The increase was due to more research activities in fiscal 2022.
We expect R&amp;D expenses to continue to increase, as we continue to expand our research and development activities to increase the
use of environmentally-friendly materials, and develop more new high-tech products to meet customer demands.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Disposition
of fixed assets.</i></b> We disposed some old fashioned or outdated molding machinery and equipment in fiscal 2022, which resulted in
approximately $0.3 million loss from disposition of fixed assets in fiscal 2022.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Other
income, net.</i></b> Other income primarily included interest income or expenses, foreign exchange gain or loss, rental income from related
parties, gain from disposition of a subsidiary and other income or expenses. In fiscal 2022, the Company had other income of approximately
$0.2 million as compared to approximately $0.1 million in fiscal 2021. The increase was mainly attributable to an increase of approximately
$0.5 million in foreign exchange gain in fiscal 2022 as compared to fiscal 2021, offset by less miscellaneous other income in fiscal
2022 as compared to fiscal 2021.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Income
tax benefit (expense).</i></b> Income tax benefit was approximately $2.8 million in fiscal 2022, compared to, income tax expense approximately
$0.6 million in fiscal 2021. The decrease was mainly due to the reversal of accrued tax liabilities in the total amount of approximately
$3.0 million relating to the tax liabilities accrued for the period from fiscal 2016 to fiscal 2018.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company may be subject to challenges from various PRC taxing authorities regarding the amounts of taxes due, although the Company&#8217;s
management believes the Company has paid or accrued for all taxes owed by the Company. As of June 30, 2022 and 2021, the Company had
accrued (before adjustment) total income tax liabilities of approximately $4.6 million and $4.3 million, respectively. According to PRC
taxation regulation and administrative practice and procedures, the statute of limitation on tax authority&#8217;s audit or examination
of previously filed tax returns expires three years from the date they were filed. The Company also obtained a written statement from
the local tax authority that no additional taxes are due as of June 30, 2022. Based on these facts, the Company reversed the accrued
tax liabilities in the total amount of approximately $3.0 million (or RMB20,424,826) relating to the tax liabilities accrued for the
period from fiscal 2016 to fiscal 2018, resulting in the decrease of accrued income tax liabilities from approximately $4.6 million to
approximately $1.5 million as of June 30, 2022. The Company continues to discuss with the local tax authority to try to settle the remaining
tax liabilities as soon as practicable, mostly related to its unpaid income tax and business tax.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Due
to uncertainties associated with the status of examinations, including the protocols of finalizing audits by the relevant tax authorities,
there is a high degree of uncertainty regarding the future cash outflows associated with the interest and penalties on these unpaid tax
balances. The final outcome of this tax uncertainty is dependent upon various matters including tax examinations, interpretation of tax
laws or expiration of status of limitation.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Net
income.</i></b> Net income was approximately $3.0 million in fiscal 2022, increase by approximately $1.7 million from $1.3 million in
fiscal 2021. The increased net income was the result of increased income tax benefit offset by increased operating expenses as discussed
above.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Other
comprehensive income (loss).</i></b> Foreign currency translation adjustments amounted to a loss of $3,203,448 and a gain of $4,879,315
in fiscal 2022 and 2021, respectively. The balance sheet amounts with the exception of equity at June 30, 2022 were translated at 6.6981
RMB to 1.00 USD as compared to 6.4566 RMB to 1.00 USD at June 30, 2021. The equity accounts were stated at their historical rate. The
average translation rates applied to the income statements accounts for the years ended June 30, 2022 and 2021 were 6.4554 RMB to 1.00
USD and 6.6221 RMB to 1.00 USD, respectively. The change in the value of the RMB relative to the U.S. dollar may affect our financial
results reported in the U.S, dollar terms without giving effect to any underlying change in our business or results of operation. The
impact attributable to changes in revenue and expenses due to foreign currency translation are summarized as follows.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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    <td style="width: 60%; text-align: left">Impact on revenue</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">979,555</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
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    <td style="text-align: left">$</td><td style="text-align: right">(188,476</td><td style="text-align: left">)</td></tr>
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    <td style="text-align: left">$</td><td style="text-align: right">109,040</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">(33,551</td><td style="text-align: left">)</td></tr>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
the year ended June 30, 2022, if using the RMB6.6981 to $1.00 (foreign exchange rate as of June 30, 2022), rather than the average exchange
rate for the year ended June 30, 2022, to translate our revenue, operating expense and net income, our reported revenue, operation expense
and net income would decrease by $979,555, $363,874 and negative $109,040, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
the year ended June 30, 2021, if using the RMB6.4566 to $1.00 (foreign exchange rate as of June 30, 2021), rather than the average exchange
rate for the year ended June 30, 2021, to translate our revenue, operating expense and net income, our reported revenue, operation expense
and net income would be increased by $628,316, $188,476 and $33,551, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Liquidity
and Capital Resources</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table sets forth summary of our cash flows for the years indicated:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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    <td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right">3,752,232</td><td style="width: 1%; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(1,455,354</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(14,741,379</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(11,245,631</td><td style="text-align: left">)</td></tr>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(1,066,364</td><td style="text-align: left">)</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">11,051,571</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(698,581</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(617,747</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">110,709</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(12,122,564</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">11,670,118</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">3,668,881</td><td style="text-align: left">&#160;</td></tr>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Operating
Activities</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Net
cash used in operating activities was approximately $8.9 million in fiscal 2023, including net loss of approximately $7.5 million, adjusted
for non-cash items for approximately $5.3 million (including depreciation and amortization of approximately $3.3 million, amortization
of right of use lease assets of approximately $1.0 million, share based compensation for services of approximately $1.2 million), and
adjustments for changes in working capital approximately $6.8 million. The adjustments for changes in working capital mainly include
decrease of approximately $2.4 million in lease liabilities, and increase of approximately $3.1 million in prepayments and other assets.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Net
cash provided by operating activities was approximately $6.2 million in fiscal 2022, including net income of approximately $3.0 million,
adjusted for non-cash items for approximately $4.1 million (including depreciation and amortization of approximately $3.5 million, amortization
of right of use lease assets of approximately $0.4 million), and adjustments for changes in working capital approximately $0.9 million.
The adjustments for changes in working capital mainly include decrease of approximately $2.8 million in tax payable primary due to income
tax reserved, offset by decrease of approximately $1.2 million in prepayments and other assets.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Net
cash provided by operating activities was approximately $3.7 million in fiscal 2021, including net income of $1.3 million, adjusted for
non-cash items for approximately $3.3 million (including depreciation and amortization of $3.1 million, amortization of ROU assets of
$0.4 million, and stock-based compensation of $0.2 million and deferred tax expense negative $0.5 million) and adjustments for changes
in working capital around negative $0.8 million. The adjustments for changes in working capital mainly included increase of $1.2 million
in inventories due to increased sales orders, decreased of 0.6 million in accrued expenses and other liabilities and increased of $0.5
million in accounts receivable, offset by increase of $1.3 million in taxes payable.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Investing
Activities</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Net
cash used in investing activities was approximately $1.5 million in fiscal 2023 primarily due to the spending of approximately $1.5 million on
our construction projects for improvement of our manufacturing facilities and warehouse and purchased machinery and
equipment.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Net
cash used in investing activities was approximately $14.7 million in fiscal 2022 primarily due to the spending of approximately $14.2 million on
our construction projects for improvement of our manufacturing facilities and warehouse and the purchase of approximately $1.1 million machinery
and equipment. On the other hand, we decreased short term investment of approximately $0.5 million when we collected the investment upon
maturity of these interest-bearing wealth management financial products and used such cash to invest on our construction projects.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Net
cash used in investing activities was approximately $11.2 million in fiscal 2021 primarily due to the purpose of approximately $0.8
million machinery and equipment to improve our production capacity and the spending of approximately $13.7 million on our
construction-in-progress projects for improvement of our manufacturing facilities and warehouse. We also paid additional capital
contributions of approximately $0.2 million to one of our long-term equity investees, offset by decreased purchase in short-term
investment of $3.3 million.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Financing
Activities</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Net
cash used in financing activities was approximately $1.1 million in fiscal 2023. During fiscal 2023, the net repayment bank loans
was of approximately $1.0 million.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Net
cash provided by financing activities was approximately $20.9 million in fiscal 2022. During fiscal 2022, we had net proceeds from private
placement of approximately $19.1 million and approximately $4.6 million proceeds from exercise of warrants and options, offset by net
repayment related parties loans of approximately $1.9 million and bank loans of approximately $0.9 million.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Net
cash provided by financing activities was approximately $11.1 million in fiscal 2021. During fiscal 2021, we had net proceeds from private
placements of approximately $6.6 million, we net proceeds from bank loan of approximately $2.4 million and net proceeds from related
party of approximately $1.9 million We also received capital contribution of approximately $0.1 million from non-controlling shareholders
in Dogness Culture.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Commitments
and Contractual Obligations</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table sets forth our contractual obligations and commercial commitments as of June 30, 2023:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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  <tr style="vertical-align: bottom">
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold">Contractual Obligations</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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    <td style="width: 35%; text-align: left">Operating lease commitment (1)</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">19,054,485</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">2,913,507</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">937,036</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">2,263,406</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">12,940,536</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">3,846,918</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">745,797</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">842,687</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">7,065</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">2,119,523</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; padding-bottom: 2.5pt">Total</td><td style="font-weight: bold; padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right">26,870,545</td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right">7,014,495</td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; padding-bottom: 2.5pt">&#160;</td>
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    <td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right">3,106,093</td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; padding-bottom: 2.5pt">&#160;</td>
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  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; background-color: white; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
    Company&#8217;s subsidiary Dogness Jiasheng leases manufacturing facilities and administration office spaces under multiple operating
    lease agreements. We adopted ASU No. 2016-02&#8212;Leases (Topic 842) on July 1, 2019, using a modified retrospective transition
    method. 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 lease assets and lease liabilities.</span></td></tr>

<tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">&#160;</td></tr>
<tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(2)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
                                            of June 30, 2023, the Company had a loan balance of RMB21,464,235 ($4,555,467) borrowed from
                                            Dongguan Rural Commercial Bank. The loans have terms of eight years with a maturity date
                                            on July 16, 2028 with effective interest rate at 6.15% and 6.55% per annum.</span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
    of June 30, 2023, the Company had a loan balance of $887,000 borrowed from Cathay Bank. The Company has extended the repayment date
    to February 2024.</span></p></td></tr>

<tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td></tr>
<tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(3)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
    Company is also obligated to make registered capital contributions to its subsidiary Zhangzhou Meijia Metal Product Ltd. (&#8220;Meijia&#8221;)
    to meet the requirement of State Administration for Industry and Commerce (&#8220;SAIC&#8221;) of China. As of June 30, 2023, future
    registered capital contribution commitments for Meijia was RMB15.37 million ($2.1 million), respectively. As of the date of this
    report, pursuant to the articles of incorporation of Meijia, the Company is obligated to contribute the remaining RMB15.37 million
    ($2.1 million) capital investment into Meijia before December 30, 2025 whenever the Company has available funds.</span></td></tr>

<tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">&#160;</td></tr>
<tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(4)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Dongguan
                                            Jiasheng had a construction project which expanded from the original plan of building a warehouse,
                                            to build new manufacturing and operating facilities, which include warehouse, workshops,
                                            office building, security gate, employee apartment building, electrical transformer station
                                            and exhibition hall, etc. The total budget is approximately RMB263.5 million ($36.3 million).
                                            As of June 30, 2022, the Company had completed this project and transferred all of the related
                                            CIP to fixed assets. As of June 30, 2023, the Company has made total payments of approximately
                                            RMB261.7 million ($36.1 million) in connection to this project, which resulted in future
                                            minimum capital expenditure payments of approximately RMB1.8 million ($0.3 million), the
                                            Company plan to pay remaining payments in twelve months after June 30, 2023.</span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Loan
Facilities</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of June 30, 2023 and 2022, the details of all our short-term bank loans are as follows:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">As of</td><td style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">As of</td><td style="font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">June 30, 2023</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">June 30, 2022</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left">Cathay Bank</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="width: 60%; text-align: left; padding-bottom: 1.5pt">Effective interest rate at 4.25%</td><td style="width: 2%; padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; width: 1%; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; width: 16%; text-align: right">887,000</td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="width: 2%; padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; width: 1%; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; width: 16%; text-align: right">564,000</td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; padding-bottom: 2.5pt">Total</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">887,000</td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">564,000</td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
February 6, 2020, one of the Company&#8217;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.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of June 30, 2023, the outstanding balance was $887,000. The Company has extended the repayment date to February 2024 from the original
due date of February 2022. As of the date of this report, the Company made total payments of $828,416.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Long-term
loan consisted of the following:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
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    <td colspan="2" style="font-weight: bold; text-align: center">As of</td><td style="font-weight: bold">&#160;</td></tr>
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    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td><td>&#160;</td>
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    <td style="font-weight: bold; text-align: left">Dongguan Rural Commercial Bank</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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    <td style="width: 60%; text-align: left">Effective interest rate at 6.15% and 6.55%</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">4,555,467</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">6,320,534</td><td style="width: 1%; text-align: left">&#160;</td></tr>
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    <td style="text-align: left; padding-bottom: 1.5pt">Less: current portion of long-term loans</td><td style="padding-bottom: 1.5pt">&#160;</td>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
July 17, 2020, the Company entered into multiple loan agreements with Dongguan Rural Commercial Bank to borrow an aggregate of $6.9 million
(RMB50 million) of loans to support the working capital needs and the construction of the Company&#8217;s current CIP projects. The loans
have tenure varying between three and eight years. The loans bear a variable interest rate based on the prime interest rate set by the
People&#8217;s Bank of China at the time of borrowing, plus 1.405 basis points. The Company pledged the land use right of approximately
$1.8 million and buildings of approximately $4.8 million from Meijia as collateral to secure total loans of $4.1 million (RMB30 million).
Mr. Silong Chen, the CEO of the Company, pledged personal property as collateral to secure the remaining loans of $2.8 million (RMB20
million). Dongguan Dogness, Meijia and Mr. Silong Chen also provided guarantee for the loans. As of June 30, 2023, the outstanding balance
was $4,555,467. The Company further repaid $2,702,960 (RMB19,600,873) and drew down $2,620,100 (RMB19,000,000) subsequent to the year
end.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Impact
of Inflation</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company&#8217;s business operations are affected by the inflation post pandemic. Inflation can have a significant impact on a company&#8217;s
financial performance. Rising prices for raw materials, labor, and other costs can increase a company&#8217;s cost of goods sold, leading
to lower gross margins and profitability. Additionally, inflation can increase the prices of products, which can lead to a decrease in
demand for those products, ultimately affecting sales volume. Inflation can also impact a company&#8217;s expenses, such as salaries
and benefits, rent, and utilities. As prices rise, these expenses can increase, leading to higher general and administrative expenses.
Finally, inflation can impact a company&#8217;s debt service, as interest rates may rise, leading to higher borrowing costs.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Impact
of Foreign Currency Fluctuations</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Although
all our raw material and production cost and expense were denominated in RMB, almost all our revenues were generated under agreements
denominated in U.S. dollars. Export sales represent 64.0% and 53.7% of our revenue for the years ended June 30, 2023 and 2022, respectively.
Moreover, for the next few years we expect that the substantial majority of our revenues from international sales will continue to be
denominated in U.S. dollars. Having the substantial portion of our revenues contracts denominated in U.S. dollars while having most of
our raw material and production costs and expenses denominated in RMB exposes us to risk, associated with exchange rate fluctuations
vis-&#224;-vis the U.S. dollar.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A
devaluation of the RMB in relation to the U.S. dollar has the effect of reducing the U.S. dollar amount of our expenses or payables that
are payable in RMB. Conversely, any appreciation of the RMB in relation to the U.S. dollar has the effect of increasing the U.S. dollar
value of our RMB raw material and productions and expenses, which would have a negative impact on our profit margins. In fiscal 2023,
the value of the RMB appreciated in relation to the U.S. dollar by approximately 8.26%. In fiscal 2022, the value of the RMB depreciated
in relation to the U.S. dollar by 3.70%. In fiscal 2021, the value of the RMB appreciated in relation to the U.S. dollar by approximately
8.70%. Because exchange rates between the U.S. dollar and the RMB fluctuate continuously, such fluctuations have an impact on our results
and period-to-period comparisons of our results.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center">RMB against the USD (%)</td><td style="padding-bottom: 1.5pt">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 80%; text-align: left">2023</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 16%; text-align: right">(8.26</td><td style="width: 1%; text-align: left">)%</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">2022</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(3.70</td><td style="text-align: left">)%</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">2021</td><td>&#160;</td>
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  </table>


<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
will continue to monitor exposure to currency fluctuations. We have not engaged in any currency hedging activities in order to reduce
our exposure to currency fluctuations.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Off-balance
Sheet Commitments and Arrangements</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">There
were no off-balance sheet arrangements for the years ended June 30, 2023 and 2022 that have or that in the opinion of management are
likely to have, a current or future material effect on our financial condition or results of operations.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Critical
Accounting Policies</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
prepare our financial statements in conformity with accounting principles generally accepted by the United States of America (&#8220;U.S.
GAAP&#8221;), which requires us to make judgments, estimates and assumptions that affect our reported amount of assets, liabilities,
revenue, costs and expenses, and any related disclosures. Although there were no material changes made to the accounting estimates and
assumptions in the past three years, we continually evaluate these estimates and assumptions based on the most recently available information,
our own historical experience and various other assumptions that we believe to be reasonable under the circumstances. Since the use of
estimates is an integral component of the financial reporting process, actual results could differ from our expectations as a result
of changes in our estimates.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
believe that the following accounting policies involve a higher degree of judgment and complexity in their application and require us
to make significant accounting estimates. Accordingly, these are the policies we believe are the most critical to understanding and evaluating
our consolidated financial condition and results of operations.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Use
of Estimates</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
preparing the consolidated financial statements in conformity with US GAAP, management makes estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting period. These estimates are based on information as of the date
of the consolidated financial statements. Significant estimates required to be made by management include, but are not limited to, the
valuation of accounts receivable, inventories, advances to suppliers, useful lives of property, plant, right-of-use assets (including
lease liabilities) and equipment, intangible assets, the recoverability of long-lived assets, provision necessary for contingent liabilities,
and realization of deferred tax assets. Actual results could differ from those estimates.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Revenue
recognition</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">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&#8217;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.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">To
determine revenue recognition for contracts with customers, the Company performs the following five steps: (i) identify the contract
with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable
consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price
to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance
obligation.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Revenue
is recognized when obligations under the terms of a contract with the Company&#8217;s customers are satisfied. Satisfaction of contract
terms occur with the transfer of title of the Company&#8217;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.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
amount of consideration the Company expects to receive consists of the sales price adjusted for any incentives if applicable. Such incentives
do not represent a standalone value and are accounted for as a reduction of revenue in accordance with ASC 606. For the years ended June
30, 2023, 2022 and 2021, the Company did not provide any sales incentives to its customers.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">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 selling expenses. In applying judgment,
the Company considered customer expectations of performance, materiality and the core principles of ASC Topic 606. The Company&#8217;s
performance obligations are generally transferred to the customer at a point in time. The Company&#8217;s contracts with customers generally
do not include any variable consideration.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company&#8217;s revenue is primarily generated from the sales of pet products, including leashes, accessories, collars, harnesses and
intelligent smart pet products, to wholesalers and retailers. Revenue is recognized when the merchandise is delivered, title is transferred
and the Company&#8217;s performance obligations to fulfill the customer contracts have been satisfied. Revenue is reported net of all
value added taxes (&#8220;VAT&#8221;). The Company does not routinely permit customers to return products and historically, customer
returns have been immaterial.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Contract
Assets and Liabilities</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Payment
terms are established on the Company&#8217;s pre-established credit requirements based upon an evaluation of customers&#8217; 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.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of June 30, 2023 and 2022, 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&#8217; 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.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Disaggregation
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company disaggregates its revenue from contracts by product types and geographic areas, as the Company believes it best depicts how the
nature, amount, timing and uncertainty of the revenue and cash flows are affected by economic factors. The Company&#8217;s disaggregation
of revenues for the six months ended December 31, 2022 and 2021 are disclosed in notes of the unaudited consolidated financial statements.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Accounts
Receivable, net</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">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. In June 2016, the FASB issued ASU No. 2016-13, &#8220;Financial
Instruments &#8212; Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,&#8221; which requires the Company
to measure and recognize expected credit losses for financial assets held and not accounted for at fair value through net income. The
Company adopted this guidance effective January 1, 2023. The Company establishes a provision for doubtful receivables based on management&#8217;s
best estimates of specific losses on individual exposures, as well as a provision on historical trends of collections. The provision
is recorded against accounts receivables balances, with a corresponding charge recorded in the consolidated statements of income and
comprehensive income. Delinquent account balances are written-off against the allowance for doubtful accounts after management has determined
that the likelihood of collection is not probable.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Inventories,
net</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Leases</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company is the lessee in a lease contract when the Company obtains the right to use the asset. Operating leases are included in the line
items right-of-use asset, lease liabilities, current, and lease liabilities, long-term in the consolidated balance sheet.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Right-of-use
(&#8220;ROU&#8221;) asset represents the Company&#8217;s right to use an underlying asset for the lease term and lease obligations represent
the Company&#8217;s obligations to make lease payments arising from the lease, both of which are recognized based on the present value
of the future minimum lease payments over the lease term at the commencement date. Leases with a lease term of 12 months or less at inception
are not recorded on the consolidated balance sheet and are expensed on a straight-line basis over the lease term in the consolidated
statement of operations and comprehensive loss. The Company determines the lease term by agreement with lessor. As the Company&#8217;s
lease does not provide implicit interest rate, the Company uses the Company&#8217;s incremental borrowing rate based on the information
available at commencement date in determining the present value of future payments. Refer to Note 7 for further discussion.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Income
Tax</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company accounts for current income taxes in accordance with the laws of the relevant tax authorities. Deferred income taxes are recognized
when temporary differences exist between the tax bases of assets and liabilities and their reported amounts in the consolidated financial
statements. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years
in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period including the enactment date. Valuation allowances are established, when necessary,
to reduce deferred tax assets to the amount expected to be realized.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">An
uncertain tax position is recognized as a benefit only if it is &#8220;more likely than not&#8221; 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 &#8220;more likely than not&#8221; 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 June 30, 2023, the
years from fiscal 2021 to fiscal 2023 for the Company&#8217;s mainland China subsidiaries remain open for statutory examination by PRC
Tax authorities. For the Company&#8217;s Hong Kong subsidiaries, and the U.S subsidiary, all tax years remain open for statutory examination
by relevant tax authorities.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Recently
Issued Accounting Pronouncements</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company considers the applicability and impact of all accounting standards updates (&#8220;ASUs&#8221;). Management periodically reviews
new accounting standards that are issued.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
December 2019, the FASB issued ASU No. 2019-12, &#8220;Income Taxes&#8221; (Topic 740): Simplifying the Accounting for Income Taxes (&#8220;ASU
2019-12&#8221;). ASU 2019-12 will simplify the accounting for income taxes by removing certain exceptions to the general principles in
Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending
existing guidance. For public business entities, the amendments in this Update are effective for fiscal years, and interim periods within
those fiscal years, beginning after December 15, 2020. For all other entities, the amendments are effective for fiscal years beginning
after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. The adoption of ASU 2019-12 does
not have a material impact on its consolidated financial statements.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">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) (&#8220;ASU 2020-01&#8221;), 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 adoption of ASU 2019-12 does not have a material impact on its consolidated financial statements.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
October 2021, the FASB issued ASU No. 2021-08, &#8220;&#8216;Business Combinations (Topic 805): Accounting for Contract Assets and Contract
Liabilities from Contracts with Customers&#8221; (&#8220;ASU 2021-08&#8221;). This ASU requires entities to apply Topic 606 to recognize
and measure contract assets and contract liabilities in a business combination. The amendments improve comparability after the business
combination by providing consistent recognition and measurement guidance for revenue contracts with customers acquired in a business
combination and revenue contracts with customers not acquired in a business combination. The amendments are effective for the Company
beginning after December 15, 2023, and are applied prospectively to business combinations that occur after the effective date. The Company
does not expect the adoption of ASU 2021-04 to have a material effect on the consolidated financial statements.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
June 2022, the FASB issued ASU 2022-03 Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual
Sale Restrictions. The update clarifies that a contractual restriction on the sale of an equity security is not considered part of the
unit of account of the equity security and, therefore, is not considered in measuring fair value. The update also clarifies that an entity
cannot, as a separate unit of account, recognize and measure a contractual sale restriction. The update also requires certain additional
disclosures for equity securities subject to contractual sale restrictions. For public business entities, the amendments in this Update
are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. For all other entities,
the amendments are effective for fiscal years beginning after December 15, 2024, and interim periods within those fiscal years. Early
adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance.
As an emerging growth company, the standard is effective for the Company for the year ended December 31, 2025. The Company is in the
process of evaluating the impact of the new guidance on its consolidated financial statements.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Except
for the above-mentioned pronouncements, there are no new recent issued accounting standards that will have material impact on the consolidated
financial statements</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="Ak_004"></span>Item
6. Directors, Senior Management and Employees</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>A.
Directors and Senior Management</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Executive
Officers and Directors</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table sets forth our executive officers and directors, their ages and the positions held by them:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom">
    <td style="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; width: 28%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Name</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 2%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></td>
    <td style="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; width: 8%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Age</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 2%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></td>
    <td style="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; width: 60%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Position
    Held</b></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Silong
    Chen</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">41</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Chief
    Executive Officer and Director</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Aihua
    Cao</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">46</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Chief
    Financial Officer and Director</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Qingshen
    Liu</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">49</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Independent
    Director</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Zhiqiang
    Shao</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">48</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Independent
    Director (Audit Committee Chair)</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Changqing
    Shi</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">40</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Independent
    Director</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
business address of all such senior management and directors is Tongsha Industrial Estate, East District, Dongguan, Guangdong, People&#8217;s
Republic of China 523217.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Silong
Chen, Chief Executive Officer</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Director
since 2017</i></b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Mr.
Chen serves as our Chief Executive Officer and Chairman of our Board of Directors. Mr. Chen founded our Chinese subsidiary in 2003 and
has more than 15 years of experience in the pet products industry. Mr. Chen created the brand Dogness in 2008. Since 2017, Mr. Chen has
served as the executive director of the Guangdong Province Economic Research Institute. We have chosen Mr. Chen to serve as a director
because of his expertise and experience in the pet supply industry.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>




<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i></i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Aihua
Cao, Chief Financial Officer</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Director
since 2023</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Ms.
Cao serves as our Chief Financial Officer. Prior to this position, Ms. Cao served as the Finance and Accounting Manager of the Company
since 2015. Ms. Cao has more than 32 years of experience in financing and accounting, and is specialized in financial system construction,
financial investment, business analysis, tax planning, and cost control. Ms. Cao received her bachelor&#8217;s degree from Hunan University
of Finance and Economics in 1991. We have chosen Dr. Chen as our Chief Financial Officer because of her knowledge and experience with
U.S. GAAP and SEC reporting and compliance requirements. We have chosen Dr. Chen to serve as a director because of her experience with
financial matters and her knowledge of our company&#8217;s operations.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Yunhao
Chen, Chief Financial Officer (from 2019 to August 2023)</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Director
(from 2019 to August 2023)</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>&#160;</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Dr.
Chen served as our Chief Financial Officer and a director from 2019 to August 2023. Prior to joining our company, Dr. Chen served as
the CFO for a US company since 2014, where she directed and managed the company&#8217;s financial reporting and accounting functions.
With a Ph.D. in Accounting and an MBA from the University of Minnesota, and a BE degree from University of International Business and
Economics of China, Dr. Chen has also been active in the academic area. From 2007 to 2014, Dr. Chen has been a faculty member at Florida
International University and University of Miami. From 2011 till present, she has been teaching at Southern Medical University as a Visiting
Professor (Healthcare MBA). We have chosen Dr. Chen as our Chief Financial Officer because of her knowledge and experience with U.S.
GAAP and SEC reporting and compliance requirements. She holds a CPA license and has conducted analyses and research of a large amount
of formal filings of SEC registrants, with focuses on financial disclosure, capital market anomaly, business valuation, internal control
and auditing, corporate tax avoidance, and earnings-returns relation. Dr. Chen also published research results in both accounting and
finance journals such as Journal of American Tax Association, Journal of Information System, and Financial Management. We chose Dr. Chen
to serve as a director because of her experience with financial matters and her knowledge of our company&#8217;s operations. Dr. Chen
has resigned as the Company&#8217;s Chief Financial Officer effective August 1, 2023.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Qingshen
Liu</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Director
since 2018</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Dr.
Liu has been an independent director since 2018. He is an associate professor in the Faculty of Animal Science at South China Agriculture
University. He has many years of experience in teaching, research, and social services and focuses on commercial animal breeding, nutrition,
and biotechnology. Dr. Liu&#8217;s vast industry involvement includes senior roles at the Chinese Association of Animal Science and Veterinary
Medicine, the Guangdong Zoological Society, the Guangdong Association of Animal Husbandry and Veterinary Medicine, the Guangdong Pet
Industry Technology Innovation Alliance, the Guangdong Vocational Education Strategic Alliance for the pet industry, and the China Native
Dog Protection Association. He is also a consultant for the China Pet Health Nutrition Association, the Dongguan Pet Industry Association,
and the Guangdong Province Science and Technology Project. He is an editor of Kennel Technology and the Guangdong Journal of Animal and
Veterinary Science. Dr. Qingshen Liu holds a Ph.D in animal nutrition and feed science from South China Agricultural University. We have
appointed Dr. Liu because of his expertise in animal science and knowledge of research, product development and education.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Zhiqiang
Shao</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Director
since 2017</i></b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Mr.
Shao has been an independent director since 2017. Since May 2015, Mr. Shao has been the Vice Risk Control Officer in Paisheng Technology
Group Co., Ltd, where he is responsible for implementing the company&#8217;s corporate risk control strategy. From March 2010 through
April 2015, Mr. Shao was the Financial and Risk Control Director at Dongguan Xiangbang Credit Guarantee Ltd. From November 2006 through
February 2010, Mr. Shao was the Financial and Risk Control Manager at China Zhongkezhi Guarantee Group Co., Ltd, Dongguan Branch. From
July 1996 to October 2006, Mr. Shao worked as the Financial Manager for Huiyang Wanli Plastic Products Co., Ltd/Dongguan Wanjia Toys
Co., Ltd. In July 1996, he graduated from a three-year college in Accounting, Shanghai Lixin Institute of Accounting and Finance (formerly
Shanghai Lixin College of Accounting), and earned his Bachelor in Financial Management from South China Normal University in May 2017.
We believe Mr. Shao&#8217;s experience with accounting and risk management make him a qualified member of our Board of Directors.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Changqing
Shi</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Director
since 2020</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Mr.
Shi has been an independent director since April 2020. Since September 2019, Mr. Shi has been the Deputy General Manager of Dongguan
Newspaper Culture Communication Co., Ltd. From May 2018 through August 2019, he was Executive Dean of Duowei Training Institute. From
April 2017 through April 2018, Mr. Shi was Vice Principal of Guangdong School of Science and Technology. From September 2016 through
March 2017, he was Vice Principal of Dongguan Yuehua School. From May 2014 through August 2016, Mr. Shi was the Chief Counselor of the
Dongguan Youth Leadership Program. Mr. Shi earned his B.A. from Yantai Normal University and is studying for a master&#8217;s degree
in cultural industry management from Peking University. We believe Mr. Shi is a qualified member of our Board of Directors due to his
media experience and corporate governance experience, which we are hopeful will benefit Dogness&#8217; efforts to promote its products
and brand and to further Dogness&#8217; efforts to grow as a public company.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Election
of Officers</i></b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
executive officers are elected by, and serve at the discretion of, our board of directors. There are no familial relationships among
any members of the executive officers.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>B.
Employment Agreements</i></b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
accordance with the PRC National Labor Law, which became effective in January 1995, and the PRC Labor Contract Law, which became effective
in January 2008, as amended subsequently in 2012, employers must execute written labor contracts with full-time employees of the Chinese
entity in order to establish an employment relationship.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
China, all employers must compensate their employees equal to at least the local minimum wage standards. Our employees are all entitled
to receive payment of at least RMB 1,720 per month for full-time workers and RMB 16.4 per hour for part-time employees, with overtime
calculated at 1.5 times normal rate for weekday overtime, 2 times normal rate for weekends and 3 times normal rate for holidays. Our
employment agreements typically begin with a one month trial period.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">All
employers are required to establish a system for labor safety and sanitation, strictly abide by state rules and standards and provide
employees with appropriate workplace safety training. In addition, employers in China are obliged to pay contributions to the social
insurance plan and the housing fund plan for employees. Accordingly, all of our employees, including management, have executed their
employment agreements. Our employment agreements with our executives provide the amount of each executive officer&#8217;s salary and
establish their eligibility to receive a bonus. We believe our labor relationships are good.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
employment agreements with our executive officers generally provide for a salary to be paid monthly. The agreements also provide that
executive officers are to work full time for our company and are entitled to all legal holidays as well as other paid leave in accordance
with PRC laws and regulations and our internal work policies. The employment agreements also provide that we will pay for all mandatory
social insurance programs for our executive officers in accordance with PRC regulations. In addition, our employment agreements with
our executive officers prevent them from rendering services for our competitors for so long as they are employed.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Other
than the salary, bonuses, equity grants and necessary social benefits required by the government, which are defined in the employment
agreements, we currently do not provide other benefits to the officers. Our executive officers are not entitled to severance payments
upon the termination of their employment agreement or following a change in control. We are not aware of any arrangement that may at
a subsequent date, result in a change of control of our company.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have not provided retirement benefits (other than a state pension scheme in which all of our employees in China participate) or severance
or change of control benefits to our named executive officers.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Under
Chinese law, we may terminate an employment agreement without penalty by providing the employee thirty days&#8217; prior written notice
or one month&#8217;s wages in lieu of notice if the employee is incompetent or remains incompetent after training or adjustment of the
employee&#8217;s position in other limited cases. If we wish to terminate an employment agreement in the absence of cause, then we are
obligated to pay the employee one month&#8217;s salary for each year we have employed the employee. We are, however, permitted to terminate
an employee for cause without penalty to our company, where the employee has committed a crime or the employee&#8217;s actions or inactions
have resulted in a material adverse effect to us.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Silong
Chen</i></b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
May 28, 2017, we entered a written employment agreement with Mr. Chen. Under the terms of Mr. Chen&#8217;s employment agreement, he is
entitled to base compensation of&#8201; $10,000 per month. Mr. Chen received options to purchase 360,000 Class A Common Shares for a
purchase price of $1.50 per share, which options will vest monthly at a rate of 10,000 per month for the next three years following the
completion of our initial public offering, with the first tranche vesting one month after completion of the offering. On October 31,
2019, Mr. Chen voluntarily waived the remaining unvested 140,000; as a result, Mr. Chen holds a total of 220,000 vested options. Mr.
Chen&#8217;s employment agreement has no expiration date but may be terminated immediately for cause or at any time by either party upon
presentation of 30 days&#8217; prior notice in the event he is unable to perform assigned tasks or the parties are unable to agree to
changes to his employment agreement.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Aihua
Cao</i></b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Effective
August 16, 2023, we entered a written employment agreement with Ms. Cao to serve as our Chief Financial Officer. Under the terms of Ms.
Cao&#8217;s employment agreement, she was entitled to base compensation of $42,000 per month. Ms. Cao&#8217;s employment agreement has
no expiration date but may be terminated at any time for any reason or for no reason, with or without cause, by either party upon presentation
of 30 days&#8217; prior notice. The employment can be terminated immediately under certain circumstances specified under section 7 of
the employment agreement.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Yunhao
Chen(resigned since August 1, 2023)</i></b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Effective
May 28, 2017, we entered a written employment agreement with Dr. Chen to serve as our Chief Financial Officer. Dr. Chen has resigned
as the Company&#8217;s Chief Financial Officer effective August 1, 2023 therefore the employment agreement was terminated as of the same
date. Under the terms of Dr. Chen&#8217;s employment agreement, she was entitled to base compensation of $10,000 per month through December
31, 2017. Beginning in January 2018, Dr. Chen&#8217;s salary increased to $150,000 per year. Effective as of the closing of our initial
public offering, Dr. Chen received options to purchase 120,000 Class A Common Shares for a purchase price of $1.50 per share, which options
vested monthly at a rate of 5,000 per month for the next two years following the completion of the offering, with the first tranche vesting
one month after completion of the offering. All of such options have vested and have been exercised. Dr. Chen&#8217;s employment agreement
was for a term of two years initially and renewed in 2019 with no fixed term and may be terminated immediately for cause or at any time
by either party upon presentation of 30 days&#8217; prior notice in the event she is unable to perform assigned tasks or the parties
are unable to agree to changes to her employment agreement.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Director
Compensation</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following section presents information regarding the compensation paid during fiscal 2023, 2022 and 2021 to members of our Board of Directors
who are not also our employees (referred to herein as &#8220;Non-Employee Directors&#8221;). As of each of June 30, 2023, 2022 and 2021,
we had five (5) directors. Other than Qingshen Liu, who received approximately $8000, $8000 and 8,000 for services in each of 2023, 2022 and 2021 and Changqing Shi, who received approximately $9000, $9000 and $9,000 for services in fiscal 2023, 2022 and 2021, none
of the Non-Employee Directors received any compensation in fiscal year 2023, 2022, and 2021, and Mr. Silong Chen and Dr. Yunhao Chen
did not receive any compensation other than as employees of our company.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Non-Employee
Directors</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
pay our independent directors an annual cash retainer to be determined from time to time by our board of directors, currently around
$8,000 per year, depending on the committee responsibilities of the director. We may also provide stock option equity-based incentives
to our directors for their service. We also plan to reimburse our directors for any out-of-pocket expenses incurred by them in connection
with their services provided in such capacity. Pursuant to our service agreements with our directors, neither we nor our subsidiaries
will provide benefits to directors upon termination of appointment.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>C.
Board Practice</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Board
of Directors and Board Committees</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
Board of Directors currently consists of five (5) directors. A majority of our directors (namely, Liu, Shi and Shao) are independent,
as such term is defined by the Nasdaq Global Market.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A
director may vote in respect of any contract or transaction in which he is interested, provided, however that the nature of the interest
of any director in any such contract or transaction shall be disclosed by him at or prior to its consideration and any vote on that matter.
A general notice or disclosure to the directors or otherwise contained in the minutes of a meeting or a written resolution of the directors
or any committee thereof of the nature of a director&#8217;s interest shall be sufficient disclosure and after such general notice, it
shall not be necessary to give special notice relating to any particular transaction. A director may be counted for a quorum upon a motion
in respect of any contract or arrangement which he shall make with our company, or in which he is so interested and may vote on such
motion.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Mr.
Silong Chen currently holds both the positions of Chief Executive Officer and Chairman of the Board. These two positions have not been
consolidated into one position; Mr. Chen simply holds both positions at this time. We do not have a lead independent director, and we
do not anticipate having a lead independent director because we will encourage our independent directors to freely voice their opinions
on a relatively small company board. We believe this leadership structure is appropriate because we are a relatively small company in
the process of listing on a public exchange. Our Board of Directors plays a key role in our risk oversight. The Board of Directors makes
all relevant Company decisions. As a smaller company with a small board of directors, we believe it is appropriate to have the involvement
and input of all of our directors in risk oversight matters.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Board
Committees</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have established three standing committees under the board: the audit committee, the compensation committee and the nominating committee.
Each committee has three members, and each member is independent, as such term is defined by the Nasdaq Global Market. The audit committee
is responsible for overseeing the accounting and financial reporting processes of our company and audits of the financial statements
of our company, including the appointment, compensation and oversight of the work of our independent auditors. The compensation committee
of the board of directors reviews and makes recommendations to the board regarding our compensation policies for our officers and all
forms of compensation, and also administers and has authority to make grants under our incentive compensation plans and equity-based
plans (but our board will retain the authority to interpret those plans). The nominating committee of the board of directors is responsible
for the assessment of the performance of the board, considering and making recommendations to the board with respect to the nominations
or elections of directors and other governance issues. The nominating committee considers diversity of opinion and experience when nominating
directors.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
members of the audit committee, the compensation committee and the nominating committee are set forth below. All such members qualify
as independent under the rules of the Nasdaq Global Market.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
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    <td style="width: 44%; text-align: left">Zhiqiang Shao</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left"></td><td style="width: 11%; text-align: right">&#160;&#160;&#160;&#160;&#160;&#160;&#160;</td>
    <td style="white-space: nowrap; width: 6%; text-align: left">(1)(2)(3)</td>
    <td style="width: 2%">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 11%; text-align: left"></td>
    <td style="width: 4%; text-align: left">(1)</td>
    <td style="width: 2%">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 11%; text-align: left"></td>
    <td style="width: 4%; text-align: left">(1)</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Changqing Shi</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"></td>
    <td style="text-align: left">(1)</td>
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: left">(1)</td>
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="white-space: nowrap; text-align: left">(1)(2)</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Qingshen Liu</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"></td>
    <td style="text-align: left">(1)</td>
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="white-space: nowrap; text-align: left">(1)(2)</td>
    <td>&#160;</td><td>&#160;</td>
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  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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    member</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(2)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Committee
    chair</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(3)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Audit
    committee financial expert</span></td></tr>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Duties
of Directors</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Under
British Virgin Islands law, our directors have a duty to act honestly, in good faith and with a view to our best interests. Our directors
also have a duty to exercise the care, diligence and skills that a reasonably prudent person would exercise in comparable circumstances.
See &#8220;Description of Share Capital &#8212; Differences in Corporate Law&#8221; for additional information on our directors&#8217;
fiduciary duties under British Virgin Islands law. In fulfilling their duty of care to us, our directors must ensure compliance with
our Memorandum and Articles of Association. We have the right to seek damages if a duty owed by our directors is breached.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
functions and powers of our board of directors include, among others:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
appointing officers and determining the term of office of the officers;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
authorizing the payment of donations to religious, charitable, public or other bodies, clubs, funds or associations as deemed advisable;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
exercising the borrowing powers of the company and mortgaging the property of the company;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
executing checks, promissory notes and other negotiable instruments on behalf of the company; and</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
maintaining or registering a register of mortgages, charges or other encumbrances of the company.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Interested
Transactions</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A
director may vote, attend a board meeting or, presuming that the director is an officer and that it has been approved, sign a document
on our behalf with respect to any contract or transaction in which he or she is interested. We require directors to promptly disclose
the interest to all other directors after becoming aware of the fact that he or she is interested in a transaction we have entered into
or are to enter into. A general notice or disclosure to the board or otherwise contained in the minutes of a meeting or a written resolution
of the board or any committee of the board that a director is a shareholder, director, officer or trustee of any specified firm or company
and is to be regarded as interested in any transaction with such firm or company will be sufficient disclosure, and, after such general
notice, it will not be necessary to give special notice relating to any particular transaction.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Compensation
and Borrowing</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
directors may receive such remuneration as our board of directors may determine or change from time to time. The compensation committee
will assist the directors in reviewing and approving the compensation structure for the directors. Our board of directors may exercise
all the powers of the company to borrow money and to mortgage or charge our undertakings and property or any part thereof, to issue debentures,
debenture stock and other securities whenever money is borrowed or as security for any debt, liability or obligation of the company or
of any third party.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Qualification</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A
majority of our Board of Directors is required to be independent. There are no membership qualifications for directors. Further, there
are no share ownership qualifications for directors unless so fixed by us in a general meeting, and this has not been so fixed as of
the date of this report. There are no other arrangements or understandings pursuant to which our directors are selected or nominated.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Director
Compensation</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">All
directors hold office until the next annual meeting of shareholders at which they are re-elected and until their successors have been
duly elected and qualified. Officers are elected by and serve at the discretion of the Board of Directors. Employee directors do not
receive any compensation for their services. Non-employee directors will be entitled to receive such remuneration as our board of directors
may determine or change from time to time for serving as directors and may receive incentive option grants from our company. In addition,
each non-employee director is entitled to be repaid or prepaid all traveling, hotel and incidental expenses reasonably incurred or expected
to be incurred in attending meetings of our board of directors or committees of our board of directors or shareholder meetings or otherwise
in connection with the discharge of his or her duties as a director.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Limitation
of Director and Officer Liability</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Under
British Virgin Islands law, each of our directors and officers, in performing his or her functions, is required to act honestly and in
good faith with a view to our best interests and exercise the care, diligence and skill that a reasonably prudent person would exercise
in comparable circumstances. British Virgin Islands law does not limit the extent to which a company&#8217;s memorandum and articles
of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the
British Virgin Islands courts to be contrary to public policy, such as to provide indemnification against civil fraud or the consequences
of committing a crime.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Under
our Memorandum and Articles of Association, we shall indemnify our directors, officers and liquidators against all expenses, including
legal fees, and against all judgments, fines and amounts paid in settlement and reasonably incurred in connection with civil, criminal,
administrative or investigative proceedings to which they are party or are threatened to be made a party by reason of their acting as
our director, officer or liquidator. To be entitled to indemnification, these persons must have acted honestly and in good faith with
a view to the best interest of the company and, in the case of criminal proceedings, they must have had no reasonable cause to believe
their conduct was unlawful. Such limitation of liability does not affect the availability of equitable remedies such as injunctive relief
or rescission. These provisions will not limit the liability of directors under United States federal securities laws.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
shall indemnify any of our directors or anyone serving at our request as a director of another entity against all expenses, including
legal fees, and against all judgments, fines and amounts paid in settlement and reasonably incurred in connection with legal, administrative
or investigative proceedings. We may only indemnify a director if he or she acted honestly and in good faith with the view to our best
interests and, in the case of criminal proceedings, the director had no reasonable cause to believe that his or her conduct was unlawful.
The decision of our board of directors as to whether the director acted honestly and in good faith with a view to our best interests
and as to whether the director had no reasonable cause to believe that his or her conduct was unlawful, is in the absence of fraud sufficient
for the purposes of indemnification, unless a question of law is involved. The termination of any proceedings by any judgment, order,
settlement, conviction or the entry of no plea does not, by itself, create a presumption that a director did not act honestly and in
good faith and with a view to our best interests or that the director had reasonable cause to believe that his or her conduct was unlawful.
If a director to be indemnified has been successful in defense of any proceedings referred to above, the director is entitled to be indemnified
against all expenses, including legal fees, and against all judgments, fines and amounts paid in settlement and reasonably incurred by
the director or officer in connection with the proceedings.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
may purchase and maintain insurance in relation to any of our directors or officers against any liability asserted against the directors
or officers and incurred by the directors or officers in that capacity, whether or not we have or would have had the power to indemnify
the directors or officers against the liability as provided in our Memorandum and Articles of Association.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Insofar
as indemnification for liabilities arising under the Securities Act may be permitted for our directors, officers or persons controlling
our company under the foregoing provisions, we have been informed that in the opinion of the SEC, such indemnification is against public
policy as expressed in the Securities Act and is therefore unenforceable.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Involvement
in Certain Legal Proceedings</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">To
the best of our knowledge, none of our directors or officers has been convicted in a criminal proceeding, excluding traffic violations
or similar misdemeanors, nor has been a party to any judicial or administrative proceeding during the past five years that resulted in
a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state
securities laws, or a finding of any violation of federal or state securities laws, except for matters that were dismissed without sanction
or settlement. Except as set forth in our discussion below in &#8220;Related Party Transactions,&#8221; our directors and officers have
not been involved in any transactions with us or any of our affiliates or associates which are required to be disclosed pursuant to the
rules and regulations of the SEC.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Code
of Business Conduct and Ethics</i></b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have adopted a code of business conduct and ethics applicable to our directors, officers and employees in connection with our application
to list on the Nasdaq Global Market. Our Code of Business Conduct and Ethics requires us to comply with applicable laws, regulations
and rules; keep accurate corporate records; avoid conflicts of interest; maintain corporate confidentiality; refrain from insider trading,
corruption, harassment and other inappropriate behavior; and encourage reporting of any known or suspected violations without fear of
reprisal.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>D.
Employees</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of September 25, 2023, we employed a total of 259 full-time and 24 part-time employees. As of June 30, 2023, we employed a total of 197
full-time and 34 part-time employees. As of June 30, 2022, we employed a total of 309 full-time and 8 part-time employees. As of June
30, 2021, we employed a total of 272 full-time and 59 part-time employees.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">15</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">20</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">123</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="border-bottom: Black 2.5pt double; text-align: left">&#160;</td><td style="border-bottom: Black 2.5pt double; text-align: right">210</td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">All
but five (5) of &#160;our total employees are employed in China. Our employees are not represented by a labor organization or covered
by a collective bargaining agreement. We have not experienced any work stoppages.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are required under PRC law to make contributions to employee benefit plans at specified percentages of our after-tax profit. In addition,
we are required by PRC law to cover employees in China with various types of social insurance and housing funds. In fiscal 2023, we contributed
in aggregate approximately $360,000 to the employee benefit plans and social insurance but did not provide housing funds. &#160;In fiscal
2022, we contributed in aggregate approximately $0.5 million to the employee benefit plans and social insurance but did not provide housing
funds. In fiscal 2021, we contributed in aggregate approximately $0.3 million to the employee benefit plans and social insurance but
did not provide housing funds. The effect on our liquidity by the payments for these contributions is immaterial. We believe that we
are in material compliance with the relevant PRC employment laws.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>E.
Share Ownership</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">There
are no membership qualifications for directors. Further, there are no share ownership qualifications for directors unless so fixed by
us in a general meeting, and this has not been so fixed as of the date of this report. There are no other arrangements or understandings
pursuant to which our directors are selected or nominated.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Description
of Share Capital</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Dogness
is a British Virgin Islands business company limited by shares and our affairs are governed by our Memorandum and Articles of Association,
and the BVI Business Companies Act (As Revised). We were registered with company number 1918432. As set forth in clause 5 of our Memorandum
of Association, the objects for which our Company is established are unrestricted.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of the date of this report, we are authorized to issue 110,000,000 shares of $0.002 par value per share divided into two classes being
90,931,000 Class A shares and 19,069,000 Class B shares of which 31,055,259 Class A Common Shares are issued and outstanding and 9,069,000
Class B shares are issued and outstanding.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following are summaries of the material provisions of our Memorandum and Articles of Association, insofar as they relate to the material
terms of our Common Shares. The forms of our Memorandum and Articles of Association are filed as exhibits to this report.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Share
and Share Options</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Incentive
Securities Pool</i></b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have established a pool for shares and options for our employees that contain shares and options to purchase our Class A Common Shares
equal to ten percent (10%) of the number of Common Shares (including both Class A and B Common Shares) issued and outstanding at the
conclusion of our initial public offering. Subject to approval by the Compensation Committee of our Board of Directors, we may grant
options in any percentage determined for a particular grant. We may grant the award of options to existing employees, officers and consultants.
We may also grant the award of restricted stock as a hiring incentive to employees, officers and directors and to non-employee directors
on an ongoing basis.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Unless
otherwise provided in the grant, any options granted will vest at a rate of one third (1/3) per year for three (3) years and have a per
share exercise price equal to the fair market value of one of our Common Shares on the date of grant. As of September 25, 2023, we had
outstanding options to purchase an aggregate of 1,720,000 &#160; Class A Common Shares that are exercisable at a purchase price of $1.0
per share&#160;&#160;. We may grant options under this pool to certain other employees in the future. We have not yet determined the
recipients of any such grants.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Common
Shares</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>General</i></b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">All
of our outstanding Common Shares are fully paid and non-assessable. Our Common Shares are issued in registered form and are issued when
registered in our register of members. Our shareholders who are non-residents of the British Virgin Islands may freely hold and vote
their Common Shares. Our Memorandum and Articles of Association do not permit us to issue bearer shares. As of the date of this report,
we have (a) 9,069,000 Class B Common shares and (b) 31,055,259 Class A Common Shares issued and outstanding.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Distributions</i></b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
holders of our Class A and Class B Common Shares are entitled to an equal share in such dividends or distributions as may be declared
by our board of directors subject to the BVI Business Companies Act (As Revised).</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Conversion
of Class B Common Shares</i></b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Class
B Common Shares may be converted at the request of the shareholder into an equal number of Class A Common Shares at any time. Class A
Common Shares are not convertible into Class B Common Shares. In addition, Class B Common Shares automatically and immediately convert
into the same number of Class A Common Shares upon any direct or indirect sale, transfer, assignment or disposition. In the event Silong
Chen directly or indirectly owns less than 453,450 Class B Common Shares, all remaining Class B Common Shares will automatically be converted
into Class A Common Shares.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Voting</i></b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Any
action required or permitted to be taken by the shareholders must be effected at a duly called meeting of the shareholders entitled to
vote on such action and may be effected by a resolution in writing. At each general meeting, each holder of Class A shares who is present
in person or by proxy (or, in the case of a shareholder being a corporation, by its duly authorized representative) will have one vote
for each Class A Common Share which such shareholder holds and each Class B Holder who is present in person or by proxy (or, in the case
of a shareholder being a corporation, by its duly authorized representative) will have three votes for each Class B Common Share which
such shareholder holds.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Listing</i></b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
Class A Common Shares are listed on the Nasdaq Global Market under the symbol &#8220;DOGZ.&#8221;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Transfer
agent and registrar</i></b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
transfer agent and registrar for the Class A Common Shares is Transhare Corporation, 2849 Executive Drive, Suite 200 Clearwater, Florida
33762.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Election
of directors</i></b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Delaware
law permits cumulative voting for the election of directors only if expressly authorized in the certificate of incorporation. The laws
of the British Virgin Islands, however, do not specifically prohibit or restrict the creation of cumulative voting rights for the election
of our directors. Cumulative voting is not a concept that is accepted as a common practice in the British Virgin Islands, and we have
made no provisions in our Memorandum and Articles of Association to allow cumulative voting for elections of directors.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Meetings</i></b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
must provide written notice of all meetings of shareholders, stating the time, place and, in the case of a special meeting of shareholders,
the purpose or purposes thereof, at least 7 days before the date of the proposed meeting to those persons whose names appear as shareholders
in the register of members on the date of the notice and are entitled to vote at the meeting. Our board of directors shall call a special
meeting upon the written request of shareholders holding at least 30% of our outstanding voting shares. In addition, our board of directors
may call a special meeting of shareholders on its own motion. A meeting of shareholders held in contravention of the requirement to give
notice is valid if shareholders holding at least 90 percent of the total voting rights on all the matters to be considered at the meeting
have waived notice of the meeting and, for this purpose, the presence of a shareholder at the meeting shall constitute waiver in relation
to all the shares which that shareholder holds.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
company&#8217;s management is entrusted to our board of directors, who will make corporate decisions by board resolution. Our directors
are free to meet at such times and in such manner and places within or outside the BVI as the directors determine to be necessary or
desirable. A 3 days&#8217; notice of a meeting of directors must be given. At any meeting of directors, a quorum will be present if half
of the total number of directors is present, unless there are only 2 directors in which case the quorum is 2. If a quorum is not present,
the meeting will be dissolved. If a quorum is present, votes of half of present directors are required to pass a resolution of directors.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
few as one-third of our outstanding shares may be sufficient to hold a shareholder meeting. Although our Memorandum and Articles of Association
require that holders of at least one-half of our outstanding shares of each class appear in person or by proxy to hold a shareholder
meeting, to the extent we fail to have quorum on this initial meeting date, we will reschedule the meeting for the next week, at which
second meeting the holders of one-third or more of our outstanding shares will constitute a quorum. As mentioned, at the initial date
set for any meeting of shareholders, a quorum will be present if there are shareholders present in person or by proxy representing not
less than one-half of the issued Common Shares entitled to vote on the resolutions to be considered at the meeting. A quorum may comprise
a single shareholder or proxy and then such person may pass a resolution of shareholders and a certificate signed by such person accompanied
where such person be a proxy by a copy of the proxy instrument shall constitute a valid resolution of shareholder. If within thirty minutes
from the time appointed for the meeting a quorum is not present, the meeting, if convened upon the requisition of shareholders, shall
be dissolved; in any other case it shall stand adjourned to the next week in the jurisdiction in which the meeting was to have been held
at the same time and place or to such other time and place as the directors may determine, and if at the adjourned meeting there are
present within one hour from the time appointed for the meeting in person or by proxy not less than one-third of the votes of the shares
or each class or series of shares entitle to vote on the matter to be considered by the meeting, those present shall constitute a quorum
but otherwise the meeting shall be dissolved. No business may be transacted at any general meeting unless a quorum is present at the
commencement of business. If present, the chair of our board of directors shall be the chair presiding at any meeting of the shareholders.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A
corporation that is a shareholder shall be deemed for the purpose of our Memorandum and Articles of Association to be present in person
if represented by its duly authorized representative. This duly authorized representative shall be entitled to exercise the same powers
on behalf of the corporation which he represents as that corporation could exercise if it were our individual shareholder.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Protection
of minority shareholders</i></b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
would normally expect British Virgin Islands courts to follow English case law precedents, which permit a minority shareholder to commence
a representative action, or derivative actions in our name, to challenge (1) an act which is <i>ultra vires</i> or illegal, (2) an act
which constitutes a fraud against the minority by parties in control of us, (3) the act complained of constitutes an infringement of
individual rights of shareholders, such as the right to vote and pre-emptive rights and (4) an irregularity in the passing of a resolution
which requires a special or extraordinary majority of the shareholders.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Pre-emptive
rights</i></b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">There
are no pre-emptive rights applicable to the issue by us of new Common Shares under either British Virgin Islands law or our Memorandum
and Articles of Association.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Transfer
of Common Shares</i></b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Subject
to the restrictions in our Memorandum and Articles of Association and applicable securities laws, any of our shareholders may transfer
all or any of his or her Common Shares by written instrument of transfer signed by the transferor and containing the name and address
of the transferee. The transfer of a registered share is effective when the name of the transferee is entered in the register of members.
The entry of the name of a person in the company&#8217;s register of members is prima facie evidence that legal title in the share vests
in that person. Our board of directors may resolve by resolution to refuse or delay the registration of the transfer of any Common Share.
If our board of directors resolves to refuse or delay any transfer, it shall specify the reasons for such refusal in the resolution.
Our directors may not resolve or refuse or delay the transfer of a Common Share unless: (a) the person transferring the shares has failed
to pay any amount due in respect of any of those shares; or (b) such refusal or delay is deemed necessary or advisable in our view or
that of our legal counsel in order to avoid violation of, or in order to ensure compliance with, any applicable, corporate, securities
and other laws and regulations.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Liquidation</i></b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
we are wound up and the assets available for distribution among our shareholders are more than sufficient to repay all amounts paid to
us on account of the issue of shares immediately prior to the winding up, the excess shall be distributable <i>pari passu </i>among those
shareholders in proportion to the amount paid up immediately prior to the winding up on the shares held by them, respectively. If we
are wound up and the assets available for distribution among the shareholders as such are insufficient to repay the whole of the amounts
paid to us on account of the issue of shares, those assets shall be distributed so that, to the greatest extent possible, the losses
shall be borne by the shareholders in proportion to the amounts paid up immediately prior to the winding up on the shares held by them,
respectively. If we are wound up, the liquidator appointed by us may, in accordance with the BVI Business Companies Act (As Revised),
divide among our shareholders in specie or kind the whole or any part of our assets (whether they shall consist of property of the same
kind or not) and may, for such purpose, set such value as the liquidator deems fair upon any property to be divided and may determine
how such division shall be carried out as between the shareholders or different classes of shareholders.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Calls
on Common Shares and forfeiture of Common Shares</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
board of directors may from time to time make calls upon shareholders for any amounts unpaid on their Common Shares in a notice served
to such shareholders at least 14 days prior to the specified time of payment. The Common Shares that have been called upon and remain
unpaid are subject to forfeiture.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Redemption
of Common Shares</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Subject
to the provisions of the BVI Business Companies Act (As Revised), we may issue shares on terms that are subject to redemption, at our
option or at the option of the holders, on such terms and in such manner as may be determined by our Memorandum and Articles of Association
and subject to any applicable requirements imposed from time to time by, the BVI Business Companies Act (As Revised), the SEC, the Nasdaq
Global Market, or by any recognized stock exchange on which our securities are listed.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Modifications
of rights</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">All
or any of the special rights attached to any class of shares may, subject to the provisions of the BVI Business Companies Act (As Revised),
be amended only pursuant to a resolution passed at a meeting by a majority of the votes cast by those entitled to vote at a meeting of
the holders of the shares of that class.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Changes
in the number of shares we are authorized to issue and those in issue</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
may from time to time by resolution of our board of directors:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
amend our Memorandum of Association to increase or decrease the maximum number of shares we are authorized to issue;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
subject to our Memorandum, divide our authorized and issued shares into a larger number of shares; and</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
subject to our Memorandum, combine our authorized and issued shares into a smaller number of shares.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Untraceable
shareholders</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are entitled to sell any shares of a shareholder who is untraceable, provided that:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
all checks or warrants in respect of dividends of these shares, not being less than three in number, for any sums payable in cash to
the holder of such shares have remained uncashed for a period of twelve years prior to the publication of the notice and during the three
months referred to in the third bullet point below;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
we have not during that time received any indication of the whereabouts or existence of the shareholder or person entitled to these shares
by death, bankruptcy or operation of law; and</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
we have caused a notice to be published in newspapers in the manner stipulated by our Memorandum and Articles of Association, giving
notice of our intention to sell these shares, and a period of three months has elapsed since such notice.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
The net proceeds of any such sale shall belong to us, and when we receive these net proceeds we shall become indebted to the former shareholder
for an amount equal to the net proceeds.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Inspection
of books and records</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Under
British Virgin Islands Law, holders of our Common Shares are entitled, upon giving written notice to us, to inspect (i) our Memorandum
and Articles of Association, (ii) the register of members, (iii) the register of directors and (iv) minutes of meetings and resolutions
of members, and to make copies and take extracts from the documents and records. However, our directors can refuse access if they are
satisfied that to allow such access would be contrary to our interests.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Rights
of non-resident or foreign shareholders</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">There
are no limitations imposed by our Memorandum and Articles of Association on the rights of non-resident or foreign shareholders to hold
or exercise voting rights on our shares. In addition, there are no provisions in our Memorandum and Articles of Association governing
the ownership threshold above which shareholder ownership must be disclosed.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Issuance
of additional Common Shares</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
Memorandum and Articles of Association authorizes our board of directors to issue additional Common Shares from authorized but unissued
shares, to the extent available, from time to time as our board of directors shall determine.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Compulsory
Acquisition</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Subject
to the Memorandum and Articles of Association, members of the company holding 90 per cent of the votes of the outstanding shares entitled
to vote may give a written instruction to the company directing the company to redeem the shares held by the remaining members. Upon
receipt of the written instruction, the company is required to redeem the shares specified in the written instruction irrespective of
whether or not the shares are by their terms redeemable and give written notice to each member whose shares are to be redeemed stating
the redemption price and the manner in which the redemption is to be effected. In such circumstances minority members can dissent from
the acquisition and are entitled to receive payment of the &#8220;fair value&#8221; of their shares which is assessed on the basis of
a statutory appraisal process.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Differences
in corporate law</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
BVI Business Companies Act (As Revised) and the laws of the British Virgin Islands affecting British Virgin Islands business companies
like us and our shareholders differ from laws applicable to U.S. corporations and their shareholders. Set forth below is a summary of
the material differences between the provisions of the laws of the British Virgin Islands applicable to us and the laws applicable to
companies incorporated in the United States and their shareholders.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Mergers
and similar arrangements</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Under
the laws of the British Virgin Islands, two or more companies may merge or consolidate in accordance with Section 170 of the BVI Business
Companies Act (As Revised). A merger means the merging of two or more constituent companies into one of the constituent companies and
a consolidation means the uniting of two or more constituent companies into a new company. In order to merge or consolidate, the directors
of each constituent company must approve a written plan of merger or consolidation, which must be authorized by a resolution of shareholders.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">While
a director may vote on the plan of merger or consolidation even if he has a financial interest in the plan, the interested director must
disclose the interest to all other directors of the company promptly upon becoming aware of the fact that he is interested in a transaction
entered into or to be entered into by the company.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A
transaction entered into by our company in respect of which a director is interested (including a merger or consolidation) is voidable
by us unless the director&#8217;s interest was (a) disclosed to the board prior to the transaction or (b) the transaction is (i) between
the director and the company and (ii) the transaction is in the ordinary course of the company&#8217;s business and on usual terms and
conditions. Notwithstanding the above, a transaction entered into by the company is not voidable if the material facts of the interest
are known to the shareholders and they approve or ratify it or the company received fair value for the transaction.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Shareholders
not otherwise entitled to vote on the merger or consolidation may still acquire the right to vote if the plan of merger or consolidation
contains any provision which, if proposed as an amendment to the memorandum or articles of association, would entitle them to vote as
a class or series on the proposed amendment. In any event, all shareholders must be given a copy of the plan of merger or consolidation
irrespective of whether they are entitled to vote at the meeting to approve the plan of merger or consolidation.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
shareholders of the constituent companies are not required to receive shares of the surviving or consolidated company but may receive
debt obligations or other securities of the surviving or consolidated company, other assets, or a combination thereof. Further, some
or all of the shares of a class or series may be converted into a kind of asset while the other shares of the same class or series may
receive a different kind of asset. As such, not all the shares of a class or series must receive the same kind of consideration.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">After
the plan of merger or consolidation has been approved by the directors and authorized by a resolution of the shareholders, articles of
merger or consolidation are executed by each company and filed with the Registrar of Corporate Affairs in the British Virgin Islands.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A
shareholder may dissent from a mandatory redemption of his shares, an arrangement (if permitted by the court), a merger (unless the shareholder
was a shareholder of the surviving company prior to the merger and continues to hold the same or similar shares after the merger) or
a consolidation. A shareholder properly exercising his dissent rights is entitled to a cash payment equal to the fair value of his shares.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A
shareholder dissenting from a merger or consolidation must object in writing to the merger or consolidation before the vote by the shareholders
on the merger or consolidation, unless notice of the meeting was not given to the shareholder. If the merger or consolidation is approved
by the shareholders, the company must give notice of this fact to each shareholder within 20 days who gave written objection. These shareholders
then have 20 days to give to the company their written election in the form specified by the BVI Business Companies Act (As Revised)
to dissent from the merger or consolidation, provided that in the case of a merger, the 20 days starts when the plan of merger is delivered
to the shareholder.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Upon
giving notice of his election to dissent, a shareholder ceases to have any shareholder rights except the right to be paid the fair value
of his shares. As such, the merger or consolidation may proceed in the ordinary course notwithstanding his dissent.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Within
seven days of the later of the delivery of the notice of election to dissent and the effective date of the merger or consolidation, the
company must make a written offer to each dissenting shareholder to purchase his shares at a specified price per share that the company
determines to be the fair value of the shares. The company and the shareholder then have 30 days to agree upon the price. If the company
and a shareholder fail to agree on the price within the 30 days, then the company and the shareholder shall, within 20 days immediately
following the expiration of the 30-day period, each designate an appraiser and these two appraisers shall designate a third appraiser.
These three appraisers shall fix the fair value of the shares as of the close of business on the day prior to the shareholders&#8217;
approval of the transaction without taking into account any change in value as a result of the transaction.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Shareholders&#8217;
suits</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">There
are both statutory and common law remedies available to our shareholders as a matter of British Virgin Islands law. These are summarized
below:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Prejudiced
members</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A
shareholder who considers that the affairs of the company have been, are being, or are likely to be, conducted in a manner that is, or
any act or acts of the company have been, or are, likely to be oppressive, unfairly discriminatory or unfairly prejudicial to him in
that capacity, can apply to the court under Section 184I of the BVI Business Companies Act (As Revised), inter alia, for an order that
his shares be acquired, that he be provided compensation, that the Court regulate the future conduct of the company, or that any decision
of the company which contravenes the BVI Business Companies Act (As Revised) or our Memorandum and Articles of Association be set aside.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Derivative
actions</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Section
184C of the BVI Business Companies Act (As Revised) provides that a shareholder of a company may, with the leave of the Court, bring
an action in the name of the company to redress any wrong done to it.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Just
and equitable winding up</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition to the statutory remedies outlined above, shareholders can also petition for the winding up of a company on the grounds that
it is just and equitable for the court to so order. Save in exceptional circumstances, this remedy is only available where the company
has been operated as a quasi partnership and trust and confidence between the partners has broken down.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Indemnification
of directors and executive officers and limitation of liability</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">British
Virgin Islands law does not limit the extent to which a company&#8217;s articles of association may provide for indemnification of officers
and directors, except to the extent any provision providing indemnification may be held by the British Virgin Islands courts to be contrary
to public policy, such as to provide indemnification against civil fraud or the consequences of committing a crime.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Under
our Memorandum and Articles of Association, we indemnify against all expenses, including legal fees, and against all judgments, fines
and amounts paid in settlement and reasonably incurred in connection with legal, administrative or investigative proceedings for any
person who:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
is or was a party or is threatened to be made a party to any threatened, pending or completed proceedings, whether civil, criminal, administrative
or investigative, by reason of the fact that the person is or was our director; or</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
is or was, at our request, serving as a director or officer of, or in any other capacity is or was acting for, another body corporate
or a partnership, joint venture, trust or other enterprise.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">These
indemnities only apply if the person acted honestly and in good faith with a view to our best interests and, in the case of criminal
proceedings, the person had no reasonable cause to believe that his conduct was unlawful. This standard of conduct is generally the same
as permitted under the Delaware General Corporation Law for a Delaware corporation.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers or persons controlling
us under the foregoing provisions, we have been advised that in the opinion of the SEC, such indemnification is against public policy
as expressed in the Securities Act and is therefore unenforceable.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Anti-takeover
provisions in our Memorandum and Articles of Association</i></b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Some
provisions of our Memorandum and Articles of Association may discourage, delay or prevent a change in control of our company or management
that shareholders may consider favorable, including provisions that provide for a staggered board of directors and prevent shareholders
from taking an action by written consent in lieu of a meeting. However, under British Virgin Islands law, our directors may only exercise
the rights and powers granted to them under our Memorandum and Articles of Association, as amended and restated from time to time, as
they believe in good faith to be in the best interests of our company.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Directors&#8217;
fiduciary duties</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Under
Delaware corporate law, a director of a Delaware corporation has a fiduciary duty to the corporation and its shareholders. This duty
has two components: the duty of care and the duty of loyalty. The duty of care requires that a director act in good faith, with the care
that an ordinarily prudent person would exercise under similar circumstances. Under this duty, a director must inform himself of, and
disclose to shareholders, all material information reasonably available regarding a transaction that is material to the company. The
duty of loyalty requires that a director act in a manner he reasonably believes to be in the best interests of the corporation. He must
not use his corporate position for personal gain or advantage. This duty prohibits self-dealing by a director and mandates that the best
interest of the corporation and its shareholders take precedence over any interest possessed by a director, officer or controlling shareholder
and not shared by the shareholders generally. In general, actions of a director are presumed to have been made on an informed basis,
in good faith and in the honest belief that the action taken was in the best interests of the corporation. However, this presumption
may be rebutted by evidence of a breach of one of the fiduciary duties. Should such evidence be presented concerning a transaction by
a director, a director must prove the procedural fairness of the transaction and that the transaction was of fair value to the corporation.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Under
British Virgin Islands law, our directors owe the company certain statutory and fiduciary duties including, among others, a duty to act
honestly, in good faith, for a proper purpose and with a view to what the directors believe to be in the best interests of the company.
Our directors are also required, when exercising powers or performing duties as a director, to exercise the care, diligence and skill
that a reasonable director would exercise in comparable circumstances, taking into account without limitation, the nature of the company,
the nature of the decision and the position of the director and the nature of the responsibilities undertaken. In the exercise of their
powers, our directors must ensure neither they nor the company acts in a manner which contravenes the BVI Business Companies Act (As
Revised) or our Memorandum and Articles of Association, as amended and re-stated from time to time. A shareholder has the right to seek
damages for breaches of duties owed to us by our directors.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Shareholder
action by written consent</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Under
the Delaware General Corporation Law, a corporation may eliminate the right of shareholders to act by written consent by amendment to
its certificate of incorporation. British Virgin Islands law provides that shareholders may approve corporate matters by way of a written
resolution without a meeting signed by or on behalf of shareholders sufficient to constitute the requisite majority of shareholders who
would have been entitled to vote on such matter at a general meeting; provided that if the consent is less than unanimous, notice must
be given to all non-consenting shareholders. Our Memorandum and Articles of Association permit shareholders to act by written consent.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Shareholder
proposals</i></b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Under
the Delaware General Corporation Law, a shareholder has the right to put any proposal before the annual meeting of shareholders, provided
it complies with the notice provisions in the governing documents. A special meeting may be called by the board of directors or any other
person authorized to do so in the governing documents, but shareholders may be precluded from calling special meetings. British Virgin
Islands law and our Memorandum and Articles of Association allow our shareholders holding not less than 30% of the votes of the outstanding
voting shares to requisition a shareholders&#8217; meeting. We are not obliged by law to call shareholders&#8217; annual general meetings,
but our Memorandum and Articles of Association do permit the directors to call such a meeting. The location of any shareholders&#8217;
meeting can be determined by the board of directors and can be held anywhere in the world.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Cumulative
voting</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Under
the Delaware General Corporation Law, cumulative voting for elections of directors is not permitted unless the corporation&#8217;s certificate
of incorporation specifically provides for it. Cumulative voting potentially facilitates the representation of minority shareholders
on a board of directors since it permits the minority shareholder to cast all the votes to which the shareholder is entitled on a single
director, which increases the shareholder&#8217;s voting power with respect to electing such director. As permitted under British Virgin
Islands law, our Memorandum and Articles of Association do not provide for cumulative voting. As a result, our shareholders are not afforded
any less protections or rights on this issue than shareholders of a Delaware corporation.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Removal
of directors</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Under
the Delaware General Corporation Law, a director of a corporation with a classified board may be removed only for cause with the approval
of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. Under our Memorandum
and Articles of Association, directors can be removed from office, with cause, by a resolution of shareholders or by a resolution of
directors passed at a meeting of directors called for the purpose of removing the director or for purposes including the removal of the
director.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Transactions
with interested shareholders</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Delaware General Corporation Law contains a business combination statute applicable to Delaware public corporations whereby, unless the
corporation has specifically elected not to be governed by such statute by amendment to its certificate of incorporation, it is prohibited
from engaging in certain business combinations with an &#8220;interested shareholder&#8221; for three years following the date that such
person becomes an interested shareholder. An interested shareholder generally is a person or group who or which owns or owned 15% or
more of the target&#8217;s outstanding voting shares within the past three years. This has the effect of limiting the ability of a potential
acquirer to make a two-tiered bid for the target in which all shareholders would not be treated equally. The statute does not apply if,
among other things, prior to the date on which such shareholder becomes an interested shareholder, the board of directors approves either
the business combination or the transaction which resulted in the person becoming an interested shareholder. This encourages any potential
acquirer of a Delaware public corporation to negotiate the terms of any acquisition transaction with the target&#8217;s board of directors.
British Virgin Islands law has no comparable statute.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Dissolution;
winding up</i></b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Under
the Delaware General Corporation Law, unless the board of directors approves the proposal to dissolve, dissolution must be approved by
shareholders holding 100% of the total voting power of the corporation. Only if the dissolution is initiated by the board of directors
may it be approved by a simple majority of the corporation&#8217;s outstanding shares. Delaware law allows a Delaware corporation to
include in its certificate of incorporation a supermajority voting requirement in connection with dissolutions initiated by the board.
Under the BVI Business Companies Act (As Revised) and our Memorandum and Articles of Association, we may appoint a voluntary liquidator
by a resolution of the shareholders or by resolution of directors.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Variation
of rights of shares</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Under
the Delaware General Corporation Law, a corporation may vary the rights of a class of shares with the approval of a majority of the outstanding
shares of such class, unless the certificate of incorporation provides otherwise. Under our Memorandum and Articles of Association, if
at any time our shares are divided into different classes of shares, the rights attached to any class may only be varied, whether or
not our company is in liquidation, with the consent in writing of or by a resolution passed at a meeting by the holders of not less than
50 percent of the issued shares in that class.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Amendment
of governing documents</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Under
the Delaware General Corporation Law, a corporation&#8217;s governing documents may be amended with the approval of a majority of the
outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. As permitted by British Virgin Islands
law, our Memorandum and Articles of Association may be amended by a resolution of shareholders and, subject to certain exceptions, by
a resolution of directors. Any amendment is effective from the date it is registered at the Registry of Corporate Affairs in the British
Virgin Islands.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="SJ_001"></span>Item
7. Major Shareholders and Related Party Transactions</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>A.
Major Shareholders</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table sets forth information with respect to beneficial ownership of our Common Shares as of October 27, 2021 by:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Each
    person who is known by us to beneficially own 5% or more of our outstanding Common Shares;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Each
    of our directors and named executive officers; and</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">All
    directors and named executive officers as a group.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
number and percentage of Common Shares beneficially owned are based on 40,124,259 Common Shares outstanding as of September 30, 2023.
Information with respect to beneficial ownership has been furnished by each director, officer or beneficial owner of 5% or more of our
Common Shares. Beneficial ownership is determined in accordance with the rules of the SEC and generally requires that such person have
voting or investment power with respect to securities. In computing the number of Common Shares beneficially owned by a person listed
below and the percentage ownership of such person, Common Shares underlying options, warrants or convertible securities held by each
such person that are exercisable or convertible within 60 days of October 27, 2021 are deemed outstanding, but are not deemed outstanding
for computing the percentage ownership of any other person. Except as otherwise indicated in the footnotes to this table, or as required
by applicable community property laws, all persons listed have sole voting and investment power for all Common Shares shown as beneficially
owned by them. Unless otherwise indicated in the footnotes, the address for each principal shareholder is in the care of our Company
at Tongsha Industrial Estate, East District, Dongguan, Guangdong, People&#8217;s Republic of China 523217. As of the date of the report,
we have approximately 9 shareholders of record. This does not include shareholders who hold their shares in &#8220;street name&#8221;.
A majority of our Common Shares are held outside the United States, and none of our directors is located in the United States.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Shares Beneficially Owned (1)</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left">Named Executive Officers and Directors:</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td>
    <td style="text-align: right">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="width: 46%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Silong Chen<sup>(3)</sup></span></td><td style="width: 2%">&#160;</td>
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    <td style="width: 1%; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">%&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Zhiqiang Shao</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">0</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">0</td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td>
    <td style="text-align: right"></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Changqing Shi</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">0</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">0</td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td>
    <td style="text-align: right"></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Qingshen Liu</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">0</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">0</td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td>
    <td style="text-align: right"></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Yunhao Chen<sup>(4)</sup></span></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">50,000</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">*</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">*</span></td>
    <td style="text-align: right"></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Aihua Cao <sup>(5)</sup></span></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">0</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">0</td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td>
    <td style="text-align: right"></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold; text-align: left">5% or Greater Shareholders</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td>
    <td style="text-align: right">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Fine victory holding company Limited<sup>(3)</sup></span></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">9,069,000</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">22.60</td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">74.50</td>
    <td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">%&#160;</span></td></tr>
  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">*</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Less
    than 1%</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Beneficial
    ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the Common
    Shares. All shares represent Class A and Class B Common Shares and granted options to the extent such options will vest within 60
    days after October 11, 2023.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(2)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Class
    A Common Shares have one vote per share. Class B Common Shares have three votes per share.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(3)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Consists
    of 9,069,000 Class B Common Shares held by Fine victory holding company Limited, of which Silong Chen may be deemed to have voting
    and dispositive power, 500,000 Class A Common Shares, and vested options to purchase 500,000 Class A Common Shares. Due to his ownership of all outstanding Class
    B Common Shares (which have ten votes per share rather than one vote like Class A Common Shares), Mr. Silong Chen has substantial
    control over Dogness.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(4)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Consists
    of 50,000 options to purchase Class A Common Shares granted and vested as
part of the salary on January 26, 2023. Dr. Chen has resigned from
    the position as the Chief Financial Officer as of August 1, 2023</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(5)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Aihua
    Cao started to serve as our Chief Financial Officer since August 16, 2023.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>B.
Related party transactions</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition to the executive officer and director compensation arrangements discussed in &#8220;Executive Compensation,&#8221; below we
describe transactions since July 1, 2020, to which we have been a participant, in which the amount involved in the transactions is material
to us or the related party. The relationship of related parties is summarized as follow:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; width: 49%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Name
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    <td style="font: 10pt Times New Roman, Times, Serif; width: 2%; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; width: 49%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Relationship
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  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Silong
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Chief
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  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Junqiang
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Relative
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  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Linsun
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    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Equity
    investee -10% of the ownership</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Dogness
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Dogness
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    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
    legal representative is Junqiang Chen, the relative of Mr. Silong Chen</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(1)
Due from related parties</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Due
from related parties consist of mainly rent receivables from the following:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">As of</td><td style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">As of</td><td style="font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">June 30, 2023</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">June 30, 2022</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td></tr>
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    <td style="width: 60%">Linsun</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">87,430</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">77,964</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">7,340</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt">Dogness Technology</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-bottom: 2.5pt">Total</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">87,430</td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">105,403</td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(2)
Due to related parties</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Due
to related parties consist of the following:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">As of</td><td style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">As of</td><td style="font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">June 30, 2023</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">June 30, 2022</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 60%; text-align: left">Mr. Silong Chen</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">80,327</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">130,468</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1.5pt">Dogness Technology</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">5,516</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 2.5pt">Total</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">85,843</td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">130,468</td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Mr.
Silong Chen periodically provides working capital loans to support the Company&#8217;s operations when needed. Such advances are non-interest
bearing and due on demand.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(3)
Loan guarantee provided by related parties</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
connection with the Company&#8217;s bank borrowings, Mr. Silong Chen pledged his personal assets as collateral and signed guarantee agreements
to provide guarantee to the Company&#8217;s long-term bank loans. (See Note 8).</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(4)
Sales to related parties</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.5in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Revenue
from related parties consisted of the following:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="10" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">For the Years Ended June 30,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="border-bottom: Black 1.5pt solid; text-align: left; font-weight: bold">Name</td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2023</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>Linsun</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="width: 46%; text-align: left">Dogness Network</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 14%; text-align: right">1,543,979</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 14%; text-align: right">1,806,732</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 14%; text-align: right">1,207,686</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt">Dogness Technology</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">156,194</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">405,847</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-bottom: 2.5pt">Total</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">1,700,173</td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
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    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">1,207,686</td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
  </table>



<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Cost
of revenue associated with the sales to these related parties amounted to $1,162,314 $1,301,180 and $663,742 for the years ended June
30, 2023, 2022 and 2021, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(5)
Accounts receivable from related parties</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.5in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Accounts
receivable from related parties consisted of the following:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
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    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
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    <td style="text-align: left">Accounts receivable - related parties:</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-bottom: 2.5pt">Total</td><td style="padding-bottom: 2.5pt">&#160;</td>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of June 30, 2023, total accounts receivable from related parties amounted to $1,272,384, of which $164,807 has been collected as of August
2023.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(6)
Advance to supplier- related party</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.5in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Advance
to supplier from related parties consisted of the following:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
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    <td colspan="2" style="font-weight: bold; text-align: center">As of</td><td style="font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">June 30, 2023</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">June 30, 2022</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">Advance to supplier - related party:</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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    <td style="border-bottom: Black 1.5pt solid; width: 1%; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; width: 16%; text-align: right">239,729</td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="width: 2%; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 2.5pt">Total</td><td style="padding-bottom: 2.5pt">&#160;</td>
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    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">-</td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(7)
Accounts payable to related parties</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Accounts
payables to related parties consisted of the following:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">As of</td><td style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">As of</td><td style="font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">June 30, 2023</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">June 30, 2022</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
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    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">Accounts payable - related parties:</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;&#160;&#160;&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="width: 60%; padding-bottom: 1.5pt">Linsun</td><td style="width: 2%; padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; width: 1%; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; width: 16%; text-align: right">-</td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="width: 2%; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 2.5pt">Total</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">-</td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(8)
Purchase from related parties</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
the years ended June 30, 2023,2022 and 2021, the Company purchased certain pet product components and parts, such as smart pet water
and food feeding devices, from Linsun. Total purchases from Linsun amounted to $565,548, $3,199,833 and $3,015,442 for the years ended
June 30, 2023, 2022 and 2021, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(9)
Lease arrangement with related parties</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
January 2, 2020, Dongguan Jiasheng signed a lease agreement with Linsun, which enabled Linsun to lease part of Dongguan Jiasheng&#8217;s
new production facilities of approximately 8,460 square meters for ten years. Annual lease payment from Linsun amounted to approximately
$230,000 and is subject to 15% increase every three years. For the year ended June 30, 2023, 2022 and 2021, the Company recorded rent
income of $434,625, $462,210 and $300,511 as other income through leasing the manufacturing facilities to Linsun, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
August 1, 2020, Dongguan Jiasheng signed a lease agreement with Dogness Network, which enabled Dogness Network to lease part of Dongguan
Jiasheng&#8217;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. This lease agreement was terminated in October, 2022.
For the years ended June 30, 2023, 2022 and 2021, the Company recorded rent income of $10,952, $78,251 and $52,796 as other income through
leasing the manufacturing facilities to Dogness Network.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
August 1, 2020, Dongguan Jiasheng signed a lease agreement with Dogness Technology, which enabled Dogness Technology to lease part of
Dongguan Jiasheng&#8217;s new production facilities of approximately 50 square meters for ten years. Annual lease payment from Dogness
Technology amounted to $1,726. For the years ended June 30, 2023, 2022 and 2021, the Company recorded rent income of $1,584, $1,706 and
$1,661 as other income through leasing the manufacturing facilities to Dogness Technology.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i></i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Future
Related Party Transactions</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Corporate Governance Committee of our Board of Directors must approve all related party transactions. All related party transactions
will be made or entered into on terms that are no less favorable to use than can be obtained from unaffiliated third parties. Related
party transactions that we have previously entered into were not approved by independent directors, as we had no independent directors
at that time.&#160;&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>C.
Interests of experts and counsel</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable for annual reports on Form 20-F.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="SJ_002"></span>Item
8. Financial Information</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>A.
Consolidated Statements and Other Financial Information</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Please
refer to Item 18.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Legal
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are currently not a party to any material legal or administrative proceedings and are not aware of any pending or threatened material
legal or administrative proceedings against us. We may from time to time become a party to various legal or administrative proceedings
arising in the ordinary course of our business.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Dividend
Policy</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have not declared or paid any cash dividends in the last two years. &#160;&#160;We anticipate that we will retain any earnings to support
operations and to finance the growth and development of our business. Therefore, we do not expect to pay cash dividends in the foreseeable
future. Any future determination relating to our dividend policy will be made at the discretion of our Board of Directors and will depend
on a number of factors, including future earnings, capital requirements, financial conditions and future prospects and other factors
the Board of Directors may deem relevant.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Subject
to the memorandum and articles of association of the company, the directors of a British Virgin Islands business company may, by resolution
of directors, authorise a distribution by the company to members at such time and of such an amount, as the directors think fit if they
are satisfied, on reasonable grounds, that the company will, immediately after the distribution, satisfy the solvency test. A company
satisfies the solvency test if (a) the value of the company&#8217;s assets exceeds its liabilities, and (b) the company is able to pay
its debts as they fall due. The resolution of the directors must contain a statement that, in the opinion of the directors, the company
will, immediately after the distribution, satisfy the solvency test.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
we determine to pay dividends on any of our Common Shares in the future, as a holding company, we will be dependent on receipt of funds
from our Hong Kong subsidiaries, HK Jiasheng and HK Dogness. Current PRC regulations permit the Mainland China Subsidiaries to pay dividends
to HK Dogness only out of their accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations.
In addition, each of our subsidiaries in China is required to set aside at least 10% of its after-tax profits each year, if any, to fund
a statutory reserve until such reserve reaches 50% of its registered capital. Each of such entity in China is also required to further
set aside a portion of its after-tax profits to fund the employee welfare fund, although the amount to be set aside, if any, is determined
at the discretion of its board of directors. Although the statutory reserves can be used, among other ways, to increase the registered
capital and eliminate future losses in excess of retained earnings of the respective companies, the reserve funds are not distributable
as cash dividends except in the event of liquidation.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition, pursuant to the EIT Law and its implementation rules, dividends generated after January 1, 2008 and distributed to us by our
Mainland China Subsidiaries are subject to withholding tax at a rate of 10% unless otherwise exempted or reduced according to treaties
or arrangements between the PRC central government and governments of other countries or regions where the non-mainland China-resident
enterprises are incorporated.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Under
existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and trade
and service-related foreign exchange transactions, can be made in foreign currencies without prior approval of the State Administration
of Foreign Exchange, or SAFE, by complying with certain procedural requirements. Specifically, under the existing exchange restrictions,
without prior approval of SAFE, cash generated from operations in China may be used to pay dividends to our company. The Mainland China
Subsidiaries may go to a licensed bank to remit their after-tax profits out of China. Nevertheless, the bank will require the Mainland
China Subsidiaries to produce the following documents for verification before they may transfer the dividends to an overseas bank account
of their parent company, HK Dogness, or indirect parent, Dogness: (1) tax payment statement and tax return; (2) auditor&#8217;s report
issued by a Chinese certified public accounting firm confirming the availability of profits and dividends for distribution in the current
year; (3) the Board minutes authorizing the distribution of dividends to its shareholders; (4) the foreign exchange registration certificate
issued by SAFE; (5) the capital verification report issued by a Chinese certified public accounting firm; (6) if the declared dividends
will be distributed out of accumulated profits earned in prior years, the Mainland China Subsidiaries must appoint a Chinese certified
public accounting firm to issue an auditors&#8217; report to the bank to certify the Mainland China Subsidiaries&#8217; financial position
during the years from which the profits arose; and (7) other information as required by SAFE.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>B.
Significant Changes</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have not experienced any significant changes since the date of our audited consolidated financial statements included in this annual
report.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="SJ_003"></span>Item
9. The Offer and Listing</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>A.
Offer and listing details</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
completed our initial public offering on December 18, 2017. Our Class A Common Shares trade under the trading symbol &#8220;DOGZ&#8221;
on the NASDAQ Global Market.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of October 10, 2023, there were approximately 6 holders of record of our Class A Common Shares. This excludes our Class
A Common Shares owned by shareholders holding Class A Common Shares under nominee security position listings. On October 10, 2023,
the last sales price of our Class A Common Shares as reported on the NASDAQ Global Market was $0.43&#160;&#160;per common
share.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>B.
Plan of distribution</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable for annual reports on Form 20-F.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>C.
Markets</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
Class A Common Shares are listed on the Nasdaq Global Market under the symbol &#8220;DOGZ.&#8221;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>D.
Selling shareholders</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable for annual reports on Form 20-F.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>E.
Dilution</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable for annual reports on Form 20-F.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>F.
Expenses of the issue</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable for annual reports on Form 20-F.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="SJ_004"></span>Item
10. Additional Information</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>A.
Share capital</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable for annual reports on Form 20-F.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>B.
Memorandum and articles of association</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
information required by this item is incorporated by reference to the material headed &#8220;Description of Share Capital&#8221; in our
Registration Statement on Form F-1, File no. 333-220547, filed with the SEC on September 20, 2017, as amended.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>C.
Material contracts</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
July 15, 2021, the Company and certain institutional investors entered into a securities purchase agreement in connection with an offering,
pursuant to which the Company agreed to sell to investors an aggregate of 2,178,120 Class A Common Shares. The common share purchase
price was $1.82 per share. After payment of expenses, the Company received approximately $3.4 million in net proceeds from the sale of
the common shares. Additionally, the Company also issued warrants to purchase 174,249 common shares to the placement agent exercisable
at $1.82 per share.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
January 15, 2021, the Company and certain institutional investors entered into a securities purchase agreement in connection with an
offering, pursuant to which the Company agreed to sell to investors an aggregate of 3,455,130 Class A Common Shares and investor warrants
to initially purchase an aggregate of 1,727,565 Class A Common Shares. The common share purchase price was $2.15 per Class A Common Share;
and the investor warrants are initially exercisable at $2.70 per share. The aggregate gross proceeds from the sale of the Class A Common
Shares, before deducting fees to the Placement Agent and other estimated offering expenses payable by the Company was approximately $7.4
million. This amount did not include any proceeds from warrant exercises.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
February 22, 2022, the Company and certain institutional investors entered into a securities purchase agreement in connection with an
offering, pursuant to which the Company sold to investors an aggregate of 1,966,251 Class A Common Shares at a purchase price of $2.88
per share. The aggregate gross proceeds from the sale of the Class A Common Shares, before deducting fees to the Placement Agent (as
defined below) and other estimated offering expenses payable by the Company were approximately $5.66 million.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
June 1, 2022, the Company and certain institutional investors entered into a securities purchase agreement for a registered direct offering
of approximately $12 million of Class A common shares and warrants at a price of $3.30 per unit. The Company will issued an aggregate
of 3,636,365 Class A common shares and warrants to purchase an aggregate of 2,181,819 Class A common shares to the investors. The aggregate
gross proceeds from the sale of the securities, before deducting fees payable to the placement agent and other estimated offering expenses
payable by the Company were approximately $12 million. This amount does not include any proceeds from the exercise of the warrants being
offered.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>D.
Exchange controls</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">See
&#8220;Item 4. Information on the Company&#8212;B. Business Overview&#8212;Regulations&#8212;Regulation on Foreign Exchange Control</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Regulation
of Dividend Distribution</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">See
&#8220;Item 4. Information on the Company&#8212;B. Business Overview&#8212;Regulations&#8212;Regulation on Dividend Distributions</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>E.
Taxation</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following sets forth the material British Virgin Islands, Chinese and U.S. federal income tax consequences related to an investment in
our Class A Common Shares. It is directed to U.S. Holders (as defined below) of our Class A Common Shares and is based upon laws and
relevant interpretations thereof in effect as of the date of this report, all of which are subject to change. This description does not
deal with all possible tax consequences relating to an investment in our Class A Common Shares, such as the tax consequences under state,
local and other tax laws.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following brief description applies only to U.S. Holders (defined below) that hold Class A Common Shares as capital assets and that have
the U.S. dollar as their functional currency. This brief description is based on the tax laws of the United States in effect as of the
date of this report and on U.S. Treasury regulations in effect or, in some cases, proposed, as of the date of this report, as well as
judicial and administrative interpretations thereof available on or before such date. All of the foregoing authorities are subject to
change, which change could apply retroactively and could affect the tax consequences described below.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
brief description below of the U.S. federal income tax consequences to &#8220;U.S. Holders&#8221; will apply to you if you are a beneficial
owner of shares and you are, for U.S. federal income tax purposes,</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
an individual who is a citizen or resident of the United States;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) organized under the laws of the United
States, any state thereof or the District of Columbia;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
an estate whose income is subject to U.S. federal income taxation regardless of its source; or</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
a trust that (1) is subject to the primary supervision of a court within the United States and the control of one or more U.S. persons
for all substantial decisions or (2) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S.
person.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">WE
URGE POTENTIAL PURCHASERS OF OUR SHARES TO CONSULT THEIR OWN TAX</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">ADVISORS
CONCERNING THE U.S. FEDERAL, STATE, LOCAL AND NON-U.S. TAX</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">CONSEQUENCES
OF PURCHASING, OWNING AND DISPOSING OF OUR SHARES.</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Generally</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Dogness
is a tax-exempt company incorporated in the British Virgin Islands. HK Dogness and HK Jiasheng are subject to Hong Kong profits tax rates.
Dongguan Dogness and Dongguan Jiasheng are governed by mainland China laws.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
company pays mainland China enterprise income taxes, value added taxes and business taxes in mainland China for revenues from Dongguan
Dogness and Dongguan Jiasheng. The Business Tax has been incorporated into VAT since May 1st of 2016. British Virgin Islands tax laws
apply to Dogness.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Mainland
China Enterprise Taxation</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following brief description of Chinese enterprise laws is designed to highlight the enterprise-level taxation on our earnings, which
will affect the amount of dividends, if any, we are ultimately able to pay to our shareholders. See &#8220;Dividend Policy.&#8221;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Mainland
China enterprise income tax is calculated based on taxable income determined under mainland China accounting principles. The Enterprise
Income Tax Law (the &#8220;EIT Law&#8221;), effective as of January 1, 2008, enterprises pay a unified income tax rate of 25% and unified
tax deduction standards are applied equally to both domestic-invested enterprises and foreign-invested enterprises. Under the EIT Law,
an enterprise established outside of mainland China with &#8220;de facto management bodies&#8221; within mainland China is considered
a resident enterprise and will normally be subject to the enterprise income tax at the rate of 25% on its global income. If the PRC tax
authorities subsequently determine that we, HK Jiasheng, HK Dogness or any future non-Mainland China Subsidiary should be classified
as a mainland China resident enterprise, then such entity&#8217;s global income will be subject to mainland China income tax at a tax
rate of 25%. In addition, under the EIT Law, payments from HK Jiasheng or HK Dogness to us may be subject to a withholding tax. The EIT
Law currently provides for a withholding tax rate of 20%. If Dogness, HK Jiasheng or HK Dogness is deemed to be a non-resident enterprise,
then it will be subject to a withholding tax at the rate of 10% on any dividends paid by its Chinese subsidiaries to such entity. In
practice, the tax authorities typically impose the withholding tax rate of 10% rate, as prescribed in the implementation regulations;
however, there can be no guarantee that this practice will continue as more guidance is provided by relevant government authorities.
We are actively monitoring the proposed withholding tax and are evaluating appropriate organizational changes to minimize the corresponding
tax impact.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">According
to the Sino-U.S. Tax Treaty which was effective on January 1, 1987 and aimed to avoid double taxation disadvantage, income that is incurred
in one nation should be taxed by that nation and credited by the other nation, but for the dividend that is generated in China and distributed
to foreigner in other nations, a rate 10% tax will be charged.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
company will have to withhold that tax when we are distributing dividends to our foreign investors. If we do not fulfill this duty, we
will receive a fine up to five times of the amount we are supposed to pay as tax or other administrative penalties from government. The
worst case could be criminal charge of tax evasion to responsible persons. The criminal penalty for this offense depends on the tax amount
the offender evaded, and the maximum penalty will be 3 &#8211; 7 years imprisonment plus fine.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Mainland
China Value Added Tax</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
to the Provisional Regulation of China on Value Added Tax and its implementing rules, issued in December 1993, all entities and individuals
that are engaged in the businesses of sales of goods, provision of repair and placement services and importation of goods into China
are generally subject to a VAT at a rate of 17% (with the exception of certain goods which are subject to a rate of 13%) of the gross
sales proceeds received, less any VAT already paid or borne by the taxpayer on the goods or services purchased by it and utilized in
the production of goods or provisions of services that have generated the gross sales proceeds.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i></i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Mainland
China Business Tax</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Companies
in China are generally subject to business tax and related surcharges by various local tax authorities at rates ranging from 3% to 20%
on revenue generated from providing services and revenue generated from the transfer of intangibles. However, since May 1, 2016, the
Business Tax has been incorporated into Value Added Tax in China, which means there will be no more Business Tax and accordingly some
business operations previously taxed in the name of Business Tax will be taxed in the manner of VAT thereafter. In general, this newly
implemented policy is intended to relieve many companies from heavy taxes under currently slowing down economy. In the case of our Chinese
subsidiaries, Dongguan Dogness and Dongguan Jiasheng, even though the VAT rate is 17%, with the deductibles the company may get in the
business process, it will bear less burden than previous Business Tax.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>British
Virgin Islands Taxation</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Under
the BVI Business Companies Act (As Revised) as currently in effect, a holder of Common Shares who is not a resident of the British Virgin
Islands is exempt from British Virgin Islands income tax on dividends paid with respect to the Common Shares and all holders of Common
Shares are not liable to the British Virgin Islands for income tax on gains realized during that year on sale or disposal of such shares.
The British Virgin Islands does not impose a withholding tax on dividends paid by a company incorporated or re-registered under the BVI
Business Companies Act (As Revised).</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">There
are no capital gains, gift or inheritance taxes levied by the British Virgin Islands on companies incorporated or re-registered under
the BVI Business Companies Act (As Revised). In addition, shares of companies incorporated or re-registered under the BVI Business Companies
Act (As Revised) are not subject to transfer taxes, stamp duties or similar charges.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">All
instruments relating to transfers of property to or by our company and all instruments relating to transactions in respect of the shares,
debt obligations or other securities of our company and all instruments relating to other transactions relating to the business of our
company are exempt from payment of stamp duty in the BVI. This assumes that our company does not hold an interest in real estate in the
BVI.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">There
is no income tax treaty or convention currently in effect between the United States and the British Virgin Islands or between China and
the British Virgin Islands.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>United
States Federal Income Taxation</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following does not address the tax consequences to any particular investor or to persons in special tax situations such as:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
banks;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
financial institutions;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
insurance companies;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
regulated investment companies;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
real estate investment trusts;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
broker-dealers;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
traders that elect to mark-to-market;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
U.S. expatriates;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
tax-exempt entities;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
persons liable for alternative minimum tax;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
persons holding our Common Shares as part of a straddle, hedging, conversion or integrated transaction;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
persons that actually or constructively own 10% or more of our voting shares;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
persons who acquired our Common Shares pursuant to the exercise of any employee share option or otherwise as consideration; or</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
persons holding our Common Shares through partnerships or other pass-through entities.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Prospective
purchasers are urged to consult their own tax advisors about the application of the U.S. Federal tax rules to their particular circumstances
as well as the state, local, foreign and other tax consequences to them of the purchase, ownership and disposition of our Common Shares.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i></i></b></span></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Taxation
of Dividends and Other Distributions on our Common Shares</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Subject
to the passive foreign investment company rules discussed below, the gross amount of distributions made by us to you with respect to
the Common Shares (including the amount of any taxes withheld therefrom) will generally be includable in your gross income as dividend
income on the date of receipt by you, but only to the extent that the distribution is paid out of our current or accumulated earnings
and profits (as determined under U.S. federal income tax principles). With respect to corporate U.S. Holders, the dividends will not
be eligible for the dividends-received deduction allowed to corporations in respect of dividends received from other U.S. corporations.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">With
respect to non-corporate U.S. Holders, including individual U.S. Holders, dividends will be taxed at the lower capital gains rate applicable
to qualified dividend income, provided that (1) the Common Shares are readily tradable on an established securities market in the United
States, or we are eligible for the benefits of an approved qualifying income tax treaty with the United States that includes an exchange
of information program, (2) we are not a passive foreign investment company (as discussed below) for either our taxable year in which
the dividend is paid or the preceding taxable year, and (3) certain holding period requirements are met. Under U.S. Internal Revenue
Service authority, Common Shares are considered for purpose of clause (1) above to be readily tradable on an established securities market
in the United States if they are listed on the Nasdaq Global Market. You are urged to consult your tax advisors regarding the availability
of the lower rate for dividends paid with respect to our Common Shares, including the effects of any change in law after the date of
this report.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Dividends
will constitute foreign source income for foreign tax credit limitation purposes. If the dividends are taxed as qualified dividend income
(as discussed above), the amount of the dividend taken into account for purposes of calculating the foreign tax credit limitation will
be limited to the gross amount of the dividend, multiplied by the reduced rate divided by the highest rate of tax normally applicable
to dividends. The limitation on foreign taxes eligible for credit is calculated separately with respect to specific classes of income.
For this purpose, dividends distributed by us with respect to our Common Shares will constitute &#8220;passive category income&#8221;
but could, in the case of certain U.S. Holders, constitute &#8220;general category income.&#8221;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">To
the extent that the amount of the distribution exceeds our current and accumulated earnings and profits (as determined under U.S. federal
income tax principles), it will be treated first as a tax-free return of your tax basis in your Class A Common Shares, and to the extent
the amount of the distribution exceeds your tax basis, the excess will be taxed as capital gain. We do not intend to calculate our earnings
and profits under U.S. federal income tax principles. Therefore, a U.S. Holder should expect that a distribution will be treated as a
dividend even if that distribution would otherwise be treated as a non-taxable return of capital or as capital gain under the rules described
above.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Taxation
of Dispositions of Common Shares</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Subject
to the passive foreign investment company rules discussed below, you will recognize taxable gain or loss on any sale, exchange or other
taxable disposition of a share equal to the difference between the amount realized (in U.S. dollars) for the share and your tax basis
(in U.S. dollars) in the Class A Common Shares. The gain or loss will be capital gain or loss. If you are a non-corporate U.S. Holder,
including an individual U.S. Holder, who has held the Class A Common Shares for more than one year, you will be eligible for (a) reduced
tax rates of 0% (for individuals in the 10% or 15% tax brackets), (b) higher tax rates of 20% (for individuals in the 39.6% tax bracket)
or (c) 15% for all other individuals. The deductibility of capital losses is subject to limitations. Any such gain or loss that you recognize
will generally be treated as United States source income or loss for foreign tax credit limitation purposes.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Passive
Foreign Investment Company</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Based
on our current and anticipated operations and the composition of our assets, we do not expect to be a passive foreign investment company,
or PFIC, for U.S. federal income tax purposes for our current taxable year ending June 30, 2017. Our actual PFIC status for the current
taxable year ending June 30, 2017 will not be determinable until the close of such taxable year and, accordingly, there is no guarantee
that we will not be a PFIC for the current taxable year. Because PFIC status is a factual determination for each taxable year which cannot
be made until the close of the taxable year. A non-U.S. corporation is considered a PFIC for any taxable year if either:</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
at least 75% of its gross income is passive income; or</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
at least 50% of the value of its assets (based on an average of the quarterly values of the assets during a taxable year) is attributable
to assets that produce or are held for the production of passive income (the &#8220;asset test&#8221;).</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
will be treated as owning our proportionate share of the assets and earning our proportionate share of the income of any other corporation
in which we own, directly or indirectly, at least 25% (by value) of the stock.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
must make a separate determination each year as to whether we are a PFIC. As a result, our PFIC status may change from no to yes. In
particular, because the value of our assets for purposes of the asset test will generally be determined based on the market price of
our Common Shares, our PFIC status will depend in large part on the market price of our Common Shares. Accordingly, fluctuations in the
market price of the Common Shares may cause us to become a PFIC. In addition, the application of the PFIC rules is subject to uncertainty
in several respects and the composition of our income and assets will be affected by how, and how quickly, we spend the cash we raised
in our initial public offering. If we are a PFIC for any year during which you hold Common Shares, we will continue to be treated as
a PFIC for all succeeding years during which you hold Common Shares. However, if we cease to be a PFIC, you may avoid some of the adverse
effects of the PFIC regime by making a &#8220;deemed sale&#8221; election with respect to the Common Shares.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
we are a PFIC for any taxable year during which you hold Common Shares, you will be subject to special tax rules with respect to any
&#8220;excess distribution&#8221; that you receive and any gain you realize from a sale or other disposition (including a pledge) of
the Common Shares, unless you make a &#8220;mark-to-market&#8221; election as discussed below. Distributions you receive in a taxable
year that are greater than 125% of the average annual distributions you received during the shorter of the three preceding taxable years
or your holding period for the Common Shares will be treated as an excess distribution. Under these special tax rules:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the
excess distribution or gain will be allocated ratably over your holding period for the Common Shares;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
the amount allocated to the current taxable year, and any taxable year prior to the first taxable year in which we were a PFIC, will
be treated as ordinary income, and</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
the amount allocated to each other year will be subject to the highest tax rate in effect for that year and the interest charge generally
applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
tax liability for amounts allocated to years prior to the year of disposition or &#8220;excess distribution&#8221; cannot be offset by
any net operating losses for such years, and gains (but not losses) realized on the sale of the Common Shares cannot be treated as capital,
even if you hold the Common Shares as capital assets.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A
U.S. Holder of &#8220;marketable stock&#8221; (as defined below) in a PFIC may make a mark-to-market election for such stock to elect
out of the tax treatment discussed above. If you make a mark-to-market election for the Common Shares, you will include in income each
year an amount equal to the excess, if any, of the fair market value of the Common Shares as of the close of your taxable year over your
adjusted basis in such Common Shares. You are allowed a deduction for the excess, if any, of the adjusted basis of the Common Shares
over their fair market value as of the close of the taxable year. However, deductions are allowable only to the extent of any net mark-to-market
gains on the Common Shares included in your income for prior taxable years. Amounts included in your income under a mark-to-market election,
as well as gain on the actual sale or other disposition of the Common Shares, are treated as ordinary income. Ordinary loss treatment
also applies to the deductible portion of any mark-to-market loss on the Common Shares, as well as to any loss realized on the actual
sale or disposition of the Common Shares, to the extent that the amount of such loss does not exceed the net mark-to-market gains previously
included for such Common Shares. Your basis in the Common Shares will be adjusted to reflect any such income or loss amounts. If you
make a valid mark-to-market election, the tax rules that apply to distributions by corporations which are not PFICs would apply to distributions
by us, except that the lower applicable capital gains rate for qualified dividend income discussed above under &#8220;&#8212; Taxation
of Dividends and Other Distributions on our Common Shares&#8221; generally would not apply.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
mark-to-market election is available only for &#8220;marketable stock&#8221;, which is stock that is traded in other than de minimis
quantities on at least 15 days during each calendar quarter (&#8220;regularly traded&#8221;) on a qualified exchange or other market
(as defined in applicable U.S. Treasury regulations), including the Nasdaq Global Market. If the Class A Common Shares are regularly
traded on the Nasdaq Global Market and if you are a holder of Class A Common Shares, the mark-to-market election would be available to
you were we to be or become a PFIC.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Alternatively,
a U.S. Holder of stock in a PFIC may make a &#8220;qualified electing fund&#8221; election with respect to such PFIC to elect out of
the tax treatment discussed above. A U.S. Holder who makes a valid qualified electing fund election with respect to a PFIC will generally
include in gross income for a taxable year such holder&#8217;s pro rata share of the corporation&#8217;s earnings and profits for the
taxable year. However, the qualified electing fund election is available only if such PFIC provides such U.S. Holder with certain information
regarding its earnings and profits as required under applicable U.S. Treasury regulations. We do not currently intend to prepare or provide
the information that would enable you to make a qualified electing fund election. If you hold Common Shares in any year in which we are
a PFIC, you will be required to file U.S. Internal Revenue Service Form 8621 regarding distributions received on the Common Shares and
any gain realized on the disposition of the Common Shares.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">You
are urged to consult your tax advisors regarding the application of the PFIC rules to your investment in our Class A Common Shares and
the elections discussed above.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Information
Reporting and Backup Withholding</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Dividend
payments with respect to our Common Shares and proceeds from the sale, exchange or redemption of our Common Shares may be subject to
information reporting to the U.S. Internal Revenue Service and possible U.S. backup withholding at a current rate of 28%. Backup withholding
will not apply, however, to a U.S. Holder who furnishes a correct taxpayer identification number and makes any other required certification
on U.S. Internal Revenue Service Form W-9 or who is otherwise exempt from backup withholding. U.S. Holders who are required to establish
their exempt status generally must provide such certification on U.S. Internal Revenue Service Form W-9. U.S. Holders are urged to consult
their tax advisors regarding the application of the U.S. information reporting and backup withholding rules.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Backup
withholding is not an additional tax. Amounts withheld as backup withholding may be credited against your U.S. federal income tax liability,
and you may obtain a refund of any excess amounts withheld under the backup withholding rules by filing the appropriate claim for refund
with the U.S. Internal Revenue Service and furnishing any required information. We do not intend to withhold taxes for individual shareholders.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Under
the Hiring Incentives to Restore Employment Act of 2010, certain United States Holders are required to report information relating to
Common Shares, subject to certain exceptions (including an exception for Common Shares held in accounts maintained by certain financial
institutions), by attaching a complete Internal Revenue Service Form 8938, Statement of Specified Foreign Financial Assets, with their
tax return for each year in which they hold Common Shares. U.S. Holders are urged to consult their tax advisors regarding the application
of the U.S. information reporting and backup withholding rules.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>F.
Dividends and paying agents</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable for annual reports on Form 20-F.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>G.
Statement by experts</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable for annual reports on Form 20-F.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>H.
Documents on display</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are subject to the information requirements of the Exchange Act. In accordance with these requirements, the Company files reports and
other information with the SEC. You may read and copy any materials filed with the SEC at the Public Reference Room at 100 F Street,
N.E., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
The SEC also maintains a web site at http://www.sec.gov that contains reports and other information regarding registrants that file electronically
with the SEC.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>I.
Subsidiary Information</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="bs_001"></span>Item
11. Quantitative and Qualitative Disclosures About Market Risk</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Interest
Rate Risk</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
exposure to interest rate risk primarily relates to excess cash invested in short-term instruments with original maturities of less than
a year and long-term held-to-maturity securities with maturities of greater than a year. Investments in both fixed rate and floating
rate interest earning instruments carry a degree of interest rate risk. Fixed rate securities may have their fair market value adversely
impacted due to a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall.
Due in part to these factors, our future investment income may fall short of expectations due to changes in interest rates, or we may
suffer losses in principal if we have to sell securities that have declined in market value due to changes in interest rates. We have
not been, and do not expect to be, exposed to material interest rate risks, and therefore have not used any derivative financial instruments
to manage our interest risk exposure.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
the year ended June 30, 2023, we had approximately $4.6 million in outstanding bank loans, with weighted average annual interest rates
of 6.22% and approximately $0.9 million in outstanding bank line of credit with interest rate of 4.25%. As of June 30, 2023, if interest
rates increased/decreased by 1 percentage point, with all other variables having remained constant, and assuming the amount of bank borrowings
outstanding at the end of the year was outstanding for the entire year, profit/loss attributable to equity owners of our company would
have been approximately RMB0.4 million ($0.05 million) lower/higher, respectively, mainly as a result of interest expense on our bank
loans.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
the year ended June 30, 2022, we had approximately $6.3 million in outstanding bank loans, with weighted average annual interest rates
of 6.35% and approximately $0.6 million in outstanding bank line of credit with interest rate of 4.25%. As of June 30, 2022, if interest
rates increased/decreased by 1 percentage point, with all other variables having remained constant, and assuming the amount of bank borrowings
outstanding at the end of the year was outstanding for the entire year, profit/loss attributable to equity owners of our company would
have been approximately RMB 0.5 million ($0.07 million) lower/higher, respectively, mainly as a result of interest expense on our bank
loans.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
the year ended June 30, 2021, we had approximately $7.4 million in outstanding bank loans, with weighted average annual interest rates
of 6.24% and approximately $0.7 million in outstanding bank line of credit with interest rate of 4.25%. As of June 30, 2021, if interest
rates increased/decreased by 1 percentage point, with all other variables having remained constant, and assuming the amount of bank borrowings
outstanding at the end of the year was outstanding for the entire year, profit/loss attributable to equity owners of our company would
have been approximately RMB 0.6 million ($0.09 million) lower/higher, respectively, mainly as a result of interest expense on our bank
loans.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company had short-term investments of $Nil, $52,255 and ,$549,895 as of June 30,2023, 2022 and 2021, respectively. The Company recorded
interest income of $13,190, $1,385 and $48,058 for the years ended June 30, 2023, 2022 and 2021, respectively. We had no long-term held-to-maturity
investments as of June 30, 2023, 2022 and 2021.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Foreign
Exchange Risk</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
functional currency is the RMB, and our financial statements are presented in U.S. dollars. The RMB, appreciated by 8.70% in 2021, depreciated
by 3.70% in 2022, and appreciated by approximately 8.26% in 2023. The change in the value of the RMB relative to the U.S. dollar may
affect our financial results reported in the U.S. dollar terms without giving effect to any underlying change in our business or results
of operation. The negative impact attributable to changes in revenue and expenses due to foreign currency translation are summarized
as follows.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Year ended</b></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>June 30, 2023</b></span></p></td><td style="padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Year ended</b></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>June 30, 2022</b></span></p></td><td style="padding-bottom: 1.5pt">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 64%; text-align: left">Impact on revenue</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right">721,476</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right">979,555</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Impact on operating expenses</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">542,622</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">363,874</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Impact on net income (loss)</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">(306,056</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">109,040</td><td style="text-align: left">&#160;</td></tr>
  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Currently,
our assets, liabilities, revenues and costs are denominated in RMB and in U.S. dollars. Our exposure to foreign exchange risk will primarily
relate to those financial assets denominated in U.S. dollars. Any significant revaluation of RMB against U.S. dollars may materially
affect our earnings and financial position, and the value of, and any dividends payable on, our Common Shares in U.S. dollars in the
future. See &#8220;Operating and Financial Review and Prospects&#8212; Impact of Foreign Currency Fluctuations</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i></i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Commodity
Risk</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
a developer and manufacturer of products composed largely of plastic, nylon and metal, our Company is exposed to the risk of an increase
in the price of raw materials. We historically have been able to pass on price increases to customers by virtue of pricing terms that
vary with changes in commodity prices, but we have not entered into any contract to hedge any specific commodity risk. Moreover, our
Company does not purchase or trade on commodity instruments or positions; instead, it purchases commodities for use.&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="bs_002"></span>Item
12. Description of Securities Other than Equity Securities</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">With
the exception of Items 12.D.3 and 12.D.4, this Item 12 is not applicable for annual reports on Form 20-F. As to Items 12.D.3 and 12.D.4,
this Item 12 is not applicable, as the Company does not have any American Depositary Shares.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="bs_003"></span>Part
II</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="bs_004"></span>Item
13. Defaults, Dividend Arrearages and Delinquencies</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
do not have any material defaults in the payment of principal, interest, or any installments under a sinking or purchase fund.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="bs_005"></span>Item
14. Material Modifications to the Rights of Securities Holders and Use of Proceeds</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>A.</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
    applicable.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>B.</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
    applicable.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>C.</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
    applicable.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>D.</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
    applicable.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>E.</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
    applicable.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="bs_006"></span>Item
15. Controls and Procedures</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(a)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Disclosure
    Controls and Procedures.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company&#8217;s management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined
in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that is designed to ensure that information required to be disclosed by the Company
in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time
periods specified in the Commission&#8217;s rules and forms. Disclosure controls and procedures include, without limitation, controls
and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under
the Exchange Act is accumulated and communicated to the issuer&#8217;s management, including its principal executive officer or officers
and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding
required disclosure.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of June 30, 2023, our company carried out an evaluation, under the supervision of and with the participation of management, including
our Company&#8217;s chief executive officer and chief financial officer, of the effectiveness of the design and operation of our Company&#8217;s
disclosure controls and procedures. Included in this Annual Report on Form 20-F, the chief executive officer and chief financial officer
concluded that our Company&#8217;s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934) were ineffective in timely alerting them to information required to be included in the Company&#8217;s U.S. Securities
and Exchange Commission (the &#8220;Commission&#8221;) filings.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(b)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Management&#8217;s
    annual report on internal control over financial reporting.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Management
of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. We used the 2013 Internal
Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the &#8220;2013 COSO Framework&#8221;)
in performing the assessment of the effectiveness of the Company&#8217;s internal control over financial reporting as of June 30, 2023.
Based on the assessment, management determined that, as of June 30, 2023, we did not maintain effective internal control over financial
reporting as we did not have sufficient full-time accounting and financial reporting personnel with appropriate levels of accounting
knowledge and experience to monitor the daily recording of transactions, to address complex U.S. GAAP accounting issues and the related
disclosures under U.S. GAAP. In addition, there was a lack of sufficient documented financial closing procedures.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(c)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Attestation
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  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(d)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Changes
    in internal control over financial reporting.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Management
continues to focus on internal control over financial reporting. As of June 30, 2023, the Company has completed certain documentation
of our internal controls and will be implementing the following remedial initiatives including engaging more qualified accounting personnel
and consultants with relevant U.S. GAAP and SEC reporting experience and qualification to strengthen the financial reporting and U.S.
GAAP training. The Company also plans to take other steps to strengthen our internal control over financial reporting, including training
of the current accounting personal regarding U.S. GAAP and SEC reporting regulations; establishing an internal audit function and standardizing
the Company&#8217;s semi-annual and year-end closing and financial reporting processes.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="bs_007"></span>Item
16.</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>[Reserved]</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="bs_008"></span>Item
16A. Audit Committee Financial Expert</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company&#8217;s board of directors has determined that Mr. Shao qualifies as an &#8220;audit committee financial expert&#8221; in accordance
with applicable Nasdaq Global Market standards. The Company&#8217;s board of directors has also determined that Mr. Shao and the other
members of the Audit Committee are all &#8220;independent&#8221; in accordance with the applicable Nasdaq Global Market standards.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="bs_009"></span>Item
16B. Code of Ethics</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company has adopted a Code of Business Conduct and Ethics that applies to the Company&#8217;s directors, officers, employees and advisors.
The Code of Ethics is attached it as an exhibit to this annual report. We have also posted a copy of our code of business conduct and
ethics on our website at www.dognesspet.com.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="bs_010"></span>Item
16C. Principal Accountant Fees and Services</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Audit
Alliance LLP was engaged by the Company on June 21, 2023 to serve as its independent registered public accounting firm for fiscal 2023.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Fees
Paid To Independent Registered Public Accounting Firm</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Audit
Fees</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 15pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
fiscal year 2023, Audit Alliance LLP&#8217;s audit fees were $160,000, and Prager Metis CPAs, LLC&#8217;s audit fees were $0.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
fiscal year 2022, Audit Alliance LLP&#8217;s audit fees were $160,000, and Prager Metis CPAs, LLC&#8217;s audit fees were $30,000.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
fiscal year 2021, Prager Metis CPAs, LLC&#8217;s audit fees were $250,000, and Friedman LLP&#8217;s audit fees were $50,000.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Audit
Related Fees</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 15pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
fiscal year 2023, Audit Alliance LLP&#8217;s audit-related fees were $4,700.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
fiscal year 2022, Audit Alliance LLP&#8217;s audit-related fees were $2,250.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
fiscal year 2021, Prager Metis CPAs, LLC&#8217;s audit-related fees were $0, and Friedman LLP&#8217;s audit-related fees were $0.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Tax
Fees</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 15pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
fiscal year 2023, Audit Alliance LLP&#8217;s tax fees were $0].&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
fiscal year 2022, Audit Alliance LLP&#8217;s tax fees were $0.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
fiscal year 2021, Prager Metis CPAs, LLC&#8217;s tax fees were $0, and Friedman LLP&#8217;s tax fees were $0.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>All
Other Fees</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 15pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
fiscal year 2023, Audit Alliance LLP&#8217;s other fees were $40,000, and Prager Metis CPAs, LLC&#8217;s other fess were $48,000.&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
fiscal year 2022, Audit Alliance LLP&#8217;s other fees were $0, Prager Metis CPAs, LLC&#8217;s other fees were $81,000, and Friedman
LLP&#8217;s other fees were $80,000.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
fiscal year 2021, Prager Metis CPAs, LLC&#8217;s other fees were $0, and Friedman LLP&#8217;s other fees were $30,000.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Audit
Committee Pre-Approval Policies</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 15pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Before
Audit Alliance LLP was engaged by the Company to render audit or non-audit services, the engagement was approved by the Company&#8217;s
audit committee. All services rendered by Audit Alliance LLP have been so approved.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Percentage
of Hours</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 15pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
percentage of hours expended on the principal accountants&#8217; engagement to audit our consolidated financial statements for fiscal
2022 that were attributed to work performed by persons other than Audit Alliance LLP&#8217;s full-time permanent employees was less than
50%.&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="bs_011"></span>Item
16D. Exemptions from the Listing Standards for Audit Committees</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="bs_012"></span>Item
16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Neither
the Company nor any affiliated purchaser has purchased any shares or other units of any class of the Company&#8217;s equity securities
registered by the Company pursuant to Section 12 of the Securities Exchange Act during the fiscal year ended June 30, 2021.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="bs_013"></span>Item
16F. Change in Registrant&#8217;s Certifying Accountant</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="bs_014"></span>Item
16G. Corporate Governance</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are incorporated in the British Virgin Islands and our corporate governance practices are governed by applicable BVI law. In addition,
because our Class A Common Shares are listed on The Nasdaq Global Market, we are subject to Nasdaq&#8217;s corporate governance requirements.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
a foreign private issuer, we are permitted to rely on exemptions from certain Nasdaq corporate governance standards applicable to U.S.
issuers, including the requirement that a majority of an issuer&#8217;s directors consist of independent directors. If we opt to rely
on such exemptions in the future, such decision might afford less protection to holders of our Class A Common Shares.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Section
5605(b)(1) of the Nasdaq Listing Rules requires listed companies to have, among other things, a majority of its board members to be independent,
and Section 5605(d) and 5605(e) require listed companies to have independent director oversight of executive compensation and nomination
of directors. As a foreign private issuer, however, we are permitted to follow home country practice in lieu of the above requirements.
Our Board of Directors could make such a decision to depart from such requirements by ordinary resolution.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
corporate governance practice in our home country, the British Virgin Islands, does not require a majority of our board to consist of
independent directors or the implementation of a nominating and corporate governance committee. Since a majority of our board of directors
would not consist of independent directors if we relied on the foreign private issuer exemption, fewer board members would be exercising
independent judgment and the level of board oversight on the management of our company might decrease as a result. In addition, we could
opt to follow British Virgin Islands law instead of the Nasdaq requirements that mandate that we obtain shareholder approval for certain
dilutive events, such as an issuance that will result in a change of control, certain transactions other than a public offering involving
issuances of 20% or greater interests in the company and certain acquisitions of the shares or assets of another company. For a description
of the material corporate governance differences between the Nasdaq requirements and British Virgin Islands law, see &#8220;Description
of Share Capital &#8212; Differences in Corporate Law&#8221;.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="bs_015"></span>Item
16 H. Mine Safety Disclosure</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="bs_016"></span>Part
III</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="bs_017"></span>Item
17. Financial Statements</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">See
Item 18.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="bs_018"></span>Item
18. Financial Statements</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
consolidated financial statements are included at the end of this annual report, beginning with page F-1.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="bs_019"></span>Item
19. Exhibits</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following documents are filed as part of this annual report:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">1.1*</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="https://www.sec.gov/Archives/edgar/data/1707303/000157104917008176/t1702620_ex1-1.htm" style="-sec-extract: exhibit">Articles of Association of Dogness (International) Corporation (incorporated by reference to registration statement on Form F-1, no. 333-220547)</a></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">1.2*</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="https://www.sec.gov/Archives/edgar/data/1707303/000157104917008176/t1702620_ex1-2.htm" style="-sec-extract: exhibit">Memorandum of Association of Dogness (International) Corporation (incorporated by reference to registration statement on Form F-1, no. 333-220547)</a></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">2.1*</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="https://www.sec.gov/Archives/edgar/data/1707303/000157104917007984/t1702389_ex2-1.htm" style="-sec-extract: exhibit">Specimen Class A Common Share Certificate (incorporated by reference to registration statement on Form F-1, no. 333-220547)</a></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">2.2*</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="https://www.sec.gov/Archives/edgar/data/1707303/000157104917007984/t1702389_ex2-2.htm" style="-sec-extract: exhibit">Form of Underwriter Warrant (incorporated by reference to registration statement on Form F-1, no. 333-220547)</a></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">2.3*</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="https://www.sec.gov/Archives/edgar/data/1707303/000157104917007984/t1702389_ex2-3.htm" style="-sec-extract: exhibit">Form of Incentive Securities Plan (incorporated by reference to registration statement on Form F-1, no. 333-220547)</a></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.1*</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="https://www.sec.gov/Archives/edgar/data/1707303/000157104917007984/t1702389_ex4-1.htm" style="-sec-extract: exhibit">Employment Agreement with Mr. Silong Chen (incorporated by reference to registration statement on Form F-1, no. 333-220547)</a></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.2*</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="https://www.sec.gov/Archives/edgar/data/1707303/000157104917007984/t1702389_ex4-2.htm" style="-sec-extract: exhibit">Employment Agreement with Dr. Yunhao Chen (incorporated by reference to registration statement on Form F-1, no. 333-220547)</a></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.3*</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="https://www.sec.gov/Archives/edgar/data/1707303/000157104917007984/t1702389_ex4-3.htm" style="-sec-extract: exhibit">Form of Subscription Agreement (incorporated by reference to registration statement on Form F-1, no. 333-220547)</a></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.4*</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="https://www.sec.gov/Archives/edgar/data/1707303/000157104917007984/t1702389_ex4-7.htm" style="-sec-extract: exhibit">Form of Purchase Order Agreement with Petco (incorporated by reference to registration statement on Form F-1, no. 333-220547)</a></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.5*</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="https://www.sec.gov/Archives/edgar/data/1707303/000157104917007984/t1702389_ex4-9.htm" style="-sec-extract: exhibit">Summary Translation of Form of Purchase Framework Agreement with Dongguan Silk Import and Export Co., Ltd (incorporated by reference to registration statement on Form F-1, no. 333-220547)</a></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.6*</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="https://www.sec.gov/Archives/edgar/data/1707303/000157104917007984/t1702389_ex4-11.htm" style="-sec-extract: exhibit">Summary Translation of Form of Purchase Framework Agreement with Dongguan Anyi Trading Co. (incorporated by reference to registration statement on Form F-1, no. 333-220547)</a></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.7*</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="https://www.sec.gov/Archives/edgar/data/1707303/000157104917007984/t1702389_ex4-12.htm" style="-sec-extract: exhibit">Form of Purchase Order between Xiamen Xianglu Chemical Fiber Co., Ltd and Dongguan Jiasheng Enterprise Co., Ltd (incorporated by reference to registration statement on Form F-1, no. 333-220547)</a></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.8*</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="https://www.sec.gov/Archives/edgar/data/1707303/000157104917007984/t1702389_ex4-15.htm" style="-sec-extract: exhibit">Summary Translation of Agreement between Dongguan Jiasheng Enterprise Co., Ltd and Dongguan University of Technology (incorporated by reference to registration statement on Form F-1, no. 333-220547)</a></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.9*</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="https://www.sec.gov/Archives/edgar/data/1707303/000149315221001188/ex10-1.htm" style="-sec-extract: exhibit">Form of Securities Purchase Agreement dated January 15, 2021, by and between the Company and the Investors (incorporated by reference to Exhibit 10.1 of the Company&#8217;s Report on Form 6-K filed with the SEC on December 7, 2021)</a></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.10*</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="https://www.sec.gov/Archives/edgar/data/1707303/000149315221001188/ex4-1.htm" style="-sec-extract: exhibit">Form of Warrant to Purchase Common Shares in connection with the Securities Purchase Agreement dated January 15, 2021 (incorporated by reference to Exhibit 4.1 of the Company&#8217;s Report on Form 6-K filed with the SEC on January 15, 2021)</a></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.11*</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="https://www.sec.gov/Archives/edgar/data/1707303/000149315221001188/ex4-2.htm" style="-sec-extract: exhibit">Form of Placement Agent Warrant to Purchase Common Shares in connection with the Securities Purchase Agreement dated January 15, 2021 (incorporated by reference to Exhibit 4.2 of the Company&#8217;s Report on Form 6-K filed with the SEC on January 15, 2021)</a></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.12*</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="https://www.sec.gov/Archives/edgar/data/1707303/000149315221016964/ex10-1.htm" style="-sec-extract: exhibit">Form of Securities Purchase Agreement dated July 15, 2021, by and between the Company and the Investors (incorporated by reference to Exhibit 10.1 of the Company&#8217;s Report on Form 6-K filed with the SEC on July 15, 2021)</a></span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 48px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.13*</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="https://www.sec.gov/Archives/edgar/data/1707303/000149315221017228/ex4-1.htm" style="-sec-extract: exhibit">Form of Placement Agent Warrant to Purchase Common Shares in connection with the Securities Purchase Agreement dated July 15, 2021 (incorporated by reference to Exhibit 4.1 of the Company&#8217;s Report on Form 6-K filed with the SEC on July 19, 2021)</a></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.14*</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="https://www.sec.gov/Archives/edgar/data/1707303/000149315221017228/ex10-2.htm" style="-sec-extract: exhibit">Form of Placement Agent Agreement dated July 15, 2021 (incorporated by reference to Exhibit 10.2 of the Company&#8217;s Report on Form 6-K filed with the SEC on July 19, 2021)</a></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.15*</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="https://www.sec.gov/Archives/edgar/data/1707303/000149315222015733/ex10-2.htm" style="-sec-extract: exhibit">Form of Securities Purchase Agreement dated June 1, 2022, by and between the Company and the investors (incorporated by reference to Exhibit 10.2 of the Company&#8217;s Report on Form 6-K filed with the SEC on June 2, 2022)</a></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.16*</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="https://www.sec.gov/Archives/edgar/data/1707303/000149315222015733/ex10-1.htm" style="-sec-extract: exhibit">Form of Placement Agent Agreement dated June 1, 2022 (incorporated by reference to Exhibit 10.1 of the Company&#8217;s Report on Form 6-K filed with the SEC on June 2, 2022)</a></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.17*</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="https://www.sec.gov/Archives/edgar/data/1707303/000149315222005417/ex10-1.htm" style="-sec-extract: exhibit">Form of Securities Purchase Agreement dated February 22, 2022, by and between the Company and the investors (incorporated by reference to Exhibit 10.1 of the Company&#8217;s Report on Form 6-K filed with the SEC on February 24, 2022)</a></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.18*</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="https://www.sec.gov/Archives/edgar/data/1707303/000149315222005417/ex10-2.htm" style="-sec-extract: exhibit">Form of Placement Agent Agreement dated February 22, 2022 (incorporated by reference to Exhibit 10.2 of the Company&#8217;s Report on Form 6-K filed with the SEC on February, 2022)</a></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.19</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="ex4-19.htm">Employment Agreement with Aihua Cao</a></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">8.1*</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="https://www.sec.gov/Archives/edgar/data/1707303/000149315222027297/ex8-1.htm" style="-sec-extract: exhibit">List of subsidiaries</a></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">11.1*</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="https://www.sec.gov/Archives/edgar/data/1707303/000157104917007984/t1702389_ex11-1.htm" style="-sec-extract: exhibit">Code of Business Conduct and Ethics of Dogness (International) Corporation (incorporated by reference to registration statement on Form F-1, no. 333-220547)</a></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">12.1</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="ex12-1.htm">Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Securities and Exchange Commission Release 34-46427 (filed herewith)</a></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">12.2</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="ex12-2.htm">Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Securities and Exchange Commission Release 34-46427 (filed herewith)</a></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">13.1</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="ex13-1.htm">Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith)</a></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">13.2</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><a href="ex13-2.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith)</span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">15.1</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><a href="ex15-1.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Consent of Audit Alliance LLP (filed herewith)</span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">15.2</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="ex15-2.htm">Consent of Prager Metis CPAs, LLC (filed herewith)</a></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif">23.1</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><a href="ex23-1.htm">Consent of Guangdong Jiamao Law
    Firm</a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">99.1</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><a href="ex99-1.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Press
    release dated October 11, 2023 titled &#8220;Dogness Reports Financial Results for Fiscal Year Ended June 30,
    2023&#8221;</span></a></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">*</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Previously
    filed.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>SIGNATURES</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized
the undersigned to sign this annual report on its behalf.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td colspan="2" style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Dogness
    (International) Corporation</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 50%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 5%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 45%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Date:
    October 11, 2023</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">By:</span></td>
    <td style="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>/s/
    Silong Chen</i></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Name:</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Silong
    Chen</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Title:</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Chief
    Executive Officer</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">To
the Board of Directors and Shareholders of Dogness (International) Corporation</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 22.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Opinion
on the Financial Statements</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 22.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have audited the accompanying consolidated balance sheets of Dogness (International) Corporation and its subsidiaries (collectively,
the &#8220;Company&#8221;) as of June 30, 2023 and 2022, the related consolidated statements of income, comprehensive income, shareholders&#8217;
equity, and cash flows for each of the two-year period ended June 30, 2023, and the related notes to the consolidated financial statements
and schedule (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects,
the financial position of the Company as of June 30, 2023 and 2022, and the results of its operations and its cash flows for each of
the years in the two-year period ended June 30, 2023, in conformity with accounting principles generally accepted in the United States
of America.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 22.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Basis
for Opinion</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 22.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">These
financial statements are the responsibility of the Company&#8217;s management. Our responsibility is to express an opinion on the Company&#8217;s
financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent
with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities
and Exchange Commission and the PCAOB.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 22.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company
is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits,
we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion
on the effectiveness of the Company&#8217;s internal control over financial reporting. Accordingly, we express no such opinion.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 22.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error
or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding
the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits
provide a reasonable basis for our opinion.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 22.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">/s/
<span id="xdx_905_edei--AuditorName_c20220701__20230630_z0nO0wztWPvd"><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" name="dei:AuditorName">Audit Alliance LLP</ix:nonNumeric></span></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have served as the Company&#8217;s auditor since 2022.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_90A_edei--AuditorLocation_c20220701__20230630_zF916eZ7JjF8"><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" name="dei:AuditorLocation">Singapore</ix:nonNumeric></span></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">October
11, 2023</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">PCAOB
ID Number <span id="xdx_90E_edei--AuditorFirmId_c20220701__20230630_z87XgIP36PD3"><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" name="dei:AuditorFirmId">3487</ix:nonNumeric></span></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; background-color: white; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 16%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 2%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 82%; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><img src="form20-f_003.jpg" alt="" style="height: 88px; width: 199px" /></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>REPORT
    OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</b></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">To
    the Stockholders and Board of Directors of</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Dogness
    (International) Corporation</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Opinion
    on the Financial Statements</b></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><img src="form20-f_004.jpg" alt="" style="height: 124px; width: 116px" /></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
    have audited the accompanying consolidated balance sheet of Dogness (International) Corporation (the &#8220;Company&#8221;) as of
    June 30, 2021, and the related consolidated statements of comprehensive income (loss), changes in stockholders&#8217; equity and
    cash flows for the year ended June 30, 2021, and related notes (collectively referred to as the financial statements). In our opinion,
    the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2021, and
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    accepted in the United States of America.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><img src="form20-f_005.jpg" alt="" style="height: 64px; width: 64px" /></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><img src="form20-f_006.jpg" alt="" style="height: 64px; width: 397px" /></span></td></tr>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>DOGNESS
(INTERNATIONAL) CORPORATION</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>CONSOLIDATED
BALANCE SHEETS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
amounts in USD)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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  <tr id="xdx_402_eus-gaap--PropertyPlantAndEquipmentNet_i02I_maANz8wh_zeBFm30JUoZb" style="vertical-align: bottom; background-color: White">
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  <tr id="xdx_40B_eus-gaap--OperatingLeaseRightOfUseAsset_i02I_maANz8wh_zqviNiygJKA2" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr id="xdx_40B_eus-gaap--FiniteLivedIntangibleAssetsNet_i02I_maANz8wh_zjbcJiozo6Za" style="vertical-align: bottom; background-color: White">
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  <tr id="xdx_405_eus-gaap--LongTermInvestments_i02I_maANz8wh_ze7ioNvlE0B8" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr id="xdx_400_eus-gaap--DeferredIncomeTaxAssetsNet_i02I_maANz8wh_zUGoYACxWsbc" style="vertical-align: bottom; background-color: White">
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  <tr id="xdx_40E_eus-gaap--Assets_i01TI_mtAzDtY_zz43weoOrpRi" style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_403_eus-gaap--LiabilitiesAndStockholdersEquityAbstract_iB_zgZKUxUHx65e" style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_409_eus-gaap--LiabilitiesCurrentAbstract_i01B_z8lpxYoQovp8" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_407_eus-gaap--ShortTermBankLoansAndNotesPayable_i02I_maLCzlhR_zpKHtODLXu8b" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Short-term bank loans</td><td>&#160;</td>
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  <tr id="xdx_405_eus-gaap--LoansPayableToBankCurrent_i02I_pp0p0_maLCzlhR_z2aU5FHd0iK6" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Current portion of long term bank loans</td><td>&#160;</td>
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  <tr id="xdx_404_eus-gaap--AccountsPayableCurrent_i02I_maLCzlhR_zCenLvnFpmY8" style="vertical-align: bottom; background-color: White">
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  <tr id="xdx_40B_eus-gaap--AccountsPayableCurrent_i02I_hus-gaap--RelatedPartyTransactionsByRelatedPartyAxis__us-gaap--RelatedPartyMember_maLCzlhR_zvo2BfxXA1Ld" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Accounts payable &#8211; related parties</td><td>&#160;</td>
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  <tr id="xdx_40F_eus-gaap--AccountsPayableCurrent_i02I_hus-gaap--RelatedPartyTransactionsByRelatedPartyAxis__us-gaap--RelatedPartyMember_maLCzlhR_zT5nL2jiuFo2" style="display: none; vertical-align: bottom; background-color: rgb(204,238,255)">
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<tr id="xdx_40D_eus-gaap--OtherLiabilitiesCurrent_i02I_pp0p0_hus-gaap--RelatedPartyTransactionsByRelatedPartyAxis__us-gaap--RelatedPartyMember_maLCzlhR_zT4hArGgLp77" style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:OtherLiabilitiesCurrent" contextRef="AsOf2023-06-30_us-gaap_RelatedPartyMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">85,843</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:OtherLiabilitiesCurrent" contextRef="AsOf2022-06-30_us-gaap_RelatedPartyMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">130,468</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40B_eus-gaap--ContractWithCustomerLiabilityCurrent_i02I_pp0p0_maLCzlhR_ze0o9WainLj2" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:ContractWithCustomerLiabilityCurrent" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">121,687</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr id="xdx_40B_eus-gaap--TaxesPayableCurrent_i02I_maLCzlhR_zVYfTFkOLdy5" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Taxes payable</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:TaxesPayableCurrent" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,015,444</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr id="xdx_402_eus-gaap--AccruedLiabilitiesCurrent_i02I_pp0p0_maLCzlhR_zet49l6vT353" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Accrued expenses and other current liabilities</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:AccruedLiabilitiesCurrent" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">1,026,218</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:AccruedLiabilitiesCurrent" contextRef="AsOf2022-06-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">1,083,469</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_404_eus-gaap--OperatingLeaseLiabilityCurrent_i02I_maLCzlhR_zifjNgqBfbD9" style="vertical-align: bottom; background-color: White">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="us-gaap:OperatingLeaseLiabilityCurrent" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">2,326,162</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr id="xdx_40B_eus-gaap--LiabilitiesCurrent_i02TI_mtLCzlhR_maLzU6M_zYY9EoeqM02d" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40C_eus-gaap--LiabilitiesNoncurrentAbstract_i01B_zFaV7aL27t9" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">NON-CURRENT LIABILITIES</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40F_eus-gaap--LongTermLoansFromBank_i02I_pp0p0_maLNzWBP_zBN2aCc89vt1" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Long term bank loans</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:LongTermLoansFromBank" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">1,595,549</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:LongTermLoansFromBank" contextRef="AsOf2022-06-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">4,934,374</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_401_eus-gaap--OperatingLeaseLiabilityNoncurrent_i02I_maLNzWBP_z6lGmBlqSImc" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_408_eus-gaap--StockholdersEquityAbstract_i01B_zI81w6HcpsR2" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr id="xdx_401_eus-gaap--CommonStockValue_i02I_zefWHTJhwjXa" style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr id="xdx_403_eus-gaap--CommonStockValue_i02I_hus-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember_zb0ZmUERfG7a" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr id="xdx_40E_eus-gaap--CommonStockValue_i02I_hus-gaap--StatementClassOfStockAxis__us-gaap--CommonClassBMember_zxvozqw675ql" style="vertical-align: bottom; background-color: White">
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  <tr id="xdx_40A_eus-gaap--CommonStockValue_i02I_maSEzv3H_zdOWBEb3sTV2" style="display: none; vertical-align: bottom; background-color: White">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_408_eus-gaap--AdditionalPaidInCapital_i02I_maSEzv3H_zgM9d1GwJNMb" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr id="xdx_406_eus-gaap--OtherAdditionalCapital_i02I_maSEzv3H_zUQYOk00UM46" style="vertical-align: bottom; background-color: White">
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  <tr id="xdx_407_eus-gaap--AccumulatedOtherComprehensiveIncomeLossNetOfTax_i02I_maSEzv3H_zd9XCRgx70Q7" style="vertical-align: bottom; background-color: White">
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  <tr id="xdx_407_eus-gaap--StockholdersEquity_i02TI_pp0p0_mtSEzv3H_maSEIPAzsHv_znPW8GMUhmr6" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_407_eus-gaap--MinorityInterest_i02I_maSEIPAzsHv_zoNwTHY5p85k" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr id="xdx_40F_eus-gaap--StockholdersEquityIncludingPortionAttributableToNoncontrollingInterest_i02TI_mtSEIPAzsHv_maLASEzDLb_zC9fP25hw1m3" style="vertical-align: bottom; background-color: White">
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    <td>&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>The
accompanying notes are an integral part of these consolidated financial statements.</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>DOGNESS
(INTERNATIONAL) CORPORATION</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>STATEMENTS
OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
amounts in USD)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td>&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr id="xdx_40F_eus-gaap--NonoperatingIncomeExpenseAbstract_iB" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr id="xdx_402_eus-gaap--InterestExpense_i01N_di_msNIEzQzm_zrx3YTHSENkj" style="vertical-align: bottom; background-color: White">
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  <tr id="xdx_40D_ecustom--RentalIncomeFromRelatedParties_i01_pp0p0_maNIEzQzm_zpv5vpydazth" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr id="xdx_40A_eus-gaap--GainOrLossOnSaleOfStockInSubsidiary_i01_maNIEzQzm_ziKEITMQ0eVd" style="vertical-align: bottom; background-color: White">
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  <tr id="xdx_400_eus-gaap--NonoperatingIncomeExpense_i01T_pp0p0_mtNIEzQzm_maCzlWK_maILFCOz58k_zxKw16APt9Sh" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_406_eus-gaap--IncomeLossFromContinuingOperationsBeforeIncomeTaxesExtraordinaryItemsNoncontrollingInterest_iT_maPLzGu7_mtILFCOz58k_zRSbMOBihBib" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left">(Loss) income before income taxes</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="us-gaap:IncomeLossFromContinuingOperationsBeforeIncomeTaxesExtraordinaryItemsNoncontrollingInterest" contextRef="From2022-07-01to2023-06-30" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">8,686,923</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:IncomeLossFromContinuingOperationsBeforeIncomeTaxesExtraordinaryItemsNoncontrollingInterest" contextRef="From2021-07-012022-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">238,264</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr id="xdx_407_eus-gaap--IncomeTaxExpenseBenefit_msPLzP5P_msPLzGu7_zvp9RHId6eDg" style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold; text-align: left; padding-bottom: 1.5pt">Income taxes (benefit) expense</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction name="us-gaap:IncomeTaxExpenseBenefit" contextRef="From2022-07-01to2023-06-30" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">1,227,449</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction name="us-gaap:IncomeTaxExpenseBenefit" contextRef="From2021-07-012022-06-30" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">2,777,868</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="us-gaap:IncomeTaxExpenseBenefit" contextRef="From2020-07-012021-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">641,460</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr id="xdx_40B_eus-gaap--ProfitLoss_iT_maCzgjo_mtPLzGu7_maCINOTzlRl_zeNdMgQho7sd" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left">Net (loss) income</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="us-gaap:ProfitLoss" contextRef="From2022-07-01to2023-06-30" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">7,459,474</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
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  <tr id="xdx_40A_eus-gaap--NetIncomeLossAttributableToNoncontrollingInterest_msCzgjo_z4f31mNrL1K4" style="vertical-align: bottom; background-color: White">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction name="us-gaap:NetIncomeLossAttributableToNoncontrollingInterest" contextRef="From2022-07-01to2023-06-30" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">259,211</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction name="us-gaap:NetIncomeLossAttributableToNoncontrollingInterest" contextRef="From2021-07-012022-06-30" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">219,427</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction name="us-gaap:NetIncomeLossAttributableToNoncontrollingInterest" contextRef="From2020-07-012021-06-30" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">213,336</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr id="xdx_40F_eus-gaap--NetIncomeLoss_iT_mtCzgjo_zS3iBZKxiOp5" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left">Net (loss) income attributable to Dogness (International) Corporation</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="us-gaap:NetIncomeLoss" contextRef="From2022-07-01to2023-06-30" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">7,200,263</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>The
accompanying notes are an integral part of these consolidated financial statements.</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>DOGNESS
(INTERNATIONAL) CORPORATION</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS&#8217; EQUITY</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>FOR
THE YEARS ENDED JUNE 30, 2023, 2022 AND 2021</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
amounts in USD)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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  <tr id="xdx_40D_eus-gaap--StockIssuedDuringPeriodValueNewIssues_zifyPXVfJpc1" style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl0498">-</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl0501">-</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl0502">-</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr id="xdx_402_ecustom--ExerciseOfWarrants_zgwfvc1VELde" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>The
accompanying notes are an integral part of these consolidated financial statements.</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>DOGNESS
(INTERNATIONAL) CORPORATION</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>CONSOLIDATED
STATEMENTS OF CASH FLOWS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
amounts in USD)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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  <tr id="xdx_40D_ecustom--ForgivenessOfPaycheckProtectionProgramLoan_i02N_di_msNCPBUz6EB_z0sLOx1K59X1" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr id="xdx_407_eus-gaap--IncreaseDecreaseInAccountsReceivable_i03N_di_msNCPBUz6EB_zIQqEL3rIAMj" style="vertical-align: bottom; background-color: White">
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  <tr id="xdx_409_eus-gaap--IncreaseDecreaseInPrepaidDeferredExpenseAndOtherAssets_i03N_di_msNCPBUz6EB_zJKhtS7zlmT1" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr id="xdx_40E_ecustom--IncreaseDecreasdeInAdvancesToSupplierRelatedParty_i03N_di_msNCPBUz6EB_zmfsLO8RuBT7" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Advances to supplier- related party</td><td>&#160;</td>
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  <tr id="xdx_40B_eus-gaap--IncreaseDecreaseInAccountsPayableTrade_i03_maNCPBUz6EB_zlh0DCZcrL4b" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="us-gaap:IncreaseDecreaseInAccountsPayableTrade" contextRef="From2022-07-01to2023-06-30" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">62,237</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
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  <tr id="xdx_40D_eus-gaap--IncreaseDecreaseInAccountsPayableRelatedParties_i03_maNCPBUz6EB_z912JLKWyROl" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Accounts payables-related parties</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="us-gaap:IncreaseDecreaseInAccountsPayableRelatedParties" contextRef="From2022-07-01to2023-06-30" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">379,124</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
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  <tr id="xdx_40B_eus-gaap--IncreaseDecreaseInDueToOtherRelatedPartiesCurrent_i03_maNCPBUz6EB_zLu7zZwlkREc" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Advance from customers</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="us-gaap:IncreaseDecreaseInDueToOtherRelatedPartiesCurrent" contextRef="From2022-07-01to2023-06-30" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">18,989</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="us-gaap:IncreaseDecreaseInDueToOtherRelatedPartiesCurrent" contextRef="From2021-07-012022-06-30" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">52,365</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:IncreaseDecreaseInDueToOtherRelatedPartiesCurrent" contextRef="From2020-07-012021-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">43,622</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: left">Taxes payable</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="us-gaap:IncreaseDecreaseInIncomeTaxes" contextRef="From2022-07-01to2023-06-30" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">441,390</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="us-gaap:IncreaseDecreaseInIncomeTaxes" contextRef="From2021-07-012022-06-30" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">2,827,106</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
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  <tr id="xdx_402_eus-gaap--IncreaseDecreaseInAccruedLiabilities_i03_maNCPBUz6EB_zwXsLERCHcE9" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Accrued expenses and other liabilities</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:IncreaseDecreaseInAccruedLiabilities" contextRef="From2022-07-01to2023-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">34,381</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="us-gaap:IncreaseDecreaseInAccruedLiabilities" contextRef="From2021-07-012022-06-30" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">137,457</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="us-gaap:IncreaseDecreaseInAccruedLiabilities" contextRef="From2020-07-012021-06-30" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">619,179</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr id="xdx_40F_eus-gaap--IncreaseDecreaseInOperatingLeaseLiability_i03_maNCPBUz6EB_zyglze14v7d4" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1.5pt">Operating lease liabilities</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction name="us-gaap:IncreaseDecreaseInOperatingLeaseLiability" contextRef="From2022-07-01to2023-06-30" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">2,444,110</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction name="us-gaap:IncreaseDecreaseInOperatingLeaseLiability" contextRef="From2021-07-012022-06-30" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">168,075</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction name="us-gaap:IncreaseDecreaseInOperatingLeaseLiability" contextRef="From2020-07-012021-06-30" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">171,221</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr id="xdx_402_eus-gaap--NetCashProvidedByUsedInOperatingActivities_i01T_mtNCPBUz6EB_maCCERCzpXX_zOQ1E2bkrrkl" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left; padding-bottom: 1.5pt">Net cash (used in) provided by operating activities</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction name="us-gaap:NetCashProvidedByUsedInOperatingActivities" contextRef="From2022-07-01to2023-06-30" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">8,902,265</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_406_eus-gaap--NetCashProvidedByUsedInInvestingActivitiesAbstract_iB_z5sKlLj8s7L" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left">Cash flows from investing activities:</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_405_eus-gaap--PaymentsToAcquirePropertyPlantAndEquipment_i01N_di_msNCPBUzWk4_zw78GtAX9xWk" style="vertical-align: bottom; background-color: White">
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  <tr id="xdx_40D_eus-gaap--ProceedsFromSaleOfProductiveAssets_i01_maNCPBUzWk4_z7R8xHfT6Ol7" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr id="xdx_40B_ecustom--PaymentsForConstructionInProgress_i01N_di_msNCPBUzWk4_zZb4zyHPB4N" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Capital expenditures on construction-in-progress</td><td>&#160;</td>
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  <tr id="xdx_407_eus-gaap--PaymentsToAcquireLongtermInvestments_i01N_di_msNCPBUzWk4_zIIltNyADjb9" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr id="xdx_404_eus-gaap--ProceedsFromSaleMaturityAndCollectionOfShorttermInvestments_i01_maNCPBUzWk4_zvz7gv30D6hd" style="vertical-align: bottom; background-color: White">
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  <tr id="xdx_40C_eus-gaap--NetCashProvidedByUsedInInvestingActivities_i01T_mtNCPBUzWk4_maCCERCzpXX_zCkbnwpujrvh" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left; padding-bottom: 1.5pt">Net cash used in investing activities</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction name="us-gaap:NetCashProvidedByUsedInInvestingActivities" contextRef="From2022-07-01to2023-06-30" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">1,455,354</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction name="us-gaap:NetCashProvidedByUsedInInvestingActivities" contextRef="From2020-07-012021-06-30" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">11,245,631</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_408_eus-gaap--NetCashProvidedByUsedInFinancingActivitiesAbstract_iB_zvhtpV32CNYb" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left">Cash flows from financing activities:</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_408_eus-gaap--ProceedsFromIssuanceOfPrivatePlacement_i01_maNCPBUzv0A_zjViKF4WpsB5" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Net proceeds from private placement</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:ProceedsFromIssuanceOfPrivatePlacement" contextRef="From2021-07-012022-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">19,124,920</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr id="xdx_408_eus-gaap--ProceedsFromContributedCapital_i01_maNCPBUzv0A_zzQjY3YSuS" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Capital contribution made by non-controlling shareholders</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl0800">-</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl0801">-</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr id="xdx_408_eus-gaap--PaymentsToMinorityShareholders_i01N_di_msNCPBUzv0A_z0LVjbzUSVs6" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Adjustment relating to non-controlling interest</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="us-gaap:PaymentsToMinorityShareholders" contextRef="From2022-07-01to2023-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">26,245</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl0805">-</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl0806">-</span></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40A_eus-gaap--ProceedsFromIssuanceOfWarrants_i01_maNCPBUzv0A_z48hYoWICcx9" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Net Proceeds from exercise of warrants</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl0808">-</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:ProceedsFromIssuanceOfWarrants" contextRef="From2021-07-012022-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">4,444,136</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl0810">-</span></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_408_eus-gaap--ProceedsFromStockOptionsExercised_i01_maNCPBUzv0A_ziygh3K09kE1" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Net Proceeds from exercise of options</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl0812">-</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:ProceedsFromStockOptionsExercised" contextRef="From2021-07-012022-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">180,000</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl0814">-</span></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40D_eus-gaap--ProceedsFromShortTermDebt_i01_maNCPBUzv0A_z7ojB1GMgcci" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Proceeds from short-term bank loans</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:ProceedsFromShortTermDebt" contextRef="From2022-07-01to2023-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">483,000</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:ProceedsFromShortTermDebt" contextRef="From2021-07-012022-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">804,000</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:ProceedsFromShortTermDebt" contextRef="From2020-07-012021-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">349,771</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_403_eus-gaap--RepaymentsOfShortTermDebt_i01N_di_msNCPBUzv0A_zb5Lw7o2H141" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Repayment of short-term bank loans</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="us-gaap:RepaymentsOfShortTermDebt" contextRef="From2022-07-01to2023-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">160,000</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="us-gaap:RepaymentsOfShortTermDebt" contextRef="From2021-07-012022-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">944,446</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="us-gaap:RepaymentsOfShortTermDebt" contextRef="From2020-07-012021-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">5,075,325</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr id="xdx_40B_eus-gaap--ProceedsFromIssuanceOfLongTermDebt_i01_maNCPBUzv0A_zX5q5Fxx1Vd5" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Proceeds from long-term bank loan</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl0824">-</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl0825">-</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:ProceedsFromIssuanceOfLongTermDebt" contextRef="From2020-07-012021-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">7,550,000</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40C_eus-gaap--RepaymentsOfLongTermDebt_i01N_di_msNCPBUzv0A_zhpzh6cMzsca" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Repayment of long-term bank loans</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="us-gaap:RepaymentsOfLongTermDebt" contextRef="From2022-07-01to2023-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,337,323</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="us-gaap:RepaymentsOfLongTermDebt" contextRef="From2021-07-012022-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">796,416</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="us-gaap:RepaymentsOfLongTermDebt" contextRef="From2020-07-012021-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">381,133</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr id="xdx_403_eus-gaap--ProceedsFromRepaymentsOfRelatedPartyDebt_i01_maNCPBUzv0A_zPpFmhmOfLie" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt">(Repayment of) proceeds from related party loans</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction name="us-gaap:ProceedsFromRepaymentsOfRelatedPartyDebt" contextRef="From2022-07-01to2023-06-30" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">25,796</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction name="us-gaap:ProceedsFromRepaymentsOfRelatedPartyDebt" contextRef="From2021-07-012022-06-30" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">1,943,408</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="us-gaap:ProceedsFromRepaymentsOfRelatedPartyDebt" contextRef="From2020-07-012021-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,892,636</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr id="xdx_408_eus-gaap--NetCashProvidedByUsedInFinancingActivities_i01T_mtNCPBUzv0A_maCCERCzpXX_zj0Liq3RZh2f" style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold; text-align: left; padding-bottom: 1.5pt">Net cash (used in) provided by financing activities</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction name="us-gaap:NetCashProvidedByUsedInFinancingActivities" contextRef="From2022-07-01to2023-06-30" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">1,066,364</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="us-gaap:NetCashProvidedByUsedInFinancingActivities" contextRef="From2021-07-012022-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">20,868,786</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="us-gaap:NetCashProvidedByUsedInFinancingActivities" contextRef="From2020-07-012021-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">11,051,571</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
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  <tr id="xdx_405_ecustom--PrepaidShareBasedCompensationForServices_i01_zeEJbLuTnvOb" style="vertical-align: bottom; background-color: White">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>The
accompanying notes are an integral part of these consolidated financial statements.</i></span></p>
<!-- Field: Split-Segment; Name: 001 -->
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


<!-- Field: Page; Sequence: 146; Value: 1 -->
    <div style="border-bottom: Black 1.5pt solid; margin-bottom: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="text-align: center; width: 100%">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->6<!-- Field: /Sequence --></td></tr></table></div>
    <div style="break-before: page; margin-top: 6pt"><p style="margin: 0pt">&#160;</p></div>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>DOGNESS
(INTERNATIONAL) CORPORATION</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
amounts in USD)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="us-gaap:OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock"><p id="xdx_801_eus-gaap--OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock_zgD29MYrs4ad" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTE
1 &#8211; <span id="xdx_825_zun2SNzXV9Q7">ORGANIZATION AND DESCRIPTION OF BUSINESS</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Dogness
(International) Corporation (&#8220;Dogness&#8221; or the &#8220;Company&#8221;), is a company limited by shares established under the
laws of the <span id="xdx_908_ecustom--EntityIncorporatedStateCountryName_c20220701__20230630__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--MsYunhaoChenMember_zhHSNZHug7dj" title="Entity incorporation, state country name"><ix:nonNumeric contextRef="From2022-07-012023-06-30_custom_MsYunhaoChenMember" name="DOGZ:EntityIncorporatedStateCountryName">British Virgin Islands</ix:nonNumeric></span> (&#8220;BVI&#8221;) on <span id="xdx_90D_ecustom--EntityIncorporatedDateOfIncorporation_dd_c20220701__20230630__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--MsYunhaoChenMember_zawQD99IQUy6" title="Entity incorporation, date of incorporation"><ix:nonNumeric contextRef="From2022-07-012023-06-30_custom_MsYunhaoChenMember" format="ixt:datemonthdayyearen" name="DOGZ:EntityIncorporatedDateOfIncorporation">July 11, 2016</ix:nonNumeric></span> 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 (&#8220;CEO&#8221;) of the Company is the controlling shareholder
(the &#8220;Controlling Shareholder&#8221;) of the Company by virtue of his ownership of <span id="xdx_906_eus-gaap--CommonStockSharesOutstanding_iI_c20230630__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassBMember_ztXdtqq0si1g" title="Common stock, shares outstanding"><ix:nonFraction name="us-gaap:CommonStockSharesOutstanding" contextRef="AsOf2023-06-30_us-gaap_CommonClassBMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">9,069,000</ix:nonFraction></span> 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.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Reorganization</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">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. (&#8220;Dongguan Dogness&#8221;), a holding company established
under the laws of the People&#8217;s Republic of China (&#8220;PRC&#8221;); and the transfer of Dogness (Hong Kong) Pet&#8217;s Products
Co., Limited (&#8220;HK Dogness&#8221;), Jiasheng Enterprise (Hong Kong) Co., Limited (&#8220;HK Jiasheng&#8221;), and Dongguan Jiasheng
Enterprise Co., Ltd. (&#8220;Dongguan Jiasheng&#8221;; collectively, the &#8220;Transferred Entities&#8221;) from the Controlling Shareholder
to Dogness and Dongguan Dogness. Prior to the reorganization, the Transferred Entities&#8217; equity interests were 100% controlled by
the Controlling Shareholder. On November 24, 2016, the Controlling Shareholder transferred his <span id="xdx_902_eus-gaap--BusinessCombinationStepAcquisitionEquityInterestInAcquireePercentage_iI_pid_dp_uPure_c20161124__us-gaap--BusinessAcquisitionAxis__custom--DongguanJiashengMember__dei--LegalEntityAxis__custom--DongguanDognessMember_zVBICtwTqmCi" title="Ownership interest percentage"><ix:nonFraction name="us-gaap:BusinessCombinationStepAcquisitionEquityInterestInAcquireePercentage" contextRef="AsOf2016-11-24_custom_DongguanJiashengMember_custom_DongguanDognessMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">100</ix:nonFraction></span>% ownership interest in Dongguan Jiasheng
to Dongguan Dogness, which is <span id="xdx_90A_eus-gaap--BusinessCombinationStepAcquisitionEquityInterestInAcquireePercentage_iI_pid_dp_uPure_c20161124__us-gaap--BusinessAcquisitionAxis__custom--HKDognessMember_zq7Ad5NFm422" title="Ownership interest percentage"><ix:nonFraction name="us-gaap:BusinessCombinationStepAcquisitionEquityInterestInAcquireePercentage" contextRef="AsOf2016-11-24_custom_HKDognessMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">100</ix:nonFraction></span>% owned by HK Dogness and considered a wholly foreign-owned entity (&#8220;WFOE&#8221;) in PRC. On January
9, 2017, the Controlling Shareholder transferred his <span id="xdx_90B_eus-gaap--BusinessCombinationStepAcquisitionEquityInterestInAcquireePercentage_iI_pid_dp_uPure_c20170109__us-gaap--BusinessAcquisitionAxis__custom--DognessLtdMember_z2a6xW2mlsTl"><ix:nonFraction name="us-gaap:BusinessCombinationStepAcquisitionEquityInterestInAcquireePercentage" contextRef="AsOf2017-01-09_custom_DognessLtdMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">100</ix:nonFraction></span>% equity interests in HK Dogness and HK Jiasheng to Dogness. After the reorganization,
Dogness ultimately owns <span id="xdx_90F_eus-gaap--BusinessCombinationStepAcquisitionEquityInterestInAcquireePercentage_iI_pid_dp_uPure_c20170109__us-gaap--BusinessAcquisitionAxis__custom--DognessIntelligenceTechnologyCoLtdMember_zSQi70NXl98b" title="Ownership interest percentage"><ix:nonFraction name="us-gaap:BusinessCombinationStepAcquisitionEquityInterestInAcquireePercentage" contextRef="AsOf2017-01-09_custom_DognessIntelligenceTechnologyCoLtdMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">100</ix:nonFraction></span>% equity interests of the entities mentioned above.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
December 18, 2017, the Company completed its initial public offering (&#8220;IPO&#8221;) of <span id="xdx_90F_eus-gaap--StockIssuedDuringPeriodSharesNewIssues_c20171217__20171218__us-gaap--SubsidiarySaleOfStockAxis__us-gaap--IPOMember__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember_zl8w18MI8Owh" title="Number of shares issued under public offering"><ix:nonFraction name="us-gaap:StockIssuedDuringPeriodSharesNewIssues" contextRef="From2017-12-172017-12-18_us-gaap_IPOMember_us-gaap_CommonClassAMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">10,913,631</ix:nonFraction></span> Class A common shares at a public
offering price of $<span id="xdx_900_eus-gaap--SharesIssuedPricePerShare_iI_c20171218__us-gaap--SubsidiarySaleOfStockAxis__us-gaap--IPOMember__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember_zLCIF1K0Q559" title="Shares issued, price per share"><ix:nonFraction name="us-gaap:SharesIssuedPricePerShare" contextRef="AsOf2017-12-18_us-gaap_IPOMember_us-gaap_CommonClassAMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">5.00</ix:nonFraction></span> per share. In connection with the offering, the Company&#8217;s Class A common shares began trading on the NASDAQ
Global Market on December 20, 2017 under the symbol &#8220;DOGZ.&#8221;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
January 2018, the Company formed a Delaware limited liability company, Dogness Group LLC (&#8220;Dogness Group&#8221;), with its operation
focusing primarily on pet product sales in the U.S. In February 2018, Dogness Overseas Ltd (&#8220;Dogness Overseas&#8221;) was established
in the British Virgin Islands as a holding company. Dogness Overseas owns all of the interests in Dogness Group.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
March 16, 2018 (the &#8220;Acquisition Date&#8221;), the Company entered into a share purchase agreement to acquire <span id="xdx_907_eus-gaap--AcquisitionCostRatio_pid_dp_uPure_c20180316__20180316__us-gaap--TypeOfArrangementAxis__custom--SharePurchaseAgreementMember__us-gaap--BusinessAcquisitionAxis__custom--ZhangzhouMeijiaMetalProductCoLtdMember_zrTYBBPsoID5" title="Acquisition cost ratio"><ix:nonFraction name="us-gaap:AcquisitionCostRatio" contextRef="From2018-03-162018-03-16_custom_SharePurchaseAgreementMember_custom_ZhangzhouMeijiaMetalProductCoLtdMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">100</ix:nonFraction></span>% of the equity
interests in Zhangzhou Meijia Metal Product Co., Ltd (&#8220;Meijia&#8221;) from its original shareholder, Long Kai (Shenzhen) Industrial
Co., Ltd (&#8220;Longkai&#8221;), for a total cash consideration of approximately RMB<span id="xdx_90E_eus-gaap--BusinessCombinationConsiderationTransferred1_pn6n6_uRMB_c20180316__20180316__us-gaap--TypeOfArrangementAxis__custom--SharePurchaseAgreementMember__dei--LegalEntityAxis__custom--LongKaiShenzhengIndustrialCoLtdMember_zwJLkUrv6bN4" title="Business combination consideration transferred"><ix:nonFraction name="us-gaap:BusinessCombinationConsiderationTransferred1" contextRef="From2018-03-162018-03-16_custom_SharePurchaseAgreementMember_custom_LongKaiShenzhengIndustrialCoLtdMember" format="ixt:numdotdecimal" decimals="-6" scale="6" unitRef="RMB">71</ix:nonFraction></span> million ($<span id="xdx_909_eus-gaap--BusinessCombinationConsiderationTransferred1_pn5n6_c20180316__20180316__us-gaap--TypeOfArrangementAxis__custom--SharePurchaseAgreementMember__us-gaap--BusinessAcquisitionAxis__custom--ZhangzhouMeijiaMetalProductCoLtdMember_zTDjhNfYDfIa" title="Business combination consideration transferred"><ix:nonFraction name="us-gaap:BusinessCombinationConsiderationTransferred1" contextRef="From2018-03-162018-03-16_custom_SharePurchaseAgreementMember_custom_ZhangzhouMeijiaMetalProductCoLtdMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">11.1</ix:nonFraction></span> million) (the &#8220;Acquisition&#8221;).
After the acquisition, Mejia became the Company&#8217;s wholly-owned subsidiary.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
July 6, 2018, Dogness Intelligence Technology Co., Ltd. (&#8220;Intelligence Guangzhou&#8221;) was incorporated under the laws of PRC
in Guangzhou City of Guangdong Province in China with a total registered capital of RMB<span id="xdx_90B_eus-gaap--Capital_iI_pn6n6_uRMB_c20180706__dei--LegalEntityAxis__custom--DognessIntelligenceTechnologyCoLtdMember_z7HMAxnEjROi" title="Capital"><ix:nonFraction name="us-gaap:Capital" contextRef="AsOf2018-07-06_custom_DognessIntelligenceTechnologyCoLtdMember" format="ixt:numdotdecimal" decimals="-6" scale="6" unitRef="RMB">80</ix:nonFraction></span> million (approximately $<span id="xdx_904_eus-gaap--Capital_iI_pn5n6_c20180706__dei--LegalEntityAxis__custom--DognessIntelligenceTechnologyCoLtdMember_zRKz4ksbwTdb" title="Capital"><ix:nonFraction name="us-gaap:Capital" contextRef="AsOf2018-07-06_custom_DognessIntelligenceTechnologyCoLtdMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">11.0</ix:nonFraction></span> million). One
of the Company&#8217;s subsidiaries, Dongguan Jiasheng, owns <span id="xdx_902_eus-gaap--BusinessCombinationStepAcquisitionEquityInterestInAcquireePercentage_iI_pid_dp_uPure_c20180706__dei--LegalEntityAxis__custom--DognessIntelligenceTechnologyCoLtdMember__us-gaap--BusinessAcquisitionAxis__custom--DongguanJiashengMember_zaI5HMFmJqBi" title="Business combination step acquisition equity interest in acquiree percentage"><ix:nonFraction name="us-gaap:BusinessCombinationStepAcquisitionEquityInterestInAcquireePercentage" contextRef="AsOf2018-07-06_custom_DognessIntelligenceTechnologyCoLtdMember_custom_DongguanJiashengMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">58</ix:nonFraction></span>% of Intelligence Guangzhou, with the remaining <span id="xdx_904_eus-gaap--BusinessCombinationStepAcquisitionEquityInterestInAcquireePercentage_iI_pid_dp_uPure_c20180706__us-gaap--BusinessAcquisitionAxis__custom--DognessIntelligenceTechnologyCoLtdMember__us-gaap--RelatedPartyTransactionAxis__custom--TwoUnrelatedPartyMember_zMewCEV47hja" title="Business combination step acquisition equity interesti in acquiree percentage"><ix:nonFraction name="us-gaap:BusinessCombinationStepAcquisitionEquityInterestInAcquireePercentage" contextRef="AsOf2018-07-06_custom_DognessIntelligenceTechnologyCoLtdMember_custom_TwoUnrelatedPartyMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">42</ix:nonFraction></span>% ownership interest
owned by two unrelated entities. Intelligence Guangzhou had immaterial operation since its inception and will conduct research and manufacturing
of the Company&#8217;s fast-growing intelligent pet products in the future. Due to the fact that Intelligence Guangzhou has no business
activities since the incorporation and Dongguan Jiasheng has not made any capital contribution, in August 2022, the Board approved to
sell the Company&#8217;s <span id="xdx_902_eus-gaap--BusinessCombinationStepAcquisitionEquityInterestInAcquireePercentage_iI_pid_dp_uPure_c20220810__us-gaap--BusinessAcquisitionAxis__custom--DognessIntelligenceTechnologyCoLtdMember__us-gaap--RelatedPartyTransactionAxis__custom--ThirdPartyMember_zeVOQcHkSeCd" title="Business combination step acquisition equity interesti in acquiree percentage"><ix:nonFraction name="us-gaap:BusinessCombinationStepAcquisitionEquityInterestInAcquireePercentage" contextRef="AsOf2022-08-10_custom_DognessIntelligenceTechnologyCoLtdMember_custom_ThirdPartyMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">58</ix:nonFraction></span>% ownership interest in Intelligence Guangzhou to a third party for a nominal price. The transaction was completed
on August 10, 2022.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Dogness
Pet Culture (Dongguan) Co., Ltd. (&#8220;Dogness Culture&#8221;) was incorporated on December 14, 2018 with registered capital of RMB
<span id="xdx_90D_eus-gaap--Capital_iI_pn6n6_uRMB_c20181214__us-gaap--BusinessAcquisitionAxis__custom--DognessPetCultureDongguanCoLtdMember_zpd6Ri68cAUd" title="Capital"><ix:nonFraction name="us-gaap:Capital" contextRef="AsOf2018-12-14_custom_DognessPetCultureDongguanCoLtdMember" format="ixt:numdotdecimal" decimals="-6" scale="6" unitRef="RMB">10</ix:nonFraction></span> million (approximately $<span id="xdx_90D_eus-gaap--Capital_iI_pn5n6_c20181214__us-gaap--BusinessAcquisitionAxis__custom--DognessPetCultureDongguanCoLtdMember_zctCLHpAz9pe" title="Capital"><ix:nonFraction name="us-gaap:Capital" contextRef="AsOf2018-12-14_custom_DognessPetCultureDongguanCoLtdMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">1.5</ix:nonFraction></span> million). The capital was not paid by the original shareholder and there were no active business operations.
On January 15, 2020, the Company&#8217;s subsidiary, Dongguan Dogness, entered into an agreement with the original shareholder of Dogness
Culture, who is a relative of Mr. Silong Chen, the Chief Executive Officer, to acquire <span id="xdx_905_eus-gaap--BusinessCombinationStepAcquisitionEquityInterestInAcquireePercentage_iI_pid_dp_uPure_c20200115__us-gaap--BusinessAcquisitionAxis__custom--DognessPetCultureDongguanCoLtdMember__srt--TitleOfIndividualAxis__custom--MrSilongChenMember_z44cCBIJZMr7" title="Business combination step acquisition equity interest in acquiree percentage"><ix:nonFraction name="us-gaap:BusinessCombinationStepAcquisitionEquityInterestInAcquireePercentage" contextRef="AsOf2020-01-15_custom_DognessPetCultureDongguanCoLtdMember_custom_MrSilongChenMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">51.2</ix:nonFraction></span>% ownership interest of Dogness Culture for
a nominal fee. The remaining equity interest of <span id="xdx_901_eus-gaap--BusinessCombinationStepAcquisitionEquityInterestInAcquireePercentage_iI_pid_dp_uPure_c20200115__us-gaap--BusinessAcquisitionAxis__custom--DognessPetCultureDongguanCoLtdMember__srt--TitleOfIndividualAxis__custom--TwoThirdPartiesMember_zQexscCBM54l" title="Business combination step acquisition equity interest in acquiree percentage"><ix:nonFraction name="us-gaap:BusinessCombinationStepAcquisitionEquityInterestInAcquireePercentage" contextRef="AsOf2020-01-15_custom_DognessPetCultureDongguanCoLtdMember_custom_TwoThirdPartiesMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">48.8</ix:nonFraction></span>% was also transferred to other two third parties for a nominal fee. Dongguan Dogness
thereafter contributed cash consideration of RMB<span id="xdx_902_eus-gaap--BusinessCombinationConsiderationTransferred1_pn4n6_uRMB_c20200114__20200115__us-gaap--BusinessAcquisitionAxis__custom--DognessPetCultureDongguanCoLtdMember__srt--TitleOfIndividualAxis__custom--MrSilongChenMember_zisqcXsNXQDh" title="Business combination consideration transferred"><ix:nonFraction name="us-gaap:BusinessCombinationConsiderationTransferred1" contextRef="From2020-01-142020-01-15_custom_DognessPetCultureDongguanCoLtdMember_custom_MrSilongChenMember" format="ixt:numdotdecimal" decimals="-4" scale="6" unitRef="RMB">5.12</ix:nonFraction></span> million (approximately $<span id="xdx_90C_eus-gaap--BusinessCombinationConsiderationTransferred1_pn4n6_c20200114__20200115__us-gaap--BusinessAcquisitionAxis__custom--DognessPetCultureDongguanCoLtdMember__srt--TitleOfIndividualAxis__custom--MrSilongChenMember_zTwUzeUbQGHh" title="Cash consideration"><ix:nonFraction name="us-gaap:BusinessCombinationConsiderationTransferred1" contextRef="From2020-01-142020-01-15_custom_DognessPetCultureDongguanCoLtdMember_custom_MrSilongChenMember" format="ixt:numdotdecimal" decimals="-4" scale="6" unitRef="USD">0.79</ix:nonFraction></span> million) on April 16, 2020 along with other two shareholders&#8217;
capital contributions of RMB<span id="xdx_900_eus-gaap--Capital_iI_pn4n6_uRMB_c20200115__us-gaap--BusinessAcquisitionAxis__custom--DognessPetCultureDongguanCoLtdMember__srt--TitleOfIndividualAxis__custom--MrSilongChenMember_zyODN3PwE331" title="Capital contributions"><ix:nonFraction name="us-gaap:Capital" contextRef="AsOf2020-01-15_custom_DognessPetCultureDongguanCoLtdMember_custom_MrSilongChenMember" format="ixt:numdotdecimal" decimals="-4" scale="6" unitRef="RMB">4.88</ix:nonFraction></span> million (approximately $<span id="xdx_90C_eus-gaap--Capital_iI_pn4n6_c20200115__us-gaap--BusinessAcquisitionAxis__custom--DognessPetCultureDongguanCoLtdMember__srt--TitleOfIndividualAxis__custom--MrSilongChenMember_zlN88orweXpe" title="Capital contributions"><ix:nonFraction name="us-gaap:Capital" contextRef="AsOf2020-01-15_custom_DognessPetCultureDongguanCoLtdMember_custom_MrSilongChenMember" format="ixt:numdotdecimal" decimals="-4" scale="6" unitRef="USD">0.76</ix:nonFraction></span> million). Dogness Culture will mainly focus on developing and expanding
pet food market and pet related service in China. On July 19, 2023, the Board approved the liquidation, dissolution, and termination
of Dogness culture following the signing of a termination agreement among Dogness&#8217;s Culture&#8217;s shareholders on May 8, 2023.</span></p>

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<ix:exclude><!-- Field: Page; Sequence: 147; Value: 1 -->
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    <div style="break-before: page; margin-top: 6pt"><p style="margin: 0pt">&#160;</p></div>
    <!-- Field: /Page --></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>DOGNESS
(INTERNATIONAL) CORPORATION</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
amounts in USD)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="us-gaap:SignificantAccountingPoliciesTextBlock"><p id="xdx_80E_eus-gaap--SignificantAccountingPoliciesTextBlock_zt40BfsySio3" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTE
2 &#8211; <span id="xdx_82A_zvmDD9e3GZ9i">SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="us-gaap:BasisOfAccountingPolicyPolicyTextBlock"><p id="xdx_844_eus-gaap--BasisOfAccountingPolicyPolicyTextBlock_zc28sqZWTHfi" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_866_zFgF1zTaYgA5">Basis
of Presentation and Principles of Consolidation</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the
United States of America (&#8220;US GAAP&#8221;) and have been consistently applied.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="us-gaap:ScheduleOfVariableInterestEntitiesTextBlock"><p id="xdx_899_eus-gaap--ScheduleOfVariableInterestEntitiesTextBlock_zYr3lJZLw36h" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company&#8217;s consolidated financial statements reflect the operating results of the following entities:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span id="xdx_8BB_zqAReRyx96Sg" style="display: none">SCHEDULE OF ENTITIES</span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom">
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                                            of</span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Incorporation</span></p></td>
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                                            of</span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Incorporation</span></p></td>
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                                            of</span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Ownership</span></p></td>
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    <td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Dogness
    (International) Corporation (&#8220;Dogness&#8221; or the &#8220;Company&#8221;)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_90B_eus-gaap--VariableInterestEntityVIEActivitiesOfVIE_c20220701__20230630__dei--LegalEntityAxis__custom--DognessInternationalCorporationMember_zPfmnbcwz6Bd" title="Principal Activities"><ix:nonNumeric contextRef="From2022-07-012023-06-30_custom_DognessInternationalCorporationMember" name="us-gaap:VariableInterestEntityVIEActivitiesOfVIE">Holding
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    (Hongkong) Pet&#8217;s Products Co., Limited (&#8220;HK Dogness&#8221;)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 2%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center; width: 14%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_908_edei--EntityIncorporationDateOfIncorporation_c20220701__20230630__dei--LegalEntityAxis__custom--DognessHongKongPetProductsCoLimitedMember_z5afNnaFFbo3" title="Date of Incorporation"><ix:nonNumeric contextRef="From2022-07-012023-06-30_custom_DognessHongKongPetProductsCoLimitedMember" format="ixt:datemonthdayyearen" name="dei:EntityIncorporationDateOfIncorporation">March
    10, 2009</ix:nonNumeric></span> </span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 2%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center; width: 14%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_904_ecustom--PlaceOfIncorporation_c20220701__20230630__dei--LegalEntityAxis__custom--DognessHongKongPetProductsCoLimitedMember_z2K4jTCBy8n1" title="Place of Incorporation"><ix:nonNumeric contextRef="From2022-07-012023-06-30_custom_DognessHongKongPetProductsCoLimitedMember" name="DOGZ:PlaceOfIncorporation">Hong
    Kong</ix:nonNumeric></span></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 2%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 1%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right; width: 14%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_906_eus-gaap--VariableInterestEntityOwnershipPercentage_pid_dp_uPure_c20220701__20230630__dei--LegalEntityAxis__custom--DognessHongKongPetProductsCoLimitedMember_zy49tYMKWB" title="% of Ownership"><ix:nonFraction name="us-gaap:VariableInterestEntityOwnershipPercentage" contextRef="From2022-07-012023-06-30_custom_DognessHongKongPetProductsCoLimitedMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">100</ix:nonFraction></span></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 1%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">%</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 2%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center; width: 24%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_901_eus-gaap--VariableInterestEntityVIEActivitiesOfVIE_c20220701__20230630__dei--LegalEntityAxis__custom--DognessHongKongPetProductsCoLimitedMember_zUJzwcK5ZNnd" title="Principal Activities"><ix:nonNumeric contextRef="From2022-07-012023-06-30_custom_DognessHongKongPetProductsCoLimitedMember" name="us-gaap:VariableInterestEntityVIEActivitiesOfVIE">Trading</ix:nonNumeric></span></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Jiasheng
    Enterprise (Hong Kong) Co., Limited (&#8220;HK Jiasheng&#8221;)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_90F_edei--EntityIncorporationDateOfIncorporation_c20220701__20230630__dei--LegalEntityAxis__custom--JiashengEnterpriseHongKongCoLimitedMember_zdlvCopnjwal" title="Date of Incorporation"><ix:nonNumeric contextRef="From2022-07-012023-06-30_custom_JiashengEnterpriseHongKongCoLimitedMember" format="ixt:datemonthdayyearen" name="dei:EntityIncorporationDateOfIncorporation">July
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_90D_ecustom--PlaceOfIncorporation_c20220701__20230630__dei--LegalEntityAxis__custom--JiashengEnterpriseHongKongCoLimitedMember_zKBwOXrHWar" title="Place of Incorporation"><ix:nonNumeric contextRef="From2022-07-012023-06-30_custom_JiashengEnterpriseHongKongCoLimitedMember" name="DOGZ:PlaceOfIncorporation">Hong
    Kong</ix:nonNumeric></span></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_903_eus-gaap--VariableInterestEntityOwnershipPercentage_pid_dp_uPure_c20220701__20230630__dei--LegalEntityAxis__custom--JiashengEnterpriseHongKongCoLimitedMember_z28Df7vHY7me" title="% of Ownership"><ix:nonFraction name="us-gaap:VariableInterestEntityOwnershipPercentage" contextRef="From2022-07-012023-06-30_custom_JiashengEnterpriseHongKongCoLimitedMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">100</ix:nonFraction></span></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">%</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_901_eus-gaap--VariableInterestEntityVIEActivitiesOfVIE_c20220701__20230630__dei--LegalEntityAxis__custom--JiashengEnterpriseHongKongCoLimitedMember_zmLTXgYQSkhi" title="Principal Activities"><ix:nonNumeric contextRef="From2022-07-012023-06-30_custom_JiashengEnterpriseHongKongCoLimitedMember" name="us-gaap:VariableInterestEntityVIEActivitiesOfVIE">Trading</ix:nonNumeric></span></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Dogness
    Intelligence Technology (Dongguan) Co., Ltd. (&#8220;Dongguan Dogness&#8221;)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_90E_eus-gaap--VariableInterestEntityOwnershipPercentage_pid_dp_uPure_c20220701__20230630__dei--LegalEntityAxis__custom--DognessIntelligenceTechnologyDongguanCoLtdMember_zm1r4AVwzHxf" title="% of Ownership"><ix:nonFraction name="us-gaap:VariableInterestEntityOwnershipPercentage" contextRef="From2022-07-012023-06-30_custom_DognessIntelligenceTechnologyDongguanCoLtdMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">100</ix:nonFraction></span></span></td>
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Dongguan
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_900_eus-gaap--VariableInterestEntityOwnershipPercentage_pid_dp_uPure_c20220701__20230630__dei--LegalEntityAxis__custom--DongguanJiashengEnterpriseCoLtdMember_zkoQsA8WtE03" title="% of Ownership"><ix:nonFraction name="us-gaap:VariableInterestEntityOwnershipPercentage" contextRef="From2022-07-012023-06-30_custom_DongguanJiashengEnterpriseCoLtdMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">100</ix:nonFraction></span></span></td>
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Zhangzhou
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_909_eus-gaap--VariableInterestEntityOwnershipPercentage_pid_dp_uPure_c20220701__20230630__dei--LegalEntityAxis__custom--DognessIntelligenceTechnologyCoLtdMember_fKg_____zAcqyt47hLV5" title="% of Ownership"><ix:nonFraction name="us-gaap:VariableInterestEntityOwnershipPercentage" contextRef="From2022-07-012023-06-30_custom_DognessIntelligenceTechnologyCoLtdMember" id="Fact001013" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">58</ix:nonFraction></span></span></td>
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
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    Pet Culture (Dongguan) Co. Ltd. (&#8220;Dogness Culture&#8221;)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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    China</ix:nonNumeric></span></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_90B_eus-gaap--VariableInterestEntityOwnershipPercentage_pid_dp_uPure_c20220701__20230630__dei--LegalEntityAxis__custom--DognessPetCultureDongguanCoLtdMember_zPhukRMH4byk" title="% of Ownership"><ix:nonFraction name="us-gaap:VariableInterestEntityOwnershipPercentage" contextRef="From2022-07-012023-06-30_custom_DognessPetCultureDongguanCoLtdMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">51.2</ix:nonFraction></span></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">%</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_907_eus-gaap--VariableInterestEntityVIEActivitiesOfVIE_c20220701__20230630__dei--LegalEntityAxis__custom--DognessPetCultureDongguanCoLtdMember_zNFYWaEtZHua" title="Principal Activities"><ix:nonNumeric contextRef="From2022-07-012023-06-30_custom_DognessPetCultureDongguanCoLtdMember" name="us-gaap:VariableInterestEntityVIEActivitiesOfVIE">Developing
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  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 6pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 15pt; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b id="xdx_F0D_zxpUV69nUXj2">*</b></span></td><td style="text-align: justify"><span id="xdx_F1D_zQ3m2styZdtj" style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:footnote id="Footnote001024" xml:lang="en-US">Due to the fact
that Intelligence Guangzhou has no business activities since the incorporation and Dongguan Jiasheng has not made the capital contribution,
in August 2022, the Board approved to sell the Company&#8217;s <span id="xdx_907_eus-gaap--EquityMethodInvestmentOwnershipPercentage_iI_pid_dp_uPure_c20230630__srt--ScheduleOfEquityMethodInvestmentEquityMethodInvesteeNameAxis__custom--DognessIntelligenceTechnologyCoLtdMember_zwWBS4ZQ9Ksb" class="xdx_phnt_RGlzY2xvc3VyZSAtIFNDSEVEVUxFIE9GIEVOVElUSUVTIChEZXRhaWxzKSAoUGFyZW50aGV0aWNhbCkA"><ix:nonFraction name="us-gaap:EquityMethodInvestmentOwnershipPercentage" contextRef="AsOf2023-06-30_custom_DognessIntelligenceTechnologyCoLtdMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">58</ix:nonFraction></span>%
ownership interest in Dogness Intelligence Technology Co., Ltd. to a third party for a nominal price. The transaction was completed on
August 10, 2022. Because Intelligence Guangzhou has not commenced any operation since inception, management determined that this disposition
did not represent a strategic shift and had no significant effect on the Company&#8217;s operations and financial results; therefore,
no discontinued operations were presented.</ix:footnote></span></td>
</tr></table>

</ix:nonNumeric><p id="xdx_8A1_zW4rN0CQaDo4" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="DOGZ:NoncontrollingInterestsPolicyTextBlock"><p id="xdx_849_ecustom--NoncontrollingInterestsPolicyTextBlock_zlBPesQ4mLz6" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_86D_ze894C3zSlM2">Non-controlling
interests</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of June 30, 2023, non-controlling interests represent <span id="xdx_908_ecustom--MinorityInterestOwnershipPercentageByNoncontrollingOwner_iI_pid_dp_uPure_c20230630__dei--LegalEntityAxis__custom--DognessPetCultureDongguanCoLtdMember_zwb4kQy1SLyg" title="Non controlling interests"><ix:nonFraction name="DOGZ:MinorityInterestOwnershipPercentageByNoncontrollingOwner" contextRef="AsOf2023-06-30_custom_DognessPetCultureDongguanCoLtdMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">48.8</ix:nonFraction></span>% non-controlling shareholders&#8217; interests in Dogness Culture, respectively.
The non-controlling interests are presented in the consolidated balance sheets, separately from equity attributable to the shareholders
of the Company. Non-controlling interests in the operating results of the Company are presented on the face of the consolidated statements
of comprehensive income (loss) as an allocation of the total income or loss between non-controlling interest holders and the shareholders
of the Company.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


<ix:exclude><!-- Field: Page; Sequence: 148; Value: 1 -->
    <div style="border-bottom: Black 1.5pt solid; margin-bottom: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="text-align: center; width: 100%">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->8<!-- Field: /Sequence --></td></tr></table></div>
    <div style="break-before: page; margin-top: 6pt"><p style="margin: 0pt">&#160;</p></div>
    <!-- Field: /Page --></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>DOGNESS
(INTERNATIONAL) CORPORATION</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
amounts in USD)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTE
2 &#8211; SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="us-gaap:UseOfEstimates"><p id="xdx_841_eus-gaap--UseOfEstimates_zXqDKv545J44" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_86C_zI7ta7MOo9y4">Use
of Estimates</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
preparing the consolidated financial statements in conformity with US GAAP, management makes estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting period. These estimates are based on information as of the date
of the consolidated financial statements. Significant estimates required to be made by management include, but are not limited to, the
valuation of accounts receivable, inventories, advances to suppliers, useful lives of property, plant, right-of-use assets (including
lease liabilities) and equipment, intangible assets, the recoverability of long-lived assets, provision necessary for contingent liabilities,
and realization of deferred tax assets. Actual results could differ from those estimates.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="us-gaap:CashAndCashEquivalentsPolicyTextBlock"><p id="xdx_844_eus-gaap--CashAndCashEquivalentsPolicyTextBlock_zWFbp8bZOuAk" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_866_z3r0jzWmaCy3">Cash
and Cash Equivalents</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="us-gaap:InvestmentPolicyTextBlock"><p id="xdx_84C_eus-gaap--InvestmentPolicyTextBlock_zdhkynJLihT8" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_86B_zn2Lwf83Ui06">Short-term
Investments</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company&#8217;s short-term investments consist of wealth management financial products purchased from PRC banks with maturities between
one month to twelve months. The banks invest the Company&#8217;s fund in certain financial instruments including money market funds,
bonds or mutual funds, with rates of return on these investments ranging from <span id="xdx_905_ecustom--InvestmentsPercentage_pid_dp_uPure_c20220701__20230630__srt--RangeAxis__srt--MinimumMember_zJwYyAUwEglb" title="Investments percentage"><ix:nonFraction name="DOGZ:InvestmentsPercentage" contextRef="From2022-07-012023-06-30_srt_MinimumMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">1.5</ix:nonFraction></span>% to <span id="xdx_904_ecustom--InvestmentsPercentage_pid_dp_uPure_c20220701__20230630__srt--RangeAxis__srt--MaximumMember_zEuhpkZhwFb9" title="Investments percentage"><ix:nonFraction name="DOGZ:InvestmentsPercentage" contextRef="From2022-07-012023-06-30_srt_MaximumMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">3.8</ix:nonFraction></span>% per annum. The carrying values of the Company&#8217;s
short-term investments approximate fair value because of their short-term maturities. The interest earned is recognized in the consolidated
statements of comprehensive income (loss) over the contractual term of these investments.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company had short-term investments of $<span id="xdx_905_eus-gaap--ShortTermInvestments_iI_pp0p0_dxL_c20230630_zDmvGp3R5uP1" title="Short-term investments::XDX::-"><span style="-sec-ix-hidden: xdx2ixbrl1041">Nil</span></span> and $<span id="xdx_905_eus-gaap--ShortTermInvestments_iI_pp0p0_c20220630_z0MCtoL9R8nb" title="Short-term investments"><ix:nonFraction name="us-gaap:ShortTermInvestments" contextRef="AsOf2022-06-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">52,255</ix:nonFraction></span> as of June 30, 2023 and 2022, respectively. The Company recorded interest income
of $<span id="xdx_903_eus-gaap--InterestIncomeOther_c20220701__20230630_znd9yxgcttD5" title="Interest income"><ix:nonFraction name="us-gaap:InterestIncomeOther" contextRef="From2022-07-01to2023-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">13,190</ix:nonFraction></span>, $<span id="xdx_909_eus-gaap--InterestIncomeOther_c20210701__20220630_z0i2FQitZHPg" title="Interest income"><ix:nonFraction name="us-gaap:InterestIncomeOther" contextRef="From2021-07-012022-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,385</ix:nonFraction></span> and $<span id="xdx_901_eus-gaap--InterestIncomeOther_c20200701__20210630_zDGXoTIeYMb6" title="Interest income"><ix:nonFraction name="us-gaap:InterestIncomeOther" contextRef="From2020-07-012021-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">48,058</ix:nonFraction></span> for the years ended June 30, 2023, 2022 and 2021, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="us-gaap:TradeAndOtherAccountsReceivablePolicy"><p id="xdx_84E_eus-gaap--TradeAndOtherAccountsReceivablePolicy_zc60f9Wf5oM6" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_86E_zofCo9th5QZ7">Accounts
Receivable, net</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">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. In June 2016, the FASB issued ASU No. 2016-13, &#8220;Financial
Instruments &#8212; Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,&#8221; which requires the Company
to measure and recognize expected credit losses for financial assets held and not accounted for at fair value through net income. The
Company adopted this guidance effective January 1, 2023. The Company establishes a provision for doubtful receivables based on management&#8217;s
best estimates of specific losses on individual exposures, as well as a provision on historical trends of collections. The provision
is recorded against accounts receivables balances, with a corresponding charge recorded in the consolidated statements of income and
comprehensive income. 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 $<span id="xdx_90B_eus-gaap--AllowanceForDoubtfulAccountsReceivable_iI_pp0p0_c20230630_zo1kyblXXf5i" title="Allowances for accounts receivable"><ix:nonFraction name="us-gaap:AllowanceForDoubtfulAccountsReceivable" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">160,026</ix:nonFraction></span> and $<span id="xdx_900_eus-gaap--AllowanceForDoubtfulAccountsReceivable_iI_pp0p0_c20220630_z9j70pVt0gb5" title="Allowances for accounts receivable"><ix:nonFraction name="us-gaap:AllowanceForDoubtfulAccountsReceivable" contextRef="AsOf2022-06-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">6,872</ix:nonFraction></span> as of June 30,
2023 and 2022.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


<ix:exclude><!-- Field: Page; Sequence: 149; Value: 1 -->
    <div style="border-bottom: Black 1.5pt solid; margin-bottom: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="text-align: center; width: 100%">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->9<!-- Field: /Sequence --></td></tr></table></div>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>DOGNESS
(INTERNATIONAL) CORPORATION</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
amounts in USD)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTE
2 &#8211; SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="us-gaap:InventorySuppliesPolicy"><p id="xdx_848_eus-gaap--InventorySuppliesPolicy_zW57zyo1gxVa" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_869_zTOT01LJp7rb">Inventories,
net</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="us-gaap:LoansAndLeasesReceivablePrepaymentEstimateAssumptionsPolicy"><p id="xdx_844_eus-gaap--LoansAndLeasesReceivablePrepaymentEstimateAssumptionsPolicy_zOF7Brwh23Ek" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_86F_zpYBSoYqv4ea">Prepayments
and other assets</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Prepayments
and other assets primarily consist 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, prepaid service fee, security deposits.
These advances are interest free, unsecured and short-term in nature and are reviewed periodically to determine whether their carrying
value has become impaired.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="us-gaap:PropertyPlantAndEquipmentPolicyTextBlock"><p id="xdx_84A_eus-gaap--PropertyPlantAndEquipmentPolicyTextBlock_zWC3mYO7NOO5" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_863_zrjBF6wIW0C">Property,
Plant and Equipment, net</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">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:</span></p>

<ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="DOGZ:ScheduleOfPropertyAndEquiipmentUsefulLifeTableTextBlock"><p id="xdx_890_ecustom--ScheduleOfPropertyAndEquiipmentUsefulLifeTableTextBlock_zHHtsBvYdGNa" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span id="xdx_8BF_zpNh6k288PWb" style="display: none">SCHEDULE OF PROPERTY AND EQUIPMENT USEFUL LIFE</span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: white">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Useful
    life</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: #CCEEFF">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 76%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Buildings</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 2%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 22%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_90F_eus-gaap--PropertyPlantAndEquipmentUsefulLife_iI_dtY_c20230630__us-gaap--PropertyPlantAndEquipmentByTypeAxis__us-gaap--BuildingMember__srt--RangeAxis__srt--MinimumMember_zch5mxTHsE3f" title="Property, plant and equipment useful life"><ix:nonNumeric contextRef="AsOf2023-06-30_us-gaap_BuildingMember_srt_MinimumMember" format="ixt-sec:duryear" name="us-gaap:PropertyPlantAndEquipmentUsefulLife">10</ix:nonNumeric></span>-<span id="xdx_90D_eus-gaap--PropertyPlantAndEquipmentUsefulLife_iI_dtY_c20230630__us-gaap--PropertyPlantAndEquipmentByTypeAxis__us-gaap--BuildingMember__srt--RangeAxis__srt--MaximumMember_zH2XLL3VqXyl" title="Property, plant and equipment useful life"><ix:nonNumeric contextRef="AsOf2023-06-30_us-gaap_BuildingMember_srt_MaximumMember" format="ixt-sec:duryear" name="us-gaap:PropertyPlantAndEquipmentUsefulLife">50</ix:nonNumeric></span>
    years</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: white">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Leasehold
    improvement</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_909_eus-gaap--PropertyPlantAndEquipmentUsefulLifeDescriptionOfTermExtensibleEnumeration_iI_dxL_c20230630__us-gaap--PropertyPlantAndEquipmentByTypeAxis__us-gaap--LeaseholdImprovementsMember_z14ifkXcqGe6" title="::XDX::http%3A%2F%2Ffasb.org%2Fus-gaap%2F2023%23UsefulLifeTermOfLeaseMember"><span style="-sec-ix-hidden: xdx2ixbrl1068">Lesser
    of useful life or lease term</span></span></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: #CCEEFF">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Machinery
    and equipment</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_905_eus-gaap--PropertyPlantAndEquipmentUsefulLife_iI_dtY_c20230630__us-gaap--PropertyPlantAndEquipmentByTypeAxis__us-gaap--MachineryAndEquipmentMember__srt--RangeAxis__srt--MinimumMember_zGN1dk2E6u4i" title="Property, plant and equipment useful life"><ix:nonNumeric contextRef="AsOf2023-06-30_us-gaap_MachineryAndEquipmentMember_srt_MinimumMember" format="ixt-sec:duryear" name="us-gaap:PropertyPlantAndEquipmentUsefulLife">5</ix:nonNumeric></span>-<span id="xdx_903_eus-gaap--PropertyPlantAndEquipmentUsefulLife_iI_dtY_c20230630__us-gaap--PropertyPlantAndEquipmentByTypeAxis__us-gaap--MachineryAndEquipmentMember__srt--RangeAxis__srt--MaximumMember_zanuFR0egKvf" title="Property, plant and equipment useful life"><ix:nonNumeric contextRef="AsOf2023-06-30_us-gaap_MachineryAndEquipmentMember_srt_MaximumMember" format="ixt-sec:duryear" name="us-gaap:PropertyPlantAndEquipmentUsefulLife">10</ix:nonNumeric></span>
    years</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: white">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Automobiles</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_90B_eus-gaap--PropertyPlantAndEquipmentUsefulLife_iI_dtY_c20230630__us-gaap--PropertyPlantAndEquipmentByTypeAxis__us-gaap--AutomobilesMember_zDHWlrcFXdc4" title="Property, plant and equipment useful life"><ix:nonNumeric contextRef="AsOf2023-06-30_us-gaap_AutomobilesMember" format="ixt-sec:duryear" name="us-gaap:PropertyPlantAndEquipmentUsefulLife">5</ix:nonNumeric></span>
    years</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: #CCEEFF">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Office
    equipment and furniture</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_909_eus-gaap--PropertyPlantAndEquipmentUsefulLife_iI_dtY_c20230630__us-gaap--PropertyPlantAndEquipmentByTypeAxis__us-gaap--OfficeEquipmentMember_zW2O2GQAZkeb" title="Property, plant and equipment useful life"><ix:nonNumeric contextRef="AsOf2023-06-30_us-gaap_OfficeEquipmentMember" format="ixt-sec:duryear" name="us-gaap:PropertyPlantAndEquipmentUsefulLife">5</ix:nonNumeric></span>
    years</span></td></tr>
  </table>
</ix:nonNumeric><p id="xdx_8A3_zibfQnhXLe85" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Expenditures
for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred. Expenditures
for major renewals and betterments that substantially extend the useful life of assets are capitalized. The cost and related accumulated
depreciation of assets retired or sold are removed from the respective accounts, and any gain or loss is recognized in the consolidated
statements of other comprehensive income (loss) in other income or expenses.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="us-gaap:IntangibleAssetsFiniteLivedPolicy"><p id="xdx_84B_eus-gaap--IntangibleAssetsFiniteLivedPolicy_zXEFWPPcU1Tf" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_869_zTC8eAjkNg5b">Intangible
Assets, net</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">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 &#8220;ownership.&#8221;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">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 <span id="xdx_90A_eus-gaap--FiniteLivedIntangibleAssetUsefulLife_iI_dtY_c20230630__us-gaap--FiniteLivedIntangibleAssetsByMajorClassAxis__custom--SoftwareMember_zKtSQ7lSfFt4" title="Intangible asset, useful life"><ix:nonNumeric contextRef="AsOf2023-06-30_custom_SoftwareMember" format="ixt-sec:duryear" name="us-gaap:FiniteLivedIntangibleAssetUsefulLife">10</ix:nonNumeric></span> years. Land use rights are amortization using the straight-line method over the estimated useful
life of <span id="xdx_903_eus-gaap--FiniteLivedIntangibleAssetUsefulLife_iI_dtY_c20230630__us-gaap--FiniteLivedIntangibleAssetsByMajorClassAxis__us-gaap--LandMember_zXDxiOp8bVG" title="Intangible asset, useful life"><ix:nonNumeric contextRef="AsOf2023-06-30_us-gaap_LandMember" format="ixt-sec:duryear" name="us-gaap:FiniteLivedIntangibleAssetUsefulLife">50</ix:nonNumeric></span> years, which is determined in connection with the term of the land use rights.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>


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    <div style="break-before: page; margin-top: 6pt"><p style="margin: 0pt">&#160;</p></div>
    <!-- Field: /Page --></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>DOGNESS
(INTERNATIONAL) CORPORATION</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
amounts in USD)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTE
2 &#8211; SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="us-gaap:EquityMethodInvestmentsPolicy"><p id="xdx_849_eus-gaap--EquityMethodInvestmentsPolicy_zBfZZSfoFl63" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_860_zHLYZLazDVG2">Long-term
Investments in Equity Investees</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
July 1, 2018, the Company adopted Accounting Standards Codification (&#8220;ASC&#8221;) 321 &#8220;Investments&#8212;Equity Securities&#8221;
(&#8220;ASC 321&#8221;). In accordance with ASC 321, equity securities over which the Company has no significant influence (generally
less than a <span id="xdx_904_eus-gaap--EquityMethodInvestmentOwnershipPercentage_iI_pid_dp_uPure_c20180701__srt--RangeAxis__srt--MaximumMember__srt--ScheduleOfEquityMethodInvestmentEquityMethodInvesteeNameAxis__custom--InvestmentsEquitySecuritiesMember_z2szYokDX6j2" title="Ownership percentage"><ix:nonFraction name="us-gaap:EquityMethodInvestmentOwnershipPercentage" contextRef="AsOf2018-07-01_srt_MaximumMember_custom_InvestmentsEquitySecuritiesMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">20</ix:nonFraction></span>% 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.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Nanjing
Rootaya Intelligence Technology Co., Ltd. (&#8220;Nanjing Rootaya&#8221;) 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<span id="xdx_90F_eus-gaap--LongTermInvestments_iI_pn4n6_uRMB_c20180731__srt--ScheduleOfEquityMethodInvestmentEquityMethodInvesteeNameAxis__custom--NanjingRootayaIntelligenceTechnologyCoLtdMember__us-gaap--TypeOfArrangementAxis__custom--EquityInvestmentAgreementMember_zqEyLw0zGWXb" title="Long-term investments"><ix:nonFraction name="us-gaap:LongTermInvestments" contextRef="AsOf2018-07-31_custom_NanjingRootayaIntelligenceTechnologyCoLtdMember_custom_EquityInvestmentAgreementMember" format="ixt:numdotdecimal" decimals="-4" scale="6" unitRef="RMB">1.25</ix:nonFraction></span> million ($<span id="xdx_906_eus-gaap--LongTermInvestments_iI_pp0p0_c20180731__srt--ScheduleOfEquityMethodInvestmentEquityMethodInvesteeNameAxis__custom--NanjingRootayaIntelligenceTechnologyCoLtdMember__us-gaap--TypeOfArrangementAxis__custom--EquityInvestmentAgreementMember_ztVVvc7pwXri" title="Long-term investments"><ix:nonFraction name="us-gaap:LongTermInvestments" contextRef="AsOf2018-07-31_custom_NanjingRootayaIntelligenceTechnologyCoLtdMember_custom_EquityInvestmentAgreementMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">172,375</ix:nonFraction></span>) for <span id="xdx_90C_eus-gaap--EquityMethodInvestmentOwnershipPercentage_iI_pid_dp_uPure_c20180731__srt--ScheduleOfEquityMethodInvestmentEquityMethodInvesteeNameAxis__custom--NanjingRootayaIntelligenceTechnologyCoLtdMember__us-gaap--TypeOfArrangementAxis__custom--EquityInvestmentAgreementMember_znFjNXKxS376" title="Ownership percentage"><ix:nonFraction name="us-gaap:EquityMethodInvestmentOwnershipPercentage" contextRef="AsOf2018-07-31_custom_NanjingRootayaIntelligenceTechnologyCoLtdMember_custom_EquityInvestmentAgreementMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">10</ix:nonFraction></span>% of the ownership interest in Nanjing Rootaya, with the remaining <span id="xdx_90E_eus-gaap--EquityMethodInvestmentOwnershipPercentage_iI_dp_c20180731__srt--ScheduleOfEquityMethodInvestmentEquityMethodInvesteeNameAxis__custom--ThreeUnrelatedShareholdersMember__us-gaap--TypeOfArrangementAxis__custom--EquityInvestmentAgreementMember_z34B36tgu3Jl" title="Ownership percentage"><ix:nonFraction name="us-gaap:EquityMethodInvestmentOwnershipPercentage" contextRef="AsOf2018-07-31_custom_ThreeUnrelatedShareholdersMember_custom_EquityInvestmentAgreementMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">90</ix:nonFraction></span>% of
the ownership interest owned by three unrelated shareholders.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Dogness
Network Technology Co., Ltd (&#8220;Dogness Network&#8221;) 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<span id="xdx_907_eus-gaap--LongTermInvestments_iI_pn5n6_uRMB_c20181130__srt--ScheduleOfEquityMethodInvestmentEquityMethodInvesteeNameAxis__custom--DognessNetworkTechnologyCoLimitedMember__us-gaap--TypeOfArrangementAxis__custom--EquityInvestmentAgreementMember_zoW9vpGYu1I5" title="Long-term investments"><ix:nonFraction name="us-gaap:LongTermInvestments" contextRef="AsOf2018-11-30_custom_DognessNetworkTechnologyCoLimitedMember_custom_EquityInvestmentAgreementMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="RMB">8.0</ix:nonFraction></span> million ($<span id="xdx_900_eus-gaap--LongTermInvestments_iI_pp0p0_c20181130__srt--ScheduleOfEquityMethodInvestmentEquityMethodInvesteeNameAxis__custom--DognessNetworkTechnologyCoLimitedMember__us-gaap--TypeOfArrangementAxis__custom--EquityInvestmentAgreementMember_zXqAmNpE4cV" title="Long-term investments"><ix:nonFraction name="us-gaap:LongTermInvestments" contextRef="AsOf2018-11-30_custom_DognessNetworkTechnologyCoLimitedMember_custom_EquityInvestmentAgreementMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">1,103,200</ix:nonFraction></span>) for <span id="xdx_90A_eus-gaap--EquityMethodInvestmentOwnershipPercentage_iI_pid_dp_uPure_c20181130__srt--ScheduleOfEquityMethodInvestmentEquityMethodInvesteeNameAxis__custom--DognessNetworkTechnologyCoLimitedMember__us-gaap--TypeOfArrangementAxis__custom--EquityInvestmentAgreementMember_zPFpzRPiYv44" title="Ownership percentage"><ix:nonFraction name="us-gaap:EquityMethodInvestmentOwnershipPercentage" contextRef="AsOf2018-11-30_custom_DognessNetworkTechnologyCoLimitedMember_custom_EquityInvestmentAgreementMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">10</ix:nonFraction></span>% of the ownership interest in Dogness Network, with the remaining <span id="xdx_902_eus-gaap--EquityMethodInvestmentOwnershipPercentage_iI_pid_dp_uPure_c20181130__srt--ScheduleOfEquityMethodInvestmentEquityMethodInvesteeNameAxis__custom--UnrelatedShareholderMember__us-gaap--TypeOfArrangementAxis__custom--EquityInvestmentAgreementMember_zlur5hIrc4if" title="Ownership percentage"><ix:nonFraction name="us-gaap:EquityMethodInvestmentOwnershipPercentage" contextRef="AsOf2018-11-30_custom_UnrelatedShareholderMember_custom_EquityInvestmentAgreementMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">90</ix:nonFraction></span>% of the ownership
interest owned by an unrelated shareholder.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Linsun
Smart Technology Co., Ltd (&#8220;Linsun&#8221;) 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<span id="xdx_90A_eus-gaap--LongTermInvestments_iI_pn5n6_uRMB_c20181130__srt--ScheduleOfEquityMethodInvestmentEquityMethodInvesteeNameAxis__custom--LinsunSmartTechnologyCoLtdMember__us-gaap--TypeOfArrangementAxis__custom--EquityInvestmentAgreementMember_zOVwHG5gYWM4" title="Long-term investments"><ix:nonFraction name="us-gaap:LongTermInvestments" contextRef="AsOf2018-11-30_custom_LinsunSmartTechnologyCoLtdMember_custom_EquityInvestmentAgreementMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="RMB">3.0</ix:nonFraction></span>
million ($<span id="xdx_908_eus-gaap--LongTermInvestments_iI_pp0p0_c20181130__srt--ScheduleOfEquityMethodInvestmentEquityMethodInvesteeNameAxis__custom--LinsunSmartTechnologyCoLtdMember__us-gaap--TypeOfArrangementAxis__custom--EquityInvestmentAgreementMember_zZJQGbSwfI09" title="Long-term investments"><ix:nonFraction name="us-gaap:LongTermInvestments" contextRef="AsOf2018-11-30_custom_LinsunSmartTechnologyCoLtdMember_custom_EquityInvestmentAgreementMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">413,700</ix:nonFraction></span>) for <span id="xdx_90B_eus-gaap--EquityMethodInvestmentOwnershipPercentage_iI_pid_dp_uPure_c20181130__srt--ScheduleOfEquityMethodInvestmentEquityMethodInvesteeNameAxis__custom--LinsunSmartTechnologyCoLtdMember__us-gaap--TypeOfArrangementAxis__custom--EquityInvestmentAgreementMember_zSWnIkYKQpN" title="Ownership percentage"><ix:nonFraction name="us-gaap:EquityMethodInvestmentOwnershipPercentage" contextRef="AsOf2018-11-30_custom_LinsunSmartTechnologyCoLtdMember_custom_EquityInvestmentAgreementMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">13</ix:nonFraction></span>% of the ownership interest in Linsun, with the remaining <span id="xdx_906_eus-gaap--EquityMethodInvestmentOwnershipPercentage_iI_pid_dp_uPure_c20181130__srt--ScheduleOfEquityMethodInvestmentEquityMethodInvesteeNameAxis__custom--LinsunSmartTechnologyCoLtdMember__us-gaap--TypeOfArrangementAxis__custom--EquityInvestmentAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--ThreeUnrelatedShareholdersMember_zqHCupgy5Bmg" title="Ownership percentage"><ix:nonFraction name="us-gaap:EquityMethodInvestmentOwnershipPercentage" contextRef="AsOf2018-11-30_custom_LinsunSmartTechnologyCoLtdMember_custom_EquityInvestmentAgreementMember_custom_ThreeUnrelatedShareholdersMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">87</ix:nonFraction></span>% of the ownership interest owned by three unrelated
shareholders.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">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&#8217;s intelligent smart pet products. The Company accounts
for the above-mentioned investments using the measurement alternative in accordance with ASC 321.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Due
to the fact that Nanjing Rootaya reported significant net loss and working capital deficit, and is unable to generate positive cash flow
in the foreseeable future. A full impairment loss has been applied against this investment in fiscal 2020. For the Company&#8217;s investments
in Dogness Network and Linsun, no material impairment indicator was noted because their operation results indicated net income and cash
inflows.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of June 30, 2023 and 2022, the Company&#8217;s long-term investments in equity investees amounted to $<span id="xdx_900_eus-gaap--LongTermInvestments_iI_pp0p0_c20230630_zYL8JP7wPqsh" title="Long term investments"><ix:nonFraction name="us-gaap:LongTermInvestments" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">1,516,900</ix:nonFraction></span> and $<span id="xdx_906_eus-gaap--LongTermInvestments_iI_pp0p0_c20220630_zhiFgxqIYLse" title="Long term investments"><ix:nonFraction name="us-gaap:LongTermInvestments" contextRef="AsOf2022-06-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">1,642,300</ix:nonFraction></span>, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


<ix:exclude><!-- Field: Page; Sequence: 151; Value: 1 -->
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    <div style="break-before: page; margin-top: 6pt"><p style="margin: 0pt">&#160;</p></div>
    <!-- Field: /Page --></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>DOGNESS
(INTERNATIONAL) CORPORATION</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
amounts in USD)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTE
2 &#8211; SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="us-gaap:FairValueOfFinancialInstrumentsPolicy"><p id="xdx_846_eus-gaap--FairValueOfFinancialInstrumentsPolicy_zbM4ArywCpvi" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_868_z14nqBac0Obl">Fair
Value of Financial Instruments</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">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:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Level
    1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Level
    3 - inputs to the valuation methodology are unobservable.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Unless
otherwise disclosed, the fair value of the Company&#8217;s financial instruments including cash, short-term investments, accounts receivable,
and other current assets, accounts payable, advance from customers, 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&#8217;s long-term investments are accounted for using the measurement alternative in accordance with ASC 321, which also approximate
their recorded values.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="us-gaap:ImpairmentOrDisposalOfLongLivedAssetsPolicyTextBlock"><p id="xdx_84D_eus-gaap--ImpairmentOrDisposalOfLongLivedAssetsPolicyTextBlock_zhflCeMSSlB1" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_86B_ztnw1uTiqPzb">Long-lived
assets impairment</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company reviews long-lived assets, including definitive-lived intangible assets, for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. If the estimated cash flows from the use of the asset and its eventual
disposition are below the asset&#8217;s carrying value, then the asset is deemed to be impaired and written down to its fair value. <span id="xdx_901_eus-gaap--AssetImpairmentCharges_dxL_c20220701__20230630_zg9ZQpb68ULb" title="Long-lived assets impairment::XDX::-"><span id="xdx_90B_eus-gaap--AssetImpairmentCharges_dxL_c20210701__20220630_zcua9EUdhfj4" title="Long-lived assets impairment::XDX::-"><span id="xdx_907_eus-gaap--AssetImpairmentCharges_dxL_c20200701__20210630_zhiREe1Ins4a" title="Long-lived assets impairment::XDX::-"><span style="-sec-ix-hidden: xdx2ixbrl1120"><span style="-sec-ix-hidden: xdx2ixbrl1122"><span style="-sec-ix-hidden: xdx2ixbrl1124">No</span></span></span></span></span></span>
impairment was recorded for the years ended June 30, 2023, 2022 and 2021.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="us-gaap:LesseeLeasesPolicyTextBlock"><p id="xdx_84E_eus-gaap--LesseeLeasesPolicyTextBlock_zUWyTIc5d8B4" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_86F_z1NXz5p0iP5j">Leases</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company is the lessee in a lease contract when the Company obtains the right to use the asset. Operating leases are included in the line
items right-of-use asset, lease liabilities, current, and lease liabilities, long-term in the consolidated balance sheet.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Right-of-use
(&#8220;ROU&#8221;) asset represents the Company&#8217;s right to use an underlying asset for the lease term and lease obligations represent
the Company&#8217;s obligations to make lease payments arising from the lease, both of which are recognized based on the present value
of the future minimum lease payments over the lease term at the commencement date. Leases with a lease term of 12 months or less at inception
are not recorded on the consolidated balance sheet and are expensed on a straight-line basis over the lease term in the consolidated
statement of operations and comprehensive loss. The Company determines the lease term by agreement with lessor. As the Company&#8217;s
lease does not provide implicit interest rate, the Company uses the Company&#8217;s incremental borrowing rate based on the information
available at commencement date in determining the present value of future payments. Refer to Note 7 for further discussion.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="DOGZ:RentalIncomePolicyTextBlock"><p id="xdx_84D_ecustom--RentalIncomePolicyTextBlock_zcWgfBx4N889" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_863_zuaYBRhX6WPh">Rental
income</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Rental
revenues are recognized as earned in accordance with the terms of the respective lease agreement on a straight-line basis. Promotional
discounts are recognized as a reduction to rental income over the promotional period. Late charges, administrative fees and other fees
are recognized as income when earned. Management reviews the tenant&#8217;s payment history and financial condition periodically in determining,
in its judgment, whether any accrued rental income and unbilled rent receivable balances applicable to each specific property is collectable.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>DOGNESS
(INTERNATIONAL) CORPORATION</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
amounts in USD)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTE
2 &#8211; SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="us-gaap:RevenueRecognitionPolicyTextBlock"><p id="xdx_845_eus-gaap--RevenueRecognitionPolicyTextBlock_zdvWx28cw9C9" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_86E_zRoRVamkjQHa">Revenue
Recognition</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">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&#8217;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.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">To
determine revenue recognition for contracts with customers, the Company performs the following five steps: (i) identify the contract
with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable
consideration to the extent that it is probable that a significant future reversal will <i>not</i> occur, (iv) allocate the transaction
price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance
obligation.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Revenue
is recognized when obligations under the terms of a contract with the Company&#8217;s customers are satisfied. Satisfaction of contract
terms occur with the transfer of title of the Company&#8217;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.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
amount of consideration the Company expects to receive consists of the sales price adjusted for any incentives if applicable. Such incentives
do not represent a standalone value and are accounted for as a reduction of revenue in accordance with ASC 606. For the years ended June
30, 2023, 2022 and 2021, the Company did not provide any sales incentives to its customers.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">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&#8217;s
performance obligations are generally transferred to the customer at a point in time. The Company&#8217;s contracts with customers generally
do not include any variable consideration.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company&#8217;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 (&#8220;VAT&#8221;). The Company
does not routinely permit customers to return products and historically, customer returns have been immaterial.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company also generates revenue by providing ribbon dyeing service and pet grooming services to customers. The Company utilizes its manufacturing
capability and color dyeing technology to provide dyeing solutions to customers and apply dyes or pigments on ribbons made of textile
materials such as fibers, yarns and fabrics to achieve customer desired color fastness and quality. The Company recognizes revenue at
the point when dyeing solutions and related services are rendered, products after dyeing are delivered and accepted by the customers.
The revenue from pet grooming services is recognized when the services are rendered.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Contract
Assets and Liabilities</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Payment
terms are established on the Company&#8217;s pre-established credit requirements based upon an evaluation of customers&#8217; 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.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of June 30, 2023 and 2022, 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&#8217; 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.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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    <div style="break-before: page; margin-top: 6pt"><p style="margin: 0pt">&#160;</p></div>
    <!-- Field: /Page --></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b></b></span>&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>DOGNESS
(INTERNATIONAL) CORPORATION</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
amounts in USD)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b>NOTE
2 &#8211; SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b>Revenue
Recognition</b></span><b><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(continued)</span></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><i>Disaggregation
of Revenues</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">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&#8217;s disaggregation
of revenues for the years ended June 30, 2023, 2022 and 2021 are disclosed in Note 15 of this consolidated financial statements.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="us-gaap:ResearchAndDevelopmentExpensePolicy"><p id="xdx_84E_eus-gaap--ResearchAndDevelopmentExpensePolicy_z16TaphBdDX9" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b><span id="xdx_867_zGV1gJSP9RAg">Research
and development costs</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">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.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="us-gaap:IncomeTaxPolicyTextBlock"><p id="xdx_841_eus-gaap--IncomeTaxPolicyTextBlock_zkykk6bOCPx8" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b><span id="xdx_86A_zPg8AlJNxo2j">Income
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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">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.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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uncertain tax position is recognized as a benefit only if it is &#8220;more likely than not&#8221; that the tax position would be sustained
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incurred related to underpayment of income tax are classified as income tax expense in the period incurred. As of June 30, 2023, the
years from fiscal 2021 to fiscal 2023 for the Company&#8217;s PRC subsidiaries remain open for statutory examination by PRC Tax authorities.
For the Company&#8217;s Hong Kong subsidiaries, and U.S subsidiary, all tax years remain open for statutory examination by relevant tax
authorities.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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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</ix:nonNumeric></span>. 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 assessed.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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significant amount of the Company&#8217;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.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">The
Company computes earnings per share (&#8220;EPS&#8221;) in accordance with ASC 260, &#8220;Earnings per Share&#8221; (&#8220;ASC 260&#8221;).
ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net income (loss)
divided by the weighted average common shares outstanding for the period. Diluted EPS presents the dilutive effect on a per share basis
of potential common shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the
periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income
per share or decrease loss per share) are excluded from the calculation of diluted EPS.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>DOGNESS
(INTERNATIONAL) CORPORATION</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
amounts in USD)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTE
2 &#8211; SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="us-gaap:ShareBasedCompensationOptionAndIncentivePlansPolicy"><p id="xdx_842_eus-gaap--ShareBasedCompensationOptionAndIncentivePlansPolicy_zITIuFYp7Be2" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b><span id="xdx_865_zzeon1BzhChg">Share-Based
compensation</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">The
Company follows the provisions of ASC 718, &#8220;Compensation - Stock Compensation,&#8221; which establishes the accounting for employee
share-based awards. For employee share-based awards, share-based compensation cost is measured at the grant date based on the fair value
of the award and is recognized as expense with graded vesting on a straight-line basis over the requisite service period for the entire
award.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="us-gaap:ForeignCurrencyTransactionsAndTranslationsPolicyTextBlock"><p id="xdx_849_eus-gaap--ForeignCurrencyTransactionsAndTranslationsPolicyTextBlock_zix52ztzjIa3" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b><span id="xdx_86D_zXMiukj6Tsz6">Foreign
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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">The
Company&#8217;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.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing
at the dates of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange
rate prevailing at the consolidated balance sheet date. Non-monetary assets and liabilities are translated using the historical rate
on the date of the transaction. All exchange gains or losses arising from translation of these foreign currency transactions are included
in net income (loss) for the year.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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Company&#8217;s financial statements are reported using U.S. Dollars. The results of operations and the consolidated statements of cash
flows denominated in foreign currencies are translated at the average rate of exchange during the reporting period. Assets and liabilities
denominated in foreign currencies at the balance sheet date are translated at the applicable rates of exchange in effect at that date.
The equity denominated in the functional currency is translated at the historical rate of exchange at the time of capital contribution.
Because cash flows are translated based on the average translation rate, amounts related to assets and liabilities reported on the consolidated
statements of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheets. Translation
adjustments arising from the use of different exchange rates from period to period are included as a separate component of accumulated
other comprehensive income (loss) included in consolidated statements of changes in equity. Gains and losses from foreign currency transactions
are included in the consolidated statement of comprehensive income (loss).</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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following table outlines the currency exchange rates that were used in creating the consolidated financial statements:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span id="xdx_8B2_zKz6ULddiAAc" style="display: none">SCHEDULE OF CURRENCY EXCHANGE RATES</span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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</ix:nonNumeric><p id="xdx_8A6_zx8sDjZLqPxe" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="us-gaap:ComprehensiveIncomePolicyPolicyTextBlock"><p id="xdx_845_eus-gaap--ComprehensiveIncomePolicyPolicyTextBlock_zcnF4W422RGl" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b><span id="xdx_861_zbDFKIpb3m4h">Comprehensive
income (loss)</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">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&#8217; 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.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="DOGZ:RelatedPartiesTransactionsPolicyTextBlock"><p id="xdx_84A_ecustom--RelatedPartiesTransactionsPolicyTextBlock_z01E3OaOXsBk" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b><span id="xdx_863_zzcl8ISomd29">Related
party transactions</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">Parties
are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant
influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject
to common control or common significant influence. Related parties may be individuals or corporate entities. A transaction is considered
to be a related party transaction when there is a transfer of resources or obligations between related parties. Related party transactions
are measured at the amounts agreed upon by the parties.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="DOGZ:CashFlowsTransactionsDisclosurePolicyTextblock"><p id="xdx_847_ecustom--CashFlowsTransactionsDisclosurePolicyTextblock_zdIzq0pqctuh" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b><span id="xdx_862_z5zaU0cM6aR3">Statement
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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">In
accordance with ASC 230, &#8220;Statement of Cash Flows,&#8221; cash flows from the Company&#8217;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.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>DOGNESS
(INTERNATIONAL) CORPORATION</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
amounts in USD)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b>NOTE
2 &#8211; SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="us-gaap:PriorPeriodReclassificationAdjustmentDescription"><p id="xdx_843_eus-gaap--PriorPeriodReclassificationAdjustmentDescription_znIHxvV0542c" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b><span id="xdx_865_zGDt9JYinWjl">Reclassifications</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">Certain
prior period amounts have been reclassified to conform to the current year presentation. These reclassifications had no effect on the
reported revenues, net income and cash flows.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="us-gaap:NewAccountingPronouncementsPolicyPolicyTextBlock"><p id="xdx_842_eus-gaap--NewAccountingPronouncementsPolicyPolicyTextBlock_zSZJOW5DcBv7" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b><span id="xdx_865_z8fhncdehnO8">Recent
Accounting Pronouncements</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">The
Company considers the applicability and impact of all accounting standards updates (&#8220;ASUs&#8221;). Management periodically reviews
new accounting standards that are issued.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">In
December 2019, the FASB issued ASU No. 2019-12, &#8220;Income Taxes&#8221; (Topic 740): Simplifying the Accounting for Income Taxes (&#8220;ASU
2019-12&#8221;). ASU 2019-12 will simplify the accounting for income taxes by removing certain exceptions to the general principles in
Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending
existing guidance. For public business entities, the amendments in this Update are effective for fiscal years, and interim periods within
those fiscal years, beginning after December 15, 2020. For all other entities, the amendments are effective for fiscal years beginning
after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. The adoption of ASU 2019-12 does
not have a material impact on its consolidated financial statements.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">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) (&#8220;ASU 2020-01&#8221;), 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 adoption of ASU 2019-12 does not have a material impact on its consolidated financial statements.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">In
October 2021, the FASB issued ASU No. 2021-08, &#8220;&#8216;Business Combinations (Topic 805): Accounting for Contract Assets and Contract
Liabilities from Contracts with Customers&#8221; (&#8220;ASU 2021-08&#8221;). This ASU requires entities to apply Topic 606 to recognize
and measure contract assets and contract liabilities in a business combination. The amendments improve comparability after the business
combination by providing consistent recognition and measurement guidance for revenue contracts with customers acquired in a business
combination and revenue contracts with customers not acquired in a business combination. The amendments are effective for the Company
beginning after December 15, 2023, and are applied prospectively to business combinations that occur after the effective date. The Company
does not expect the adoption of ASU 2021-04 to have a material effect on the consolidated financial statements.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
June 2022, the FASB issued ASU 2022-03 Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual
Sale Restrictions. The update clarifies that a contractual restriction on the sale of an equity security is not considered part of the
unit of account of the equity security and, therefore, is not considered in measuring fair value. The update also clarifies that an entity
cannot, as a separate unit of account, recognize and measure a contractual sale restriction. The update also requires certain additional
disclosures for equity securities subject to contractual sale restrictions. For public business entities, the amendments in this Update
are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. For all other entities,
the amendments are effective for fiscal years beginning after December 15, 2024, and interim periods within those fiscal years. Early
adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance.
As an emerging growth company, the standard is effective for the Company for the year ended December 31, 2025. The Company is in the
process of evaluating the impact of the new guidance on its consolidated financial statements.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">Except
for the above-mentioned pronouncements, there are no new recent issued accounting standards that will have material impact on the consolidated
financial statements</span></p>

</ix:nonNumeric><p id="xdx_853_zZor8Tcr92ne" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">&#160;</span></p>


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    <div style="break-before: page; margin-top: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="width: 100%">&#160;</td></tr></table></div>
    <!-- Field: /Page --></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>DOGNESS
(INTERNATIONAL) CORPORATION</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
amounts in USD)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="us-gaap:LoansNotesTradeAndOtherReceivablesDisclosureTextBlock"><p id="xdx_809_eus-gaap--LoansNotesTradeAndOtherReceivablesDisclosureTextBlock_zZXHf69ly3Fh" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b>NOTE
3 &#8211; <span id="xdx_829_zxHyakFshDh3">ACCOUNTS RECEIVABLE, NET</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="us-gaap:ScheduleOfAccountsNotesLoansAndFinancingReceivableTextBlock"><p id="xdx_89B_eus-gaap--ScheduleOfAccountsNotesLoansAndFinancingReceivableTextBlock_zLEhuwl5aZA2" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">Accounts
receivable consisted of the following:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span id="xdx_8B4_zKUWEFvYVVz5" style="display: none">SCHEDULE OF ACCOUNTS RECEIVABLE</span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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  <tr style="vertical-align: bottom">
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    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td></tr>
  <tr id="xdx_40A_ecustom--AccountsReceivableFromThirdpartyCustomers_iI_maAAORNzfXu_zzbJOcPzqvn7" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 64%; text-align: left">Accounts receivable from third-party customers</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right"><ix:nonFraction name="DOGZ:AccountsReceivableFromThirdpartyCustomers" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,652,788</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
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    <td style="text-align: left; padding-bottom: 1.5pt">Less: allowance for doubtful accounts</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction name="us-gaap:AllowanceForDoubtfulAccountsReceivable" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">160,026</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction name="us-gaap:AllowanceForDoubtfulAccountsReceivable" contextRef="AsOf2022-06-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">6,872</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
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    <td style="text-align: left">Total accounts receivable from third-party customers, net</td><td>&#160;</td>
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  <tr id="xdx_40A_ecustom--AccountsReceivableNetCurrentRelatedParties_iI_pp0p0_maARNCzmui_zIuj1B3mh6T4" style="vertical-align: bottom; background-color: White">
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  <tr id="xdx_401_eus-gaap--AccountsReceivableNetCurrent_iTI_pp0p0_mtARNCzmui_zTibltNdSvC5" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 2.5pt">Total accounts receivable, net</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:AccountsReceivableNetCurrent" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">2,765,146</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:AccountsReceivableNetCurrent" contextRef="AsOf2022-06-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">2,744,024</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
  </table>

</ix:nonNumeric><p id="xdx_8AB_zbgWzNbEfczb" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">Allowance
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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">Approximately
$<span id="xdx_905_eus-gaap--AccountsReceivableNet_iI_pn5n6_c20230630__srt--TitleOfIndividualAxis__custom--ThirdPartyCustomersMember_zMElK4JGavTg" title="Accounts receivable"><ix:nonFraction name="us-gaap:AccountsReceivableNet" contextRef="AsOf2023-06-30_custom_ThirdPartyCustomersMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">0.8</ix:nonFraction></span> million (RMB<span id="xdx_902_eus-gaap--AccountsReceivableNet_iI_pn5n6_uRMB_c20230630__srt--TitleOfIndividualAxis__custom--ThirdPartyCustomersMember_zuOkXy8x3yi8" title="Accounts receivable"><ix:nonFraction name="us-gaap:AccountsReceivableNet" contextRef="AsOf2023-06-30_custom_ThirdPartyCustomersMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="RMB">5.7</ix:nonFraction></span> million) or <span id="xdx_900_eus-gaap--ConcentrationRiskPercentage1_pid_dp_uPure_c20220701__20230630__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--AccountsReceivableMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember__srt--MajorCustomersAxis__custom--ThirdPartyCustomersMember_zcLHk9grLZ91" title="Concentration risk percentage"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2022-07-012023-06-30_us-gaap_AccountsReceivableMember_us-gaap_CustomerConcentrationRiskMember_custom_ThirdPartyCustomersMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">48</ix:nonFraction></span>% of the accounts receivable balance as of June 30, 2023 from third-party customers has been collected
as of August 31, 2023.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">In
connection with the Company&#8217;s long-term investments in equity investees as disclosed in Note 2, the </span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Company
sold certain intelligent pet products to related parties Dogness Technology and Dogness Network. The outstanding accounts receivable
from these related parties amounted to $<span id="xdx_909_eus-gaap--AccountsReceivableNetCurrent_iI_c20230630__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__us-gaap--RelatedPartyMember_zAnFGYHj91y" title="accounts receivable from related parties amounted"><ix:nonFraction name="us-gaap:AccountsReceivableNetCurrent" contextRef="AsOf2023-06-30_us-gaap_RelatedPartyMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,272,384</ix:nonFraction></span> as of June 30, 2023, of which $<span id="xdx_907_eus-gaap--AccountsReceivableNetCurrent_iI_c20231011__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__us-gaap--RelatedPartyMember__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember_zCSvOBFwhiD5" title="accounts receivable from related parties amounted"><ix:nonFraction name="us-gaap:AccountsReceivableNetCurrent" contextRef="AsOf2023-10-11_us-gaap_RelatedPartyMember_us-gaap_SubsequentEventMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">164,807</ix:nonFraction></span> has been collected subsequent to year end (See
Note 11).</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="us-gaap:AccountsReceivableAllowanceForCreditLossTableTextBlock"><p id="xdx_89F_eus-gaap--AccountsReceivableAllowanceForCreditLossTableTextBlock_zudCQcuzTtP5" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">Allowance
for doubtful accounts movement is as follows:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_8BC_zbeqDFWGUz4h" style="display: none">SCHEDULE
OF ALLOWANCE FOR DOUBTFUL ACCOUNTS</span>&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td></tr>
  <tr id="xdx_408_eus-gaap--AllowanceForDoubtfulAccountsReceivable_iS_pp0p0_z9Ycu46wsNe7" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 64%; text-align: left">Beginning balance</td><td style="width: 2%">&#160;</td>
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  <tr id="xdx_406_eus-gaap--AllowanceForDoubtfulAccountsReceivablePeriodIncreaseDecrease_pp0p0_zthYsxodVQOg" style="vertical-align: bottom; background-color: White">
    <td>Provision (recovery)</td><td>&#160;</td>
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  <tr id="xdx_40B_eus-gaap--AllowanceForDoubtfulAccountsReceivableWriteOffs_iN_pp0p0_di_z8dQwzHG8vJl" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Write off</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1217">-</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr id="xdx_40C_ecustom--AllowanceForDoubtfulAccountsReceivableForeignCurrencyTranslationAdjustments_z8KgNOtOnV4a" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1.5pt">Foreign currency translation adjustments</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction name="DOGZ:AllowanceForDoubtfulAccountsReceivableForeignCurrencyTranslationAdjustments" contextRef="From2022-07-01to2023-06-30" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">7,100</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr id="xdx_407_eus-gaap--AllowanceForDoubtfulAccountsReceivable_iE_pp0p0_zJGlAthbIIl4" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 2.5pt">Ending balance</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:AllowanceForDoubtfulAccountsReceivable" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">160,026</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:AllowanceForDoubtfulAccountsReceivable" contextRef="AsOf2022-06-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">6,872</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
  </table>

</ix:nonNumeric><p id="xdx_8A5_ze12MMAFnB96" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="us-gaap:InventoryDisclosureTextBlock"><p id="xdx_800_eus-gaap--InventoryDisclosureTextBlock_zUPCde8vFzq1" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b>NOTE
4 &#8211; <span id="xdx_82E_zIuIY1Z5wDU1">INVENTORIES, NET</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="us-gaap:ScheduleOfInventoryCurrentTableTextBlock"><p id="xdx_89A_eus-gaap--ScheduleOfInventoryCurrentTableTextBlock_z5AMgakElEw4" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">Inventories
consisted of the following:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span id="xdx_8B4_zYf8I1G0MXZc" style="display: none">SCHEDULE OF INVENTORY</span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" id="xdx_49D_20230630_z3Wmb6nUJ622" style="font-weight: bold; text-align: center">As of</td><td style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">June 30, 2023</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">June 30, 2022</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td></tr>
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    <td style="text-align: left">Work in process</td><td>&#160;</td>
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  <tr id="xdx_40F_eus-gaap--InventoryFinishedGoods_iI_pp0p0_maIGzrpz_z1yapkj0Df5" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt">Finished goods</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="us-gaap:InventoryFinishedGoods" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">2,727,827</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr id="xdx_409_eus-gaap--InventoryGross_iTI_pp0p0_mtIGzrpz_maINzLEh_zeCXqY7RL4Sa" style="vertical-align: bottom; background-color: White">
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  <tr id="xdx_406_eus-gaap--InventoryNet_iTI_pp0p0_mtINzLEh_zYlaq5II0aGi" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 2.5pt">Inventory, net</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:InventoryNet" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">2,679,275</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
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</ix:nonNumeric><p id="xdx_8A6_zqtfsMQHJIb8" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">Inventory
includes raw materials, work in progress and finished goods. Finished goods include direct material costs, direct labor costs and manufacturing
overhead.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">For
the years ended June 30, 2023, 2022 and 2021, the Company recorded inventory write down of $<span id="xdx_904_eus-gaap--InventoryWriteDown_pp0p0_c20220701__20230630_zwQ7qEBuuX2f" title="Inventory markdown"><ix:nonFraction name="us-gaap:InventoryWriteDown" contextRef="From2022-07-01to2023-06-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">246,281</ix:nonFraction></span>, $<span id="xdx_906_eus-gaap--InventoryWriteDown_pp0p0_dxL_c20210701__20220630_zxfbvirupzWl" title="Inventory markdown::XDX::-"><span style="-sec-ix-hidden: xdx2ixbrl1250">Nil</span></span> and $<span id="xdx_901_eus-gaap--InventoryWriteDown_pp0p0_c20200701__20210630_zFJ8Okks20ug" title="Inventory markdown"><ix:nonFraction name="us-gaap:InventoryWriteDown" contextRef="From2020-07-012021-06-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">117,703</ix:nonFraction></span>, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<ix:exclude><!-- Field: Page; Sequence: 157; Value: 14 -->
    <div style="border-bottom: Black 1.5pt solid; margin-bottom: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="text-align: center; width: 100%">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->17<!-- Field: /Sequence --></td></tr></table></div>
    <div style="break-before: page; margin-top: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="width: 100%">&#160;</td></tr></table></div>
    <!-- Field: /Page --></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><br /></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>DOGNESS
(INTERNATIONAL) CORPORATION</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
amounts in USD)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="us-gaap:PropertyPlantAndEquipmentDisclosureTextBlock"><p id="xdx_806_eus-gaap--PropertyPlantAndEquipmentDisclosureTextBlock_zaSE2UjMUrv6" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b>NOTE
5 &#8211; <span id="xdx_826_zDNAMQvMeuG6">PROPERTY, PLANT AND EQUIPMENT, NET</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="us-gaap:PropertyPlantAndEquipmentTextBlock"><p id="xdx_897_eus-gaap--PropertyPlantAndEquipmentTextBlock_zokB1yIGbGVj" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">Property,
plant and equipment stated at cost less accumulated depreciation consisted of the following:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span id="xdx_8B8_zebE5h7bwyMf" style="display: none">SCHEDULE OF PROPERTY AND EQUIPMENT, NET</span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" id="xdx_492_20230630_znheqBNDKU69" style="font-weight: bold; text-align: center">As of</td><td style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">June 30, 2023</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">June 30, 2022</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td></tr>
  <tr id="xdx_403_eus-gaap--BuildingsAndImprovementsGross_iI_pp0p0_maPPAEGz2Q4_zICD1ravSKyd" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 64%">Buildings</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right"><ix:nonFraction name="us-gaap:BuildingsAndImprovementsGross" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">25,192,351</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
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  <tr id="xdx_403_eus-gaap--MachineryAndEquipmentGross_iI_pp0p0_maPPAEGz2Q4_zRRrAEX1n5Kk" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Machinery and equipment</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:MachineryAndEquipmentGross" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">6,847,546</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr id="xdx_40D_eus-gaap--FurnitureAndFixturesGross_iI_pp0p0_maPPAEGz2Q4_zm33I3dnecYk" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Office equipment and furniture</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:FurnitureAndFixturesGross" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">928,429</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr id="xdx_403_ecustom--AutomobilesPropertyAndEquipment_iI_pp0p0_maPPAEGz2Q4_z1qvAlffszDa" style="vertical-align: bottom; background-color: White">
    <td>Automobiles</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="DOGZ:AutomobilesPropertyAndEquipment" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">779,065</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr id="xdx_404_eus-gaap--LeaseholdImprovementsGross_iI_pp0p0_maPPAEGz2Q4_zZuqaOYlxQOd" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="us-gaap:LeaseholdImprovementsGross" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">40,751,384</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td>Total</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:PropertyPlantAndEquipmentGross" contextRef="AsOf2022-06-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">79,274,100</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: left">Less: Accumulated depreciation</td><td>&#160;</td>
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</ix:nonNumeric><p id="xdx_8AB_ziPpXxBWPW6g" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><span id="xdx_903_eus-gaap--AssetImpairmentCharges_pp0p0_dxL_c20220701__20230630_z5CZzaWjij4d" title="Impairment of fixed assets::XDX::-"><span id="xdx_90C_eus-gaap--AssetImpairmentCharges_pp0p0_dxL_c20210701__20220630_zb6N0GBNxVfe" title="Impairment of fixed assets::XDX::-"><span id="xdx_90E_eus-gaap--AssetImpairmentCharges_pp0p0_dxL_c20200701__20210630_zFpTIROztM08" title="Impairment of fixed assets::XDX::-"><span style="-sec-ix-hidden: xdx2ixbrl1285"><span style="-sec-ix-hidden: xdx2ixbrl1287"><span style="-sec-ix-hidden: xdx2ixbrl1289">No</span></span></span></span></span></span>
impairment was recorded for the years ended June 30, 2023, 2022 and 2021, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">Depreciation
expense was $<span id="xdx_909_eus-gaap--Depreciation_pp0p0_c20220701__20230630_zUIdNWHXMisd" title="Depreciation"><ix:nonFraction name="us-gaap:Depreciation" contextRef="From2022-07-01to2023-06-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">3,251,711</ix:nonFraction></span>, $<span id="xdx_909_eus-gaap--Depreciation_pp0p0_c20210701__20220630_zAI9FM5Xes25" title="Depreciation"><ix:nonFraction name="us-gaap:Depreciation" contextRef="From2021-07-012022-06-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">3,375,875</ix:nonFraction></span> and $<span id="xdx_907_eus-gaap--Depreciation_pp0p0_c20200701__20210630_zE7wqvwdQyh7" title="Depreciation"><ix:nonFraction name="us-gaap:Depreciation" contextRef="From2020-07-012021-06-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">3,025,686</ix:nonFraction></span> for the years ended June 30, 2023, 2022 and 2021, respectively. In connection with
the approximately $<span id="xdx_906_eus-gaap--ProceedsFromBankDebt_pn5n6_c20220701__20230630__dei--LegalEntityAxis__custom--DongguanRuralCommercialBankMember_z1PELfaYO6w4" title="Long-term bank loans borrowed"><ix:nonFraction name="us-gaap:ProceedsFromBankDebt" contextRef="From2022-07-012023-06-30_custom_DongguanRuralCommercialBankMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">4.6</ix:nonFraction></span> million long-term bank loans borrowed from Dongguan Rural Commercial Bank, the Company&#8217;s subsidiary Meijia
pledged its fixed assets of approximately $<span id="xdx_904_eus-gaap--SecuredDebt_iI_pn5n6_c20230630__dei--LegalEntityAxis__custom--DongguanRuralCommercialBankMember_zz4W8KQNBEH" title="Secured loans"><ix:nonFraction name="us-gaap:SecuredDebt" contextRef="AsOf2023-06-30_custom_DongguanRuralCommercialBankMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">4.8</ix:nonFraction></span> million as collateral to secure the loans. In addition, in connection with the Company&#8217;s
approximately $<span id="xdx_904_eus-gaap--SecuredDebt_iI_pn5n6_c20230630__us-gaap--ShortTermDebtTypeAxis__custom--CathayBankMember_zEUFJ4ra9VXe" title="Secured loans"><ix:nonFraction name="us-gaap:SecuredDebt" contextRef="AsOf2023-06-30_custom_CathayBankMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">0.9</ix:nonFraction></span> million loan from Cathay Bank, the Company&#8217;s U.S. subsidiary Dogness Group pledged its fixed assets as collateral
to secure the borrowing (see Note 8).</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">The
Company&#8217;s subsidiary Dongguan Jiasheng had a capital project to build new manufacturing and operating facilities, which include
warehouse, workshops, office building, security gate, employee apartment building, electrical transformer station and exhibition hall,
etc. The total budget is approximately RMB<span id="xdx_90E_ecustom--EstimatedBudgetedCosts_pn5n6_uRMB_c20220701__20230630__dei--LegalEntityAxis__custom--DongguanJiashengMember_zR9fOCkLwlWb" title="Estimated budgeted costs"><ix:nonFraction name="DOGZ:EstimatedBudgetedCosts" contextRef="From2022-07-012023-06-30_custom_DongguanJiashengMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="RMB">263.5</ix:nonFraction></span> million ($<span id="xdx_906_ecustom--EstimatedBudgetedCosts_pn5n6_c20220701__20230630__dei--LegalEntityAxis__custom--DongguanJiashengMember_zc9ZvwmQpZQh" title="Estimated budgeted costs"><ix:nonFraction name="DOGZ:EstimatedBudgetedCosts" contextRef="From2022-07-012023-06-30_custom_DongguanJiashengMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">36.3</ix:nonFraction></span> million). As of June 30, 2022, the Company had completed this project
and transferred all of the related CIP to fixed assets. As of June 30, 2023, the Company has made total payments of approximately RMB<span id="xdx_905_eus-gaap--PaymentsToAcquireProductiveAssets_pn5n6_uRMB_c20220701__20230630__dei--LegalEntityAxis__custom--DongguanJiashengMember_z8Uu265kKJXd" title="Payments to acquire assets"><ix:nonFraction name="us-gaap:PaymentsToAcquireProductiveAssets" contextRef="From2022-07-012023-06-30_custom_DongguanJiashengMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="RMB">261.7</ix:nonFraction></span>
million ($<span id="xdx_904_eus-gaap--PaymentsToAcquireProductiveAssets_pn5n6_c20220701__20230630__dei--LegalEntityAxis__custom--DongguanJiashengMember_zqLV1zfUWGO7" title="Payments to acquire assets"><ix:nonFraction name="us-gaap:PaymentsToAcquireProductiveAssets" contextRef="From2022-07-012023-06-30_custom_DongguanJiashengMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">36.1</ix:nonFraction></span> million) in connection to this project, which resulted in future minimum capital expenditure payments of approximately
RMB<span id="xdx_90B_eus-gaap--PaymentsToAcquireProductiveAssets_pp5n6_uRMB_c20220701__20230630__dei--LegalEntityAxis__custom--DongguanJiashengMember__us-gaap--PropertyPlantAndEquipmentByTypeAxis__custom--WarehouseConstructionMember_zVjtw0mflK96" title="Payments to acquire assets"><ix:nonFraction name="us-gaap:PaymentsToAcquireProductiveAssets" contextRef="From2022-07-012023-06-30_custom_DongguanJiashengMember_custom_WarehouseConstructionMember" format="ixt:numdotdecimal" decimals="5" scale="6" unitRef="RMB">1.8</ix:nonFraction></span> million ($<span id="xdx_906_eus-gaap--PaymentsToAcquireProductiveAssets_pp5n6_c20220701__20230630__dei--LegalEntityAxis__custom--DongguanJiashengMember__us-gaap--PropertyPlantAndEquipmentByTypeAxis__custom--WarehouseConstructionMember_z7r1MFhpBirj" title="Payments to acquire assets"><ix:nonFraction name="us-gaap:PaymentsToAcquireProductiveAssets" contextRef="From2022-07-012023-06-30_custom_DongguanJiashengMember_custom_WarehouseConstructionMember" format="ixt:numdotdecimal" decimals="5" scale="6" unitRef="USD">0.3</ix:nonFraction></span> million), the Company plan to pay remaining payments in twelve months after June 30, 2023.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">The
Company&#8217;s subsidiary Dogness Culture was also working on a project to decorate a pet themed retail store. Total decoration cost
is approximately RMB<span id="xdx_90D_ecustom--EstimatedBudgetedCosts_pn5n6_uRMB_c20220701__20230630__dei--LegalEntityAxis__custom--DognessCultureMember_z6EyOYL1pTO8" title="Estimated budgeted costs"><ix:nonFraction name="DOGZ:EstimatedBudgetedCosts" contextRef="From2022-07-012023-06-30_custom_DognessCultureMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="RMB">2.2</ix:nonFraction></span> million ($<span id="xdx_906_ecustom--EstimatedBudgetedCosts_pn5n6_c20220701__20230630__dei--LegalEntityAxis__custom--DognessCultureMember_zD6eMflM84Wg" title="Estimated budgeted costs"><ix:nonFraction name="DOGZ:EstimatedBudgetedCosts" contextRef="From2022-07-012023-06-30_custom_DognessCultureMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">0.3</ix:nonFraction></span> million). This project was fully completed during year ended June 30, 2021. As of June 30, 2023,
the Company has fully paid for the project.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="us-gaap:GoodwillAndIntangibleAssetsDisclosureTextBlock"><p id="xdx_800_eus-gaap--GoodwillAndIntangibleAssetsDisclosureTextBlock_zEJLT2EQJSo4" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b>NOTE
6 &#8211; <span id="xdx_827_znKb0t62D8k8">INTANGIBLE ASSETS, NET</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="us-gaap:ScheduleOfIntangibleAssetsAndGoodwillTableTextBlock"><p id="xdx_89A_eus-gaap--ScheduleOfIntangibleAssetsAndGoodwillTableTextBlock_zAKhtcXBBUO2" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">Net
intangible assets consisted of the following:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span id="xdx_8B6_zzNT6AXDMXs4" style="display: none">SCHEDULE OF INTANGIBLE ASSETS, NET</span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" id="xdx_497_20230630_zZMfvbZep795" style="font-weight: bold; text-align: center">As of</td><td style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" id="xdx_49B_20220630_zuUMK8GeZad9" style="font-weight: bold; text-align: center">As of</td><td style="font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">June 30, 2023</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">June 30, 2022</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td></tr>
  <tr id="xdx_408_eus-gaap--CapitalizedComputerSoftwareGross_iI_maFLIANz9Wr_zLri2YCSWATi" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 64%">Software</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right"><ix:nonFraction name="us-gaap:CapitalizedComputerSoftwareGross" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">207,218</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right"><ix:nonFraction name="us-gaap:CapitalizedComputerSoftwareGross" contextRef="AsOf2022-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">224,349</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr id="xdx_401_eus-gaap--FiniteLivedIntangibleAssetsGross_iI_maFLIANz9Wr_zTczR2TsqRp6" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Land use right</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:FiniteLivedIntangibleAssetsGross" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">2,094,167</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:FiniteLivedIntangibleAssetsGross" contextRef="AsOf2022-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">2,267,289</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_402_eus-gaap--FiniteLivedIntangibleAssetsAccumulatedAmortization_iNI_di_msFLIANz9Wr_z4tCSJEF8T46" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt">Less: accumulated amortization</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction name="us-gaap:FiniteLivedIntangibleAssetsAccumulatedAmortization" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">456,379</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction name="us-gaap:FiniteLivedIntangibleAssetsAccumulatedAmortization" contextRef="AsOf2022-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">428,221</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr id="xdx_40A_eus-gaap--FiniteLivedIntangibleAssetsNet_iTI_mtFLIANz9Wr_zEJ22jifUj1l" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 2.5pt">Intangible assets, net</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:FiniteLivedIntangibleAssetsNet" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,845,006</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:FiniteLivedIntangibleAssetsNet" contextRef="AsOf2022-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">2,063,417</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
  </table>

</ix:nonNumeric><p id="xdx_8A5_z5Td4UgeQafi" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">Amortization
expense was $<span id="xdx_90F_eus-gaap--AmortizationOfIntangibleAssets_c20220701__20230630_zE6NbHWHr3q8" title="Amortization of intangible assets"><ix:nonFraction name="us-gaap:AmortizationOfIntangibleAssets" contextRef="From2022-07-01to2023-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">63,460</ix:nonFraction></span>, $<span id="xdx_90B_eus-gaap--AmortizationOfIntangibleAssets_c20210701__20220630_zFgzYup3EQTl" title="Amortization of intangible assets"><ix:nonFraction name="us-gaap:AmortizationOfIntangibleAssets" contextRef="From2021-07-012022-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">82,472</ix:nonFraction></span>, and $<span id="xdx_905_eus-gaap--AmortizationOfIntangibleAssets_c20200701__20210630_zH3aJYAkuF6l" title="Amortization of intangible assets"><ix:nonFraction name="us-gaap:AmortizationOfIntangibleAssets" contextRef="From2020-07-012021-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">80,396</ix:nonFraction></span>, for the years ended June 30, 2023, 2022 and 2021, respectively. In connection with the $<span id="xdx_904_eus-gaap--ShortTermBorrowings_iI_pn5n6_c20230630__us-gaap--CollateralAxis__custom--IntangibleAssetsMember_zmGCMaYRjXX9" title="Loan from bank"><ix:nonFraction name="us-gaap:ShortTermBorrowings" contextRef="AsOf2023-06-30_custom_IntangibleAssetsMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">4.6</ix:nonFraction></span>
million long-term loans borrowed from Dongguan Rural Commercial Bank, the Company&#8217;s subsidiary Meijia pledged its land use right
with net book value of $<span id="xdx_908_eus-gaap--SecuredDebt_iI_pn5n6_c20230630__us-gaap--CollateralAxis__custom--IntangibleAssetsMember_zHBp2NlTaVQk" title="Collateral to secure loan"><ix:nonFraction name="us-gaap:SecuredDebt" contextRef="AsOf2023-06-30_custom_IntangibleAssetsMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">1.8</ix:nonFraction></span> million as the collateral to secure the loans (See Note 8)</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


<ix:exclude><!-- Field: Page; Sequence: 158; Value: 14 -->
    <div style="border-bottom: Black 1.5pt solid; margin-bottom: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="text-align: center; width: 100%">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->18<!-- Field: /Sequence --></td></tr></table></div>
    <div style="break-before: page; margin-top: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="width: 100%">&#160;</td></tr></table></div>
    <!-- Field: /Page --></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>DOGNESS
(INTERNATIONAL) CORPORATION</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
amounts in USD)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b>NOTE
6 &#8211; INTANGIBLE ASSETS, NET (continued)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="us-gaap:ScheduleofFiniteLivedIntangibleAssetsFutureAmortizationExpenseTableTextBlock"><p id="xdx_897_eus-gaap--ScheduleofFiniteLivedIntangibleAssetsFutureAmortizationExpenseTableTextBlock_zvp12L1wHgib" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">Estimated
future amortization expense is as follows:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span id="xdx_8BD_zSJAZ0Znivud" style="display: none">SCHEDULE
OF FUTURE AMORTIZATION EXPENSE</span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="border-bottom: Black 1.5pt solid; text-align: left">Twelve months ending June 30,</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" id="xdx_49C_20230630_zfyafjexdoYl" style="border-bottom: Black 1.5pt solid; text-align: center">Amortization expense</td><td style="padding-bottom: 1.5pt">&#160;</td></tr>
  <tr id="xdx_406_eus-gaap--FiniteLivedIntangibleAssetsAmortizationExpenseNextTwelveMonths_iI_maFLIANzqsP_zSjCKbHXxsq8" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 80%; text-align: left">2024</td><td style="width: 2%">&#160;</td>
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  <tr id="xdx_40E_eus-gaap--FiniteLivedIntangibleAssetsAmortizationExpenseYearTwo_iI_maFLIANzqsP_zA6MeU4V8rgk" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">2025</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:FiniteLivedIntangibleAssetsAmortizationExpenseYearTwo" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">57,277</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_403_eus-gaap--FiniteLivedIntangibleAssetsAmortizationExpenseYearThree_iI_maFLIANzqsP_zROEScpWtymb" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">2026</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:FiniteLivedIntangibleAssetsAmortizationExpenseYearThree" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">56,680</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40C_eus-gaap--FiniteLivedIntangibleAssetsAmortizationExpenseYearFour_iI_maFLIANzqsP_zeULer5zrAEa" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">2027</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:FiniteLivedIntangibleAssetsAmortizationExpenseYearFour" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">56,680</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40F_ecustom--FiniteLivedIntangibleAssetsAmortizationExpenseAfterYearFour_iI_maFLIANzqsP_z09okvC89Aw8" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt">Thereafter</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="DOGZ:FiniteLivedIntangibleAssetsAmortizationExpenseAfterYearFour" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,599,483</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr id="xdx_409_eus-gaap--FiniteLivedIntangibleAssetsNet_iTI_mtFLIANzqsP_zJ261k7jO4z1" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 2.5pt">Total</td><td style="padding-bottom: 2.5pt">&#160;</td>
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  </table>

</ix:nonNumeric><p id="xdx_8A9_zaa7aZjP7ojg" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="us-gaap:LesseeOperatingLeasesTextBlock"><p id="xdx_80F_eus-gaap--LesseeOperatingLeasesTextBlock_zYZD9ih6qLe7" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b>NOTE
7 &#8211; <span id="xdx_827_z0o1lHClrFWl">LEASES</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">The
Company has several operating leases for manufacturing facilities and offices. The Company&#8217;s lease agreements do not contain any
material residual value guarantees or material restrictive covenants. Operating lease expenses were $<span id="xdx_901_eus-gaap--OperatingLeaseCost_c20220701__20230630_zyO04oon36P7" title="Operating lease expense"><ix:nonFraction name="us-gaap:OperatingLeaseCost" contextRef="From2022-07-01to2023-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,615,537</ix:nonFraction></span>, $<span id="xdx_902_eus-gaap--OperatingLeaseCost_c20210701__20220630_zRbzlNjCqFPa" title="Operating lease expense"><ix:nonFraction name="us-gaap:OperatingLeaseCost" contextRef="From2021-07-012022-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">477,268</ix:nonFraction></span> and $<span id="xdx_90D_eus-gaap--OperatingLeaseCost_c20200701__20210630_z4j4ameENbMe" title="Operating lease expense"><ix:nonFraction name="us-gaap:OperatingLeaseCost" contextRef="From2020-07-012021-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">476,574</ix:nonFraction></span>
for the years ended June 30, 2023, 2022 and 2021, respectively. Short-term lease expenses were $<span id="xdx_907_eus-gaap--ShortTermLeaseCost_dxL_c20220701__20230630_zqchycO6chxd" title="Short-term lease expenses::XDX::-"><span style="-sec-ix-hidden: xdx2ixbrl1367">Nil</span></span>, $<span id="xdx_900_eus-gaap--ShortTermLeaseCost_dxL_c20210701__20220630_zWSIPwdUtZFj" title="Short-term lease expenses::XDX::-"><span style="-sec-ix-hidden: xdx2ixbrl1369">Nil</span></span> and $<span id="xdx_90E_eus-gaap--ShortTermLeaseCost_c20200701__20210630_zDLZXMGwJtBa" title="Short-term lease expenses"><ix:nonFraction name="us-gaap:ShortTermLeaseCost" contextRef="From2020-07-012021-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">11,189</ix:nonFraction></span> for the years ended
June 30, 2023, 2022 and 2021, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="DOGZ:ScheduleSupplementalBalanceSheetInformationTableTextBlock"><p id="xdx_891_ecustom--ScheduleSupplementalBalanceSheetInformationTableTextBlock_z5FpfSTWnW93" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">Supplemental
balance sheet information related to operating leases was as follows:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span id="xdx_8B7_zXc4BfL7u3Ok" style="display: none">SCHEDULE OF SUPPLEMENTAL BALANCE SHEET INFORMATION</span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" id="xdx_49D_20230630_zNpJLAf2kGvk" style="border-bottom: Black 1.5pt solid; text-align: center"><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>As of</b></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>June 30, 2023</b></span></p></td><td style="padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" id="xdx_496_20220630_zfCRCbszNv26" style="border-bottom: Black 1.5pt solid; text-align: center"><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>As of</b></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>June 30, 2022</b></span></p></td><td style="padding-bottom: 1.5pt">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td></tr>
  <tr id="xdx_400_eus-gaap--OperatingLeaseRightOfUseAsset_iI_z1IF0MHTwwyh" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 64%; text-align: left; padding-bottom: 1.5pt">Operating lease right-of-use assets, net</td><td style="width: 2%; padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; width: 1%; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; width: 14%; text-align: right"><ix:nonFraction name="us-gaap:OperatingLeaseRightOfUseAsset" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">17,537,096</ix:nonFraction></td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="width: 2%; padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; width: 1%; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; width: 14%; text-align: right"><ix:nonFraction name="us-gaap:OperatingLeaseRightOfUseAsset" contextRef="AsOf2022-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">4,589,678</ix:nonFraction></td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40A_eus-gaap--OperatingLeaseLiabilityCurrent_iI_maOLLzeXu_z5OKymfZXTw2" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Operating lease liabilities - current</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right"><ix:nonFraction name="us-gaap:OperatingLeaseLiabilityCurrent" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">2,326,162</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right"><ix:nonFraction name="us-gaap:OperatingLeaseLiabilityCurrent" contextRef="AsOf2022-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">184,700</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40E_eus-gaap--OperatingLeaseLiabilityNoncurrent_iI_maOLLzeXu_znqsIRUV7CZk" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1.5pt">Operating lease liabilities - non-current</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="us-gaap:OperatingLeaseLiabilityNoncurrent" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">10,612,508</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="us-gaap:OperatingLeaseLiabilityNoncurrent" contextRef="AsOf2022-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">901,351</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr id="xdx_407_eus-gaap--OperatingLeaseLiability_iTI_mtOLLzeXu_zNP9yx0U7Zt3" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 2.5pt">Total operating lease liabilities</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:OperatingLeaseLiability" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">12,938,670</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:OperatingLeaseLiability" contextRef="AsOf2022-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,086,051</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
  </table>

</ix:nonNumeric><p id="xdx_8AF_zzgkrQC7D3t3" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">The
weighted average remaining lease terms and average discount rate was <span id="xdx_908_eus-gaap--OperatingLeaseWeightedAverageRemainingLeaseTerm1_iI_dtY_c20230630_zdMOwnE8ZC9l" title="Weighted average remaining lease terms"><ix:nonNumeric contextRef="AsOf2023-06-30" format="ixt-sec:duryear" name="us-gaap:OperatingLeaseWeightedAverageRemainingLeaseTerm1">14.23</ix:nonNumeric></span> years and <span id="xdx_90F_eus-gaap--OperatingLeaseWeightedAverageDiscountRatePercent_iI_dp_uPure_c20230630_z1DMmtZqrDRl" title="Weighted average remaining discount rate percentage"><ix:nonFraction name="us-gaap:OperatingLeaseWeightedAverageDiscountRatePercent" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">5.79</ix:nonFraction></span>% as of June 30, 2023.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="us-gaap:LesseeOperatingLeaseLiabilityMaturityTableTextBlock"><p id="xdx_891_eus-gaap--LesseeOperatingLeaseLiabilityMaturityTableTextBlock_zJVXsTZfXQ4h" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">The
following is a schedule of maturities of lease liabilities are as follows:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span id="xdx_8BC_zujqIz79SXle" style="display: none">SCHEDULE OF MATURITIES OF LEASE LIABILITIES</span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Twelve months ending June 30,</td><td>&#160;</td>
    <td colspan="2" id="xdx_494_20230630_zvCoPex71Y9g" style="text-align: right">&#160;</td><td>&#160;</td></tr>
  <tr id="xdx_404_eus-gaap--LesseeOperatingLeaseLiabilityPaymentsDueNextTwelveMonths_iI_maLOLLPz6Tf_zBj1mPxnxX2i" style="vertical-align: bottom; background-color: White">
    <td style="width: 80%; text-align: left">2024</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right"><ix:nonFraction name="us-gaap:LesseeOperatingLeaseLiabilityPaymentsDueNextTwelveMonths" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">2,913,507</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr id="xdx_405_eus-gaap--LesseeOperatingLeaseLiabilityPaymentsDueYearTwo_iI_maLOLLPz6Tf_zITXBrONFOce" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">2025</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:LesseeOperatingLeaseLiabilityPaymentsDueYearTwo" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">207,990</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40D_eus-gaap--LesseeOperatingLeaseLiabilityPaymentsDueYearThree_iI_maLOLLPz6Tf_z9Lm3FD2R0b9" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">2026</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:LesseeOperatingLeaseLiabilityPaymentsDueYearThree" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">729,046</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_408_eus-gaap--LesseeOperatingLeaseLiabilityPaymentsDueYearFour_iI_maLOLLPz6Tf_zYQmMB6GbjHe" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">2027</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:LesseeOperatingLeaseLiabilityPaymentsDueYearFour" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,226,060</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40A_eus-gaap--LesseeOperatingLeaseLiabilityPaymentsDueYearFive_iI_maLOLLPz6Tf_z0VlOHTaaKx9" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">2028</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:LesseeOperatingLeaseLiabilityPaymentsDueYearFive" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,037,346</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_400_eus-gaap--LesseeOperatingLeaseLiabilityPaymentsDueAfterYearFive_iI_maLOLLPz6Tf_zYkkIac0PxKg" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt">Thereafter</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="us-gaap:LesseeOperatingLeaseLiabilityPaymentsDueAfterYearFive" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">12,940,536</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr id="xdx_40F_eus-gaap--LesseeOperatingLeaseLiabilityPaymentsDue_iTI_mtLOLLPz6Tf_zc50wirziX1b" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Total future minimum lease payments</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:LesseeOperatingLeaseLiabilityPaymentsDue" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">19,054,485</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40F_eus-gaap--LesseeOperatingLeaseLiabilityUndiscountedExcessAmount_iI_zEZZTzv50eO" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="us-gaap:LesseeOperatingLeaseLiabilityUndiscountedExcessAmount" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">6,115,815</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr id="xdx_401_eus-gaap--OperatingLeaseLiability_iI_z9npFz9mKyVg" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 2.5pt">Total</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:OperatingLeaseLiability" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">12,938,670</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
  </table>

</ix:nonNumeric><p id="xdx_8A8_zxvHnnDsZmz6" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


<ix:exclude><!-- Field: Page; Sequence: 159; Value: 14 -->
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    <div style="break-before: page; margin-top: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="width: 100%">&#160;</td></tr></table></div>
    <!-- Field: /Page --></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>DOGNESS
(INTERNATIONAL) CORPORATION</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
amounts in USD)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="us-gaap:ShortTermDebtTextBlock"><p id="xdx_804_eus-gaap--ShortTermDebtTextBlock_z7HDxM4Utac8" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b>NOTE
8 &#8211; <span id="xdx_82F_zwRrOcBSfvF4">BANK LOANS</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="DOGZ:ScheduleOfShortTermBankLoansTableTextBlock"><p id="xdx_895_ecustom--ScheduleOfShortTermBankLoansTableTextBlock_zkk1TrBu73Ee" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">Short-term
loans consisted of the following:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span id="xdx_8B7_zAVFZNTopuRc" style="display: none">SCHEDULE OF SHORT-TERM BANK LOANS</span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">As of</td><td style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">As of</td><td style="font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">June 30,2023</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">June 30, 2022</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left">Cathay Bank</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="width: 64%; text-align: left; padding-bottom: 1.5pt">Effective interest rate at <span id="xdx_90D_eus-gaap--DebtInstrumentInterestRateEffectivePercentage_iI_pid_dp_uPure_c20230630__us-gaap--CreditFacilityAxis__custom--CathayBankMember_zjgts8QXTJhl" title="Effective interest rate" class="xdx_phnt_RGlzY2xvc3VyZSAtIFNDSEVEVUxFIE9GIFNIT1JULVRFUk0gQkFOSyBMT0FOUyAoRGV0YWlscykgKFBhcmVudGhldGljYWwpAA__"><span id="xdx_903_eus-gaap--DebtInstrumentInterestRateEffectivePercentage_iI_pid_dp_uPure_c20220630__us-gaap--CreditFacilityAxis__custom--CathayBankMember_z6h1fhq2QJYk" title="Effective interest rate" class="xdx_phnt_RGlzY2xvc3VyZSAtIFNDSEVEVUxFIE9GIFNIT1JULVRFUk0gQkFOSyBMT0FOUyAoRGV0YWlscykgKFBhcmVudGhldGljYWwpAA__"><ix:nonFraction name="us-gaap:DebtInstrumentInterestRateEffectivePercentage" contextRef="AsOf2023-06-30_custom_CathayBankMember28609031" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure"><ix:nonFraction name="us-gaap:DebtInstrumentInterestRateEffectivePercentage" contextRef="AsOf2022-06-30_custom_CathayBankMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">4.25</ix:nonFraction></ix:nonFraction></span></span>%</td><td style="width: 2%; padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; width: 1%; text-align: left">$</td><td id="xdx_981_eus-gaap--ShortTermBankLoansAndNotesPayable_iI_c20230630__us-gaap--CreditFacilityAxis__custom--CathayBankMember_fKDEp_zn3ro6842vFa" title="Short-term Debt" style="border-bottom: Black 1.5pt solid; width: 14%; text-align: right"><ix:nonFraction name="us-gaap:ShortTermBankLoansAndNotesPayable" contextRef="AsOf2023-06-30_custom_CathayBankMember28609031" format="ixt:numdotdecimal" decimals="0" unitRef="USD">887,000</ix:nonFraction></td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="width: 2%; padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; width: 1%; text-align: left">$</td><td id="xdx_983_eus-gaap--ShortTermBankLoansAndNotesPayable_iI_c20220630__us-gaap--CreditFacilityAxis__custom--CathayBankMember_fKDEp_zMhiI40n8eZ3" title="Short-term Debt" style="border-bottom: Black 1.5pt solid; width: 14%; text-align: right"><ix:nonFraction name="us-gaap:ShortTermBankLoansAndNotesPayable" contextRef="AsOf2022-06-30_custom_CathayBankMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">564,000</ix:nonFraction></td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; padding-bottom: 2.5pt">Total</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_98A_eus-gaap--ShortTermBankLoansAndNotesPayable_iI_c20230630_zOicMUdotjN8" title="Short-term Debt" style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:ShortTermBankLoansAndNotesPayable" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">887,000</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_983_eus-gaap--ShortTermBankLoansAndNotesPayable_iI_c20220630_zqta5BA3Hv5h" title="Short-term Debt" style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:ShortTermBankLoansAndNotesPayable" contextRef="AsOf2022-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">564,000</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
  </table>

</ix:nonNumeric><p id="xdx_8AE_zZN0V0em5EB3" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
February 6, 2020, one of the Company&#8217;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 $<span id="xdx_904_eus-gaap--LineOfCreditFacilityMaximumBorrowingCapacity_iI_pn5n6_c20200206__dei--LegalEntityAxis__custom--DongguanJiashengEnterpriseCoLtdDongguanJiashengMember__us-gaap--CreditFacilityAxis__custom--CathayBankMember_zoYGsAFAFaak" title="Maximum line of credit" class="xdx_phnt_RGlzY2xvc3VyZSAtIFNDSEVEVUxFIE9GIFNIT1JULVRFUk0gQkFOSyBMT0FOUyAoRGV0YWlscykgKFBhcmVudGhldGljYWwpAA__"><ix:nonFraction name="us-gaap:LineOfCreditFacilityMaximumBorrowingCapacity" contextRef="AsOf2020-02-06_custom_DongguanJiashengEnterpriseCoLtdDongguanJiashengMember_custom_CathayBankMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">1.2</ix:nonFraction></span> 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.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of June 30, 2023, the outstanding balance was $<span id="xdx_906_eus-gaap--DebtInstrumentFaceAmount_iI_c20230630__dei--LegalEntityAxis__custom--DongguanJiashengEnterpriseCoLtdDongguanJiashengMember__us-gaap--CreditFacilityAxis__custom--CathayBankMember_zEK42scrh3oh" title="Outstanding balance"><ix:nonFraction name="us-gaap:DebtInstrumentFaceAmount" contextRef="AsOf2023-06-30_custom_DongguanJiashengEnterpriseCoLtdDongguanJiashengMember_custom_CathayBankMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">887,000</ix:nonFraction></span>. The Company has extended the repayment date to February 2024 from the original
due date of February 2022. As of the date of this report, the Company made total payments of $<span id="xdx_90C_eus-gaap--LoansPayable_iI_c20230630_zssOexQN5vjc" title="Payments amount"><ix:nonFraction name="us-gaap:LoansPayable" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">828,416</ix:nonFraction></span>.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="us-gaap:ScheduleOfDebtInstrumentsTextBlock"><p id="xdx_898_eus-gaap--ScheduleOfDebtInstrumentsTextBlock_zapyQsPZMYBl" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">Long-term
loan consisted of the following:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span id="xdx_8BA_zCXF46NMAEBc" style="display: none">SCHEDULE OF LONG-TERM LOAN</span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">As of</td><td style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">As of</td><td style="font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">June 30, 2023</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">June 30, 2022</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left">Dongguan Rural Commercial Bank</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="width: 64%; text-align: left">Effective interest rate at <span id="xdx_90D_eus-gaap--DebtInstrumentInterestRateEffectivePercentage_iI_pid_dp_uPure_c20230630__us-gaap--CreditFacilityAxis__custom--DongguanRuralCommercialBankMember_z1TYu9yEDmdf" title="Effective interest rate" class="xdx_phnt_RGlzY2xvc3VyZSAtIFNDSEVEVUxFIE9GIExPTkctVEVSTSBMT0FOIChEZXRhaWxzKSAoUGFyZW50aGV0aWNhbCkA"><ix:nonFraction name="us-gaap:DebtInstrumentInterestRateEffectivePercentage" contextRef="AsOf2023-06-30_custom_DongguanRuralCommercialBankMember28609656" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">6.15</ix:nonFraction></span>% and <span id="xdx_90B_eus-gaap--DebtInstrumentInterestRateEffectivePercentage_iI_pid_dp_uPure_c20220630__us-gaap--CreditFacilityAxis__custom--DongguanRuralCommercialBankMember_zEKTf2CMTUPa" title="Effective interest rate" class="xdx_phnt_RGlzY2xvc3VyZSAtIFNDSEVEVUxFIE9GIExPTkctVEVSTSBMT0FOIChEZXRhaWxzKSAoUGFyZW50aGV0aWNhbCkA"><ix:nonFraction name="us-gaap:DebtInstrumentInterestRateEffectivePercentage" contextRef="AsOf2022-06-30_custom_DongguanRuralCommercialBankMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">6.55</ix:nonFraction></span>%</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td id="xdx_981_eus-gaap--LoansPayableToBank_iI_c20230630__us-gaap--CreditFacilityAxis__custom--DongguanRuralCommercialBankMember_zJ0y2iHcOPwi" title="Loans payable to bank" style="width: 14%; text-align: right"><ix:nonFraction name="us-gaap:LoansPayableToBank" contextRef="AsOf2023-06-30_custom_DongguanRuralCommercialBankMember28609656" format="ixt:numdotdecimal" decimals="0" unitRef="USD">4,555,467</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td id="xdx_985_eus-gaap--LoansPayableToBank_iI_c20220630__us-gaap--CreditFacilityAxis__custom--DongguanRuralCommercialBankMember_zsDRJVdNSrVj" title="Loans payable to bank" style="width: 14%; text-align: right"><ix:nonFraction name="us-gaap:LoansPayableToBank" contextRef="AsOf2022-06-30_custom_DongguanRuralCommercialBankMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">6,320,534</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt">Less: current portion of long-term loans</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td id="xdx_985_eus-gaap--LongTermDebtCurrent_iNI_di_c20230630_zZZXmYtw4iK8" title="Less: current portion of long-term loans" style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction name="us-gaap:LongTermDebtCurrent" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">2,959,918</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td id="xdx_98A_eus-gaap--LongTermDebtCurrent_iNI_di_c20220630_zdHq5ew89OYe" title="Less: current portion of long-term loans" style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction name="us-gaap:LongTermDebtCurrent" contextRef="AsOf2022-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,386,160</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold; text-align: left; padding-bottom: 2.5pt">Long-term loans</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_989_eus-gaap--LongTermDebtNoncurrent_iI_c20230630_zwb0SuGEaQCk" title="Long-term loans" style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:LongTermDebtNoncurrent" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,595,549</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_987_eus-gaap--LongTermDebtNoncurrent_iI_c20220630_zS5aY4Cy2wC8" title="Long-term loans" style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:LongTermDebtNoncurrent" contextRef="AsOf2022-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">4,934,374</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
  </table>

</ix:nonNumeric><p id="xdx_8A1_zH9qZPb5kQn7" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">On
July 17, 2020, the Company entered into multiple loan agreements with Dongguan Rural Commercial Bank to borrow an aggregate of $<span id="xdx_906_eus-gaap--ProceedsFromLoans_pn5n6_c20200717__20200717__us-gaap--CreditFacilityAxis__custom--DongguanRuralCommercialBankMember_zuvc6UmGM04j" title="Proceeds from loans"><ix:nonFraction name="us-gaap:ProceedsFromLoans" contextRef="From2020-07-172020-07-17_custom_DongguanRuralCommercialBankMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">6.9</ix:nonFraction></span> million
(RMB<span id="xdx_90B_eus-gaap--ProceedsFromLoans_pn5n6_uRMB_c20200717__20200717__us-gaap--CreditFacilityAxis__custom--DongguanRuralCommercialBankMember_zGtoFeoLAYll" title="Proceeds from loans"><ix:nonFraction name="us-gaap:ProceedsFromLoans" contextRef="From2020-07-172020-07-17_custom_DongguanRuralCommercialBankMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="RMB">50</ix:nonFraction></span> million) of loans to support the working capital needs and the construction of the Company&#8217;s current CIP projects. <span id="xdx_901_eus-gaap--DebtInstrumentDescription_c20200717__20200717__us-gaap--CreditFacilityAxis__custom--DongguanRuralCommercialBankMember_zpr29RaJrrA9" title="Debt instrument description"><ix:nonNumeric contextRef="From2020-07-172020-07-17_custom_DongguanRuralCommercialBankMember" name="us-gaap:DebtInstrumentDescription">The loans
have tenure varying between three and eight years. The loans bear a variable interest rate based on the prime interest rate set by the
People&#8217;s Bank of China at the time of borrowing, plus 1.405 basis points</ix:nonNumeric></span>. The Company pledged the land use right of approximately
$<span id="xdx_90A_eus-gaap--OperatingLeaseRightOfUseAsset_iI_pn5n6_c20200717__dei--LegalEntityAxis__custom--MeijiaMember__us-gaap--PropertyPlantAndEquipmentByTypeAxis__us-gaap--LandMember_zRwiWMfqXzOe" title="Operating lease right of use asset"><ix:nonFraction name="us-gaap:OperatingLeaseRightOfUseAsset" contextRef="AsOf2020-07-17_custom_MeijiaMember_us-gaap_LandMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">1.8</ix:nonFraction></span> million and buildings of approximately $<span id="xdx_900_eus-gaap--OperatingLeaseRightOfUseAsset_iI_pn5n6_c20200717__dei--LegalEntityAxis__custom--MeijiaMember__us-gaap--PropertyPlantAndEquipmentByTypeAxis__us-gaap--BuildingMember_zKd2L3pYYyvb" title="Operating lease right of use asset"><ix:nonFraction name="us-gaap:OperatingLeaseRightOfUseAsset" contextRef="AsOf2020-07-17_custom_MeijiaMember_us-gaap_BuildingMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">4.8</ix:nonFraction></span> million from Meijia as collateral to secure total loans of $<span id="xdx_902_ecustom--LoansReceivableCollateralForSecuredBorrowings_iI_pn5n6_c20200717__dei--LegalEntityAxis__custom--MeijiaMember_zdTiNnbeUMsi" title="Loans receivable collateral for secured borrowings"><ix:nonFraction name="DOGZ:LoansReceivableCollateralForSecuredBorrowings" contextRef="AsOf2020-07-17_custom_MeijiaMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">4.1</ix:nonFraction></span> million (RMB<span id="xdx_90C_ecustom--LoansReceivableCollateralForSecuredBorrowings_iI_pn6n6_uRMB_c20200717__dei--LegalEntityAxis__custom--MeijiaMember_zToyyQ2sR8R7" title="Loans receivable collateral for secured borrowings"><ix:nonFraction name="DOGZ:LoansReceivableCollateralForSecuredBorrowings" contextRef="AsOf2020-07-17_custom_MeijiaMember" format="ixt:numdotdecimal" decimals="-6" scale="6" unitRef="RMB">30</ix:nonFraction></span> million).
Mr. Silong Chen, the CEO of the Company, pledged personal property as collateral to secure the remaining loans of $<span id="xdx_904_ecustom--LoansReceivableCollateralForSecuredBorrowings_iI_pn5n6_c20200717__dei--LegalEntityAxis__custom--MeijiaMember__srt--TitleOfIndividualAxis__custom--MrSilongChenMember_zAsuH3aFgvRl" title="Loans receivable collateral for secured borrowings"><ix:nonFraction name="DOGZ:LoansReceivableCollateralForSecuredBorrowings" contextRef="AsOf2020-07-17_custom_MeijiaMember_custom_MrSilongChenMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">2.8</ix:nonFraction></span> million (RMB<span id="xdx_904_ecustom--LoansReceivableCollateralForSecuredBorrowings_iI_pn6n6_uRMB_c20200717__dei--LegalEntityAxis__custom--MeijiaMember__srt--TitleOfIndividualAxis__custom--MrSilongChenMember_zwIyAm13c5hk" title="Loans receivable collateral for secured borrowings"><ix:nonFraction name="DOGZ:LoansReceivableCollateralForSecuredBorrowings" contextRef="AsOf2020-07-17_custom_MeijiaMember_custom_MrSilongChenMember" format="ixt:numdotdecimal" decimals="-6" scale="6" unitRef="RMB">20</ix:nonFraction></span>
million). Dongguan Dogness, Meijia and Mr. Silong Chen also provided guarantee for the loans. As of June 30, 2023, the outstanding balance
was $<span id="xdx_907_eus-gaap--LoansPayableToBank_iI_c20230630__us-gaap--CreditFacilityAxis__custom--DongguanRuralCommercialBankMember_zEwYWpvIUQN3" title="Loans payable to bank"><ix:nonFraction name="us-gaap:LoansPayableToBank" contextRef="AsOf2023-06-30_custom_DongguanRuralCommercialBankMember28609656" format="ixt:numdotdecimal" decimals="0" unitRef="USD">4,555,467</ix:nonFraction></span>. The Company further repaid $<span id="xdx_906_eus-gaap--RepaymentsOfDebt_c20220701__20230630_ziflLXlMe5t1" title="Repayments of debt"><ix:nonFraction name="us-gaap:RepaymentsOfDebt" contextRef="From2022-07-01to2023-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">2,702,960</ix:nonFraction></span> (RMB<span id="xdx_905_eus-gaap--RepaymentsOfDebt_uRMB_c20220701__20230630_zzh3X20LGaWl" title="Repayments of debt"><ix:nonFraction name="us-gaap:RepaymentsOfDebt" contextRef="From2022-07-01to2023-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="RMB">19,600,873</ix:nonFraction></span>) and drew down $<span id="xdx_902_eus-gaap--LoansPayableToBank_iI_c20230701__us-gaap--CreditFacilityAxis__custom--DongguanRuralCommercialBankMember__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember_zCfVvPfhg5b4" title="Loans payable to bank"><ix:nonFraction name="us-gaap:LoansPayableToBank" contextRef="AsOf2023-07-01_custom_DongguanRuralCommercialBankMember_us-gaap_SubsequentEventMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">2,620,100</ix:nonFraction></span> (RMB<span id="xdx_90C_eus-gaap--LoansPayableToBank_iI_uRMB_c20230701__us-gaap--CreditFacilityAxis__custom--DongguanRuralCommercialBankMember__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember_zlsf7q1h8k34" title="Loans payable to bank"><ix:nonFraction name="us-gaap:LoansPayableToBank" contextRef="AsOf2023-07-01_custom_DongguanRuralCommercialBankMember_us-gaap_SubsequentEventMember" format="ixt:numdotdecimal" decimals="0" unitRef="RMB">19,000,000</ix:nonFraction></span>) subsequent to the period
end.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">Interest
expenses for the above-mentioned loans amounted to $<span id="xdx_90B_eus-gaap--InterestExpenseDebt_c20220701__20230630_zKecaUF5BCM9" title="Interest expense"><ix:nonFraction name="us-gaap:InterestExpenseDebt" contextRef="From2022-07-01to2023-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">396,517</ix:nonFraction></span>, $<span id="xdx_90D_eus-gaap--InterestExpenseDebt_c20210701__20220630_zA9uyO0KDZee" title="Interest expense"><ix:nonFraction name="us-gaap:InterestExpenseDebt" contextRef="From2021-07-012022-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">471,443</ix:nonFraction></span> and $<span id="xdx_90D_eus-gaap--InterestExpenseDebt_c20200701__20210630_zSr6Ek8jLLa1" title="Interest expense"><ix:nonFraction name="us-gaap:InterestExpenseDebt" contextRef="From2020-07-012021-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">460,905</ix:nonFraction></span> for the years ended June 30, 2023, 2022 and 2021,
respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">The
Company capitalized interest of $<span id="xdx_90D_eus-gaap--InterestCostsCapitalized_dxL_c20220701__20230630_zWWBgjJ20dAe" title="Capitalized interest::XDX::-"><span style="-sec-ix-hidden: xdx2ixbrl1485">Nil</span></span>, $<span id="xdx_90A_eus-gaap--InterestCostsCapitalized_c20210701__20220630_zAAEBhDzJ1P6" title="Capitalized interest"><ix:nonFraction name="us-gaap:InterestCostsCapitalized" contextRef="From2021-07-012022-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">90,775</ix:nonFraction></span> and $<span id="xdx_90A_eus-gaap--InterestCostsCapitalized_c20200701__20210630_zSf6rT7QZS4e" title="Capitalized interest"><ix:nonFraction name="us-gaap:InterestCostsCapitalized" contextRef="From2020-07-012021-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">145,620</ix:nonFraction></span> related to certain CIP projects expenditures for the years ended June 30,
2023, 2022 and 2021, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">As
of June 30, 2023, the Company&#8217;s short-term and long-term loans totaled approximately $<span id="xdx_902_eus-gaap--LongTermDebt_iI_pn5n6_c20230630_zB8pwQEnHAsd" title="Long term debt"><ix:nonFraction name="us-gaap:LongTermDebt" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">5.4</ix:nonFraction></span> million. The repayment schedule for the
Company&#8217;s bank loans are as follows:</span></p>

<ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="us-gaap:ScheduleOfDebtTableTextBlock"><p id="xdx_898_eus-gaap--ScheduleOfDebtTableTextBlock_zYfunk0kyNUg" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span id="xdx_8BE_z3SKyozDd3Xc" style="display: none">SCHEDULE OF BANK LOANS REPAYMENT</span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="border-bottom: Black 1.5pt solid; text-align: left; font-weight: bold">Twelve months ending June 30,</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" id="xdx_496_20230630_z4N0U1lp8Hdd" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Repayment</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr id="xdx_40C_eus-gaap--LongTermDebtMaturitiesRepaymentsOfPrincipalInNextTwelveMonths_iI_maLTDzhra_z6WCEF0n1Uve" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 80%; text-align: left">2024</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right"><ix:nonFraction name="us-gaap:LongTermDebtMaturitiesRepaymentsOfPrincipalInNextTwelveMonths" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">3,846,918</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr id="xdx_402_eus-gaap--LongTermDebtMaturitiesRepaymentsOfPrincipalInYearTwo_iI_maLTDzhra_zGQlCokgzpQb" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">2025</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:LongTermDebtMaturitiesRepaymentsOfPrincipalInYearTwo" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">361,513</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40A_eus-gaap--LongTermDebtMaturitiesRepaymentsOfPrincipalInYearThree_iI_maLTDzhra_zZToyAwEKfd" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">2026</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:LongTermDebtMaturitiesRepaymentsOfPrincipalInYearThree" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">384,284</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40A_eus-gaap--LongTermDebtMaturitiesRepaymentsOfPrincipalInYearFour_iI_maLTDzhra_zpB9kDimgTLf" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">2027</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:LongTermDebtMaturitiesRepaymentsOfPrincipalInYearFour" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">408,490</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40F_eus-gaap--LongTermDebtMaturitiesRepaymentsOfPrincipalInYearFive_iI_pp0p0_maLTDzhra_zNpjljfcRvlg" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">2028</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:LongTermDebtMaturitiesRepaymentsOfPrincipalInYearFive" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">434,197</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40A_eus-gaap--LongTermDebtMaturitiesRepaymentsOfPrincipalAfterYearFive_iI_pp0p0_maLTDzhra_z4280D7hHGla" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1.5pt">2029</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="us-gaap:LongTermDebtMaturitiesRepaymentsOfPrincipalAfterYearFive" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">7,065</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr id="xdx_40B_eus-gaap--LongTermDebt_iTI_pp0p0_mtLTDzhra_zRNKPOJd7mw9" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 2.5pt">Total</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:LongTermDebt" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">5,442,467</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
  </table>
<!-- Field: Split-Segment; Name: 002 -->
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


<ix:exclude><!-- Field: Page; Sequence: 160; Value: 14 -->
    <div style="border-bottom: Black 1.5pt solid; margin-bottom: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="text-align: center; width: 100%">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->20<!-- Field: /Sequence --></td></tr></table></div>
    <div style="break-before: page; margin-top: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="width: 100%">&#160;</td></tr></table></div>
    <!-- Field: /Page --></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>DOGNESS
(INTERNATIONAL) CORPORATION</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
amounts in USD)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric></ix:nonNumeric><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="us-gaap:IncomeTaxDisclosureTextBlock"><p id="xdx_802_eus-gaap--IncomeTaxDisclosureTextBlock_zF5QvAiSD8Oc" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b>NOTE
9 &#8211; <span id="xdx_82C_zg8BFWFJyqj5">TAXES</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b>(a)
Corporate Income Taxes (&#8220;CIT&#8221;)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">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.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">Under
Hong Kong tax laws, subsidiaries in Hong Kong are subject to statutory income tax rate at <span id="xdx_907_eus-gaap--EffectiveIncomeTaxRateReconciliationAtFederalStatutoryIncomeTaxRate_pid_dp_uPure_c20220701__20230630__srt--StatementGeographicalAxis__country--HK_zcSq1NKxsPoi" title="Statutory income tax rate"><ix:nonFraction name="us-gaap:EffectiveIncomeTaxRateReconciliationAtFederalStatutoryIncomeTaxRate" contextRef="From2022-07-012023-06-30_country_HK" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">16.5</ix:nonFraction></span>% if revenue is generated in Hong Kong
and there are no withholding taxes in Hong Kong on remittance of dividends.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><span id="xdx_90E_ecustom--DescriptionOnTaxRate_c20220701__20230630_zzJjJP2RztLi" title="Description on tax rate"><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" name="DOGZ:DescriptionOnTaxRate">Under
the Enterprise Income Tax (&#8220;EIT&#8221;) Law of PRC, domestic enterprises and Foreign Investment Enterprises (&#8220;FIEs&#8221;)
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 (&#8220;HNTEs&#8221;).
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&#8217;s main operating subsidiary in PRC, was approved as HNTEs and is entitled to a reduced income tax rate of
15% from 2015 to 2023.</ix:nonNumeric></span> The certificate is subject to further renewal.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">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 years ended June 30, 2023,
2022 and 2021were reported at a reduced rate of <span id="xdx_904_eus-gaap--EffectiveIncomeTaxRateReconciliationAtFederalStatutoryIncomeTaxRate_pid_dp_uPure_c20220701__20230630_zulqZBlcyAoa"><ix:nonFraction name="us-gaap:EffectiveIncomeTaxRateReconciliationAtFederalStatutoryIncomeTaxRate" contextRef="From2022-07-01to2023-06-30" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">15</ix:nonFraction></span>% as a result of Dongguan Jiasheng being approved as HNTE. The impact of the tax holidays
noted above decreased foreign taxes by $<span id="xdx_907_eus-gaap--IncomeTaxHolidayAggregateDollarAmount_c20220701__20230630_zcFtkTa6qTWi" title="Foreign taxes"><ix:nonFraction name="us-gaap:IncomeTaxHolidayAggregateDollarAmount" contextRef="From2022-07-01to2023-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">316,913</ix:nonFraction></span>, $<span id="xdx_903_eus-gaap--IncomeTaxHolidayAggregateDollarAmount_c20210701__20220630_ze0QnvXGcBr2" title="Foreign taxes"><ix:nonFraction name="us-gaap:IncomeTaxHolidayAggregateDollarAmount" contextRef="From2021-07-012022-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">100,210</ix:nonFraction></span> and $<span id="xdx_902_eus-gaap--IncomeTaxHolidayAggregateDollarAmount_c20200701__20210630_zddFlmBn55f1" title="Foreign taxes"><ix:nonFraction name="us-gaap:IncomeTaxHolidayAggregateDollarAmount" contextRef="From2020-07-012021-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">117,514</ix:nonFraction></span> for the years ended June 30, 2023, 2022 and 2021, respectively.
The benefit of the tax holidays on net income (loss) per share (basic and diluted) was $<span id="xdx_90A_eus-gaap--IncomeTaxHolidayIncomeTaxBenefitsPerShare_c20220701__20230630_zOUZ5EXPMh4i" title="Tax holidays on net income (loss) per share"><ix:nonFraction name="us-gaap:IncomeTaxHolidayIncomeTaxBenefitsPerShare" contextRef="From2022-07-01to2023-06-30" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">0.01</ix:nonFraction></span>, $<span id="xdx_906_eus-gaap--IncomeTaxHolidayIncomeTaxBenefitsPerShare_c20210701__20220630_zVVanZg9MJ23"><ix:nonFraction name="us-gaap:IncomeTaxHolidayIncomeTaxBenefitsPerShare" contextRef="From2021-07-012022-06-30" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">0.00</ix:nonFraction></span> and $<span id="xdx_903_eus-gaap--IncomeTaxHolidayIncomeTaxBenefitsPerShare_c20200701__20210630_zH8wSmtjS8d5"><ix:nonFraction name="us-gaap:IncomeTaxHolidayIncomeTaxBenefitsPerShare" contextRef="From2020-07-012021-06-30" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">0.00</ix:nonFraction></span> for the years ended June
30, 2023, 2022 and 2021, respectively. As of June 30, 2023 all of the Company&#8217;s tax returns of its PRC subsidiaries, Hong Kong
subsidiaries and U.S subsidiary remain open for statutory examination by relevant tax authorities.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="us-gaap:ScheduleOfEffectiveIncomeTaxRateReconciliationTableTextBlock"><p id="xdx_89F_eus-gaap--ScheduleOfEffectiveIncomeTaxRateReconciliationTableTextBlock_zeQvwEByR62d" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">The
following table reconciles the statutory rate to the Company&#8217;s effective tax:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; display: none; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_8B1_zT8KmJiDSuD">SCHEDULE
OF RECONCILIATION EFFECTIVE TAX</span></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="display: none; vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" id="xdx_495_20220701__20230630_z0Ch9crFD4Ng" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2023</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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<tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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    <td style="text-align: left">Effect of rate differential for Hong Kong and other outside PRC entities</td><td>&#160;</td>
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  <tr id="xdx_405_ecustom--IncomeTaxReconciliationPreferentialTaxRate_maITEBzGes_z8ZJKRBBEEQ7" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Effect of PRC preferential tax rate</td><td>&#160;</td>
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    <td style="text-align: left">Change in valuation allowance</td><td>&#160;</td>
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  <tr id="xdx_400_ecustom--IncomeTaxReconciliationSurchargeOnUnpaidIncomeTax_maITEBzGes_zHETWfAqFtp4" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Surcharge on unpaid income tax</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1544">-</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1545">-</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr id="xdx_40A_ecustom--IncomeTaxReconciliationOfIncomeTaxPayableReserved_maITEBzGes_z2NlrThp1tUa" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Income tax payable reserved</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="DOGZ:IncomeTaxReconciliationOfIncomeTaxPayableReserved" contextRef="From2022-07-01to2023-06-30" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">567,342</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1550">-</span></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_408_eus-gaap--IncomeTaxReconciliationChangeInEnactedTaxRate_maITEBzGes_zWOVf68VQAZ" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Permanent difference</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="us-gaap:IncomeTaxReconciliationChangeInEnactedTaxRate" contextRef="From2022-07-01to2023-06-30" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">83,745</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
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  <tr id="xdx_40E_eus-gaap--IncomeTaxReconciliationPriorYearIncomeTaxes_maITEBzGes_zYBpuGbrbXfd" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1.5pt">Refund of prior years&#8217; tax</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1557">-</span></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr id="xdx_408_eus-gaap--IncomeTaxExpenseBenefit_iT_mtITEBzGes_znWuybvbDRMj" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 2.5pt">Effective tax</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(<ix:nonFraction name="us-gaap:IncomeTaxExpenseBenefit" contextRef="From2022-07-01to2023-06-30" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">1,227,449</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">)</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(<ix:nonFraction name="us-gaap:IncomeTaxExpenseBenefit" contextRef="From2021-07-012022-06-30" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">2,777,868</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">)</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:IncomeTaxExpenseBenefit" contextRef="From2020-07-012021-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">641,460</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
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</ix:nonNumeric><p id="xdx_8AB_zRidLKjWP2v" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="us-gaap:ScheduleOfComponentsOfIncomeTaxExpenseBenefitTableTextBlock"><p id="xdx_893_eus-gaap--ScheduleOfComponentsOfIncomeTaxExpenseBenefitTableTextBlock_z7SefccgXfj2" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">The
provision for income tax consists of the following:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; display: none; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_8BE_zsiEkmH5OWT7">SCHEDULE OF COMPONENTS OF INCOME TAX EXPENSE (BENEFIT)</span></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="display: none; vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" id="xdx_498_20220701__20230630_z8om2jGa6Di4" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2023</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" id="xdx_499_20210701__20220630_zs0EnyhHuEzk" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2022</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" id="xdx_49F_20200701__20210630_z88C6UKn5X37" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2020</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="10" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">For the Years Ended June 30,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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    <td style="width: 52%; text-align: left">Current income tax (benefit) expense</td><td style="width: 2%">&#160;</td>
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    <td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">(<ix:nonFraction name="us-gaap:CurrentIncomeTaxExpenseBenefit" contextRef="From2021-07-012022-06-30" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">2,659,444</ix:nonFraction></td><td style="width: 1%; text-align: left">)</td><td style="width: 2%">&#160;</td>
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  <tr id="xdx_402_eus-gaap--DeferredIncomeTaxExpenseBenefit_maITEBzeN2_zEpiGsW3nqc8" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1.5pt">Deferred income tax benefit</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction name="us-gaap:DeferredIncomeTaxExpenseBenefit" contextRef="From2022-07-01to2023-06-30" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">658,595</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td style="text-align: left; padding-bottom: 2.5pt">Total income tax (benefit) expense</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(<ix:nonFraction name="us-gaap:IncomeTaxExpenseBenefit" contextRef="From2022-07-01to2023-06-30" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">1,227,449</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">)</td><td style="padding-bottom: 2.5pt">&#160;</td>
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</ix:nonNumeric><p id="xdx_8A8_zrZGsKHHd1r3" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


<ix:exclude><!-- Field: Page; Sequence: 161; Value: 14 -->
    <div style="border-bottom: Black 1.5pt solid; margin-bottom: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="text-align: center; width: 100%">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->21<!-- Field: /Sequence --></td></tr></table></div>
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    <!-- Field: /Page --></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>DOGNESS
(INTERNATIONAL) CORPORATION</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
amounts in USD)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b>NOTE
9 &#8211; TAXES (continued)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="us-gaap:ScheduleOfDeferredTaxAssetsAndLiabilitiesTableTextBlock"><p id="xdx_89D_eus-gaap--ScheduleOfDeferredTaxAssetsAndLiabilitiesTableTextBlock_z3C1xsFPmVxj" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">The
Company&#8217;s deferred tax assets consist of the following:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; display: none; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span id="xdx_8B0_z6LQy2udj56f">SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="text-align: justify">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" id="xdx_49B_20230630_zj3FpfN7cMt4" style="border-bottom: Black 1.5pt solid; text-align: center"><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>As of</b></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>June 30, 2023</b></span></p></td><td style="padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" id="xdx_494_20220630_zu0yvn1gBYCd" style="border-bottom: Black 1.5pt solid; text-align: center"><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>As of</b></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-indent: 15.05pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>June 30, 2022</b></span></p></td><td style="padding-bottom: 1.5pt">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Deferred tax assets:</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_403_eus-gaap--DeferredTaxAssetsOperatingLossCarryforwards_iI_maDTANzB1S_zqlnfPvobxad" style="vertical-align: bottom; background-color: White">
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    <td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right"><ix:nonFraction name="us-gaap:DeferredTaxAssetsOperatingLossCarryforwards" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">3,086,012</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right"><ix:nonFraction name="us-gaap:DeferredTaxAssetsOperatingLossCarryforwards" contextRef="AsOf2022-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,828,369</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr id="xdx_40E_eus-gaap--DeferredTaxAssetsTaxDeferredExpenseReservesAndAccrualsImpairmentLosses_iI_maDTANzB1S_zigROvmWfto6" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Assets impairment reserve</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:DeferredTaxAssetsTaxDeferredExpenseReservesAndAccrualsImpairmentLosses" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">493,981</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr id="xdx_407_ecustom--DeferredTaxAssetOthers_iI_maDTANzB1S_zVbYPNrMurIj" style="vertical-align: bottom; background-color: White">
    <td>Others</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="DOGZ:DeferredTaxAssetOthers" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">38,558</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="DOGZ:DeferredTaxAssetOthers" contextRef="AsOf2022-06-30" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">45,537</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr id="xdx_400_eus-gaap--DeferredTaxAssetsValuationAllowance_iNI_di_msDTANzB1S_zl6ks0H45tj8" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt">Valuation allowance</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction name="us-gaap:DeferredTaxAssetsValuationAllowance" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">2,259,801</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction name="us-gaap:DeferredTaxAssetsValuationAllowance" contextRef="AsOf2022-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,535,331</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr id="xdx_40D_eus-gaap--DeferredTaxAssetsNet_iTI_mtDTANzB1S_zX8fdKyZZwQh" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1.5pt">Deferred tax assets, net</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="us-gaap:DeferredTaxAssetsNet" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,281,634</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="us-gaap:DeferredTaxAssetsNet" contextRef="AsOf2022-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">699,039</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  </table>

</ix:nonNumeric><p id="xdx_8A7_zpK9RWSoFT0e" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b>(b)
Taxes Payable</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="DOGZ:ScheduleOfTaxesPayableTableTextBlock"><p id="xdx_89F_ecustom--ScheduleOfTaxesPayableTableTextBlock_z1wYtOIFrxih" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">The
Company&#8217;s taxes payable consists of the following:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; display: none; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_8B6_z3YIOWh48uVa">SCHEDULE OF TAXES PAYABLE</span></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" id="xdx_49D_20230630_z4TyFQy90wx5" style="border-bottom: Black 1.5pt solid; text-align: center"><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>As of</b></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>June 30, 2023</b></span></p></td><td style="padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td></tr>
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    <td style="width: 64%; text-align: left">Corporate income tax payable</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right"><ix:nonFraction name="DOGZ:CorporateIncomeTaxPayable" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">875,973</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
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    <td style="text-align: left; padding-bottom: 1.5pt">Other tax payable</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="DOGZ:OtherTaxPayables" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">139,471</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="DOGZ:OtherTaxPayables" contextRef="AsOf2022-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">21,436</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr id="xdx_40E_eus-gaap--TaxesPayableCurrentAndNoncurrent_iTI_mtTPCANzFk2_zMXhpbduCRBb" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 2.5pt">Total taxes payable</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:TaxesPayableCurrentAndNoncurrent" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,015,444</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:TaxesPayableCurrentAndNoncurrent" contextRef="AsOf2022-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,557,661</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
  </table>

</ix:nonNumeric><p id="xdx_8A9_zOS6RSAYo9T" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">The
Company may be subject to challenges from various PRC taxing authorities regarding the amounts of taxes due, although the Company&#8217;s
management believes the Company has paid or accrued for all taxes owed by the Company. According to PRC taxation regulation and administrative
practice and procedures, the statute of limitation on tax authority&#8217;s audit or examination of previously filed tax returns expires
three years from the date they were filed. The Company also obtained a written statement from the local tax authority that no additional
taxes are due as of June 30, 2023. Based on these facts, the Company reversed the accrued tax liabilities in the total amount of approximately
$<span id="xdx_907_eus-gaap--AccruedLiabilitiesCurrentAndNoncurrent_iI_pn5n6_c20230630_zZXfCTRxXqA"><ix:nonFraction name="us-gaap:AccruedLiabilitiesCurrentAndNoncurrent" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">3.4</ix:nonFraction></span> million (or RMB<span id="xdx_90F_eus-gaap--AccruedLiabilitiesCurrentAndNoncurrent_iI_uRMB_c20230630_zHIUF9SoPMx7"><ix:nonFraction name="us-gaap:AccruedLiabilitiesCurrentAndNoncurrent" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="RMB">24,370,181</ix:nonFraction></span>) relating to the tax liabilities accrued for the period from fiscal 2016 to fiscal 2019, resulting in
the decrease of accrued income tax liabilities from approximately $<span id="xdx_905_eus-gaap--AccruedLiabilitiesCurrentAndNoncurrent_iI_pn5n6_c20230630__srt--RangeAxis__srt--MaximumMember_zgrsh0w6q2cd"><ix:nonFraction name="us-gaap:AccruedLiabilitiesCurrentAndNoncurrent" contextRef="AsOf2023-06-30_srt_MaximumMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">4.2</ix:nonFraction></span> million to approximately $<span id="xdx_900_eus-gaap--AccruedLiabilitiesCurrentAndNoncurrent_iI_pn5n6_c20230630__srt--RangeAxis__srt--MinimumMember_zF2HrIYeqrOh"><ix:nonFraction name="us-gaap:AccruedLiabilitiesCurrentAndNoncurrent" contextRef="AsOf2023-06-30_srt_MinimumMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">0.9</ix:nonFraction></span> million as of June 30, 2023. The
Company continues to discuss with the local tax authority to try to settle the remaining tax liabilities as soon as practicable, mostly
related to its unpaid income tax and business tax.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">Due
to uncertainties associated with the status of examinations, including the protocols of finalizing audits by the relevant tax authorities,
there is a high degree of uncertainty regarding the future cash outflows associated with the interest and penalties on these unpaid tax
balances. The final outcome of this tax uncertainty is dependent upon various matters including tax examinations, interpretation of tax
laws or expiration of status of limitation.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="us-gaap:CommitmentsAndContingenciesDisclosureTextBlock"><p id="xdx_809_eus-gaap--CommitmentsAndContingenciesDisclosureTextBlock_z8b3OyOOAUx9" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b>NOTE
10 &#8211; <span id="xdx_829_z16MXzYwYK7i">COMMITMENTS AND CONTINGENCIES</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b>Contingencies</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">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&#8217;s consolidated
financial position or results of operations or liquidity</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


<ix:exclude><!-- Field: Page; Sequence: 162; Value: 14 -->
    <div style="border-bottom: Black 1.5pt solid; margin-bottom: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="text-align: center; width: 100%">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->22<!-- Field: /Sequence --></td></tr></table></div>
    <div style="break-before: page; margin-top: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="width: 100%">&#160;</td></tr></table></div>
    <!-- Field: /Page --></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>DOGNESS
(INTERNATIONAL) CORPORATION</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
amounts in USD)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b>NOTE
10 &#8211; COMMITMENTS AND CONTINGENCIES (continued)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b>Capital
Investment Obligation</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><i>Zhangzhou
Meijia Metal Product Ltd.</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">Meijia
was incorporated under the laws of the People&#8217;s Republic of China with a total registered capital of RMB <span id="xdx_901_eus-gaap--Capital_iI_pn5n6_uRMB_c20180316__dei--LegalEntityAxis__custom--ZhangzhouMeijiaMetalProductCoLtdMeijiaMember_zndzFcBRU7B8" title="Capital"><ix:nonFraction name="us-gaap:Capital" contextRef="AsOf2018-03-16_custom_ZhangzhouMeijiaMetalProductCoLtdMeijiaMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="RMB">60.0</ix:nonFraction></span> million ($<span id="xdx_906_eus-gaap--Capital_iI_pn5n6_c20180316__dei--LegalEntityAxis__custom--ZhangzhouMeijiaMetalProductCoLtdMeijiaMember_zXJIRR1ARit9" title="Capital"><ix:nonFraction name="us-gaap:Capital" contextRef="AsOf2018-03-16_custom_ZhangzhouMeijiaMetalProductCoLtdMeijiaMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">8.3</ix:nonFraction></span> million).
As of June 30, 2022, RMB<span id="xdx_904_eus-gaap--Capital_iI_pn5n6_uRMB_c20220630__dei--LegalEntityAxis__custom--ZhangzhouMeijiaMetalProductCoLtdMeijiaMember_z5SXgwtlhjp1" title="Capital"><ix:nonFraction name="us-gaap:Capital" contextRef="AsOf2022-06-30_custom_ZhangzhouMeijiaMetalProductCoLtdMeijiaMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="RMB">42.7</ix:nonFraction></span> million ($<span id="xdx_90A_eus-gaap--Capital_iI_pn5n6_c20220630__dei--LegalEntityAxis__custom--ZhangzhouMeijiaMetalProductCoLtdMeijiaMember_zxULmoctRqJ4" title="Capital"><ix:nonFraction name="us-gaap:Capital" contextRef="AsOf2022-06-30_custom_ZhangzhouMeijiaMetalProductCoLtdMeijiaMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">5.9</ix:nonFraction></span> million) capital contribution has been made. During the year ended June 30, 2023, the Company
made additional capital contribution RMB<span id="xdx_908_eus-gaap--Capital_iI_pp0p0_uRMB_c20230630__dei--LegalEntityAxis__custom--ZhangzhouMeijiaMetalProductCoLtdMeijiaMember_zNS32rSJKmz9" title="Capital"><ix:nonFraction name="us-gaap:Capital" contextRef="AsOf2023-06-30_custom_ZhangzhouMeijiaMetalProductCoLtdMeijiaMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="RMB">1,930,000</ix:nonFraction></span> ($<span id="xdx_906_eus-gaap--Capital_iI_pn5n6_c20230630__dei--LegalEntityAxis__custom--ZhangzhouMeijiaMetalProductCoLtdMeijiaMember_zMHFCZJy4NJ6" title="Capital"><ix:nonFraction name="us-gaap:Capital" contextRef="AsOf2023-06-30_custom_ZhangzhouMeijiaMetalProductCoLtdMeijiaMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">0.3</ix:nonFraction></span> million) in Meijia.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">As
of the date of this report, pursuant to the articles of incorporation of Meijia, the Company is obligated to contribute the remaining
RMB <span id="xdx_90B_eus-gaap--Capital_iI_pp0p0_uRMB_c20210630__dei--LegalEntityAxis__custom--ZhangzhouMeijiaMetalProductCoLtdMeijiaMember__us-gaap--AwardDateAxis__custom--DecemberThirtyTwoThousandTwentyFiveMember_zvidO2ebnZx5" title="Capital"><ix:nonFraction name="us-gaap:Capital" contextRef="AsOf2021-06-30_custom_ZhangzhouMeijiaMetalProductCoLtdMeijiaMember_custom_DecemberThirtyTwoThousandTwentyFiveMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="RMB">15,370,000</ix:nonFraction></span> ($<span id="xdx_90E_eus-gaap--Capital_iI_pn5n6_c20210630__dei--LegalEntityAxis__custom--ZhangzhouMeijiaMetalProductCoLtdMeijiaMember__us-gaap--AwardDateAxis__custom--DecemberThirtyTwoThousandTwentyFiveMember_ztBaq9VPFFgl" title="Capital"><ix:nonFraction name="us-gaap:Capital" contextRef="AsOf2021-06-30_custom_ZhangzhouMeijiaMetalProductCoLtdMeijiaMember_custom_DecemberThirtyTwoThousandTwentyFiveMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">2.1</ix:nonFraction></span> million) capital investment into Meijia before December 30, 2025 whenever the Company has available funds.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b>Capital
Expenditure Commitment</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">In
connection with the Company&#8217;s construction projects on Dogness Culture and Dongguan Jiasheng, the future minimum capital expenditure
commitment on these projects was $<span id="xdx_90D_ecustom--CapitalExpendituresFutureMinimumPaymentsDue_iI_c20230630_zCAvWkEbEJ96" title="Future minimum capital expenditure commitment"><ix:nonFraction name="DOGZ:CapitalExpendituresFutureMinimumPaymentsDue" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">254,070</ix:nonFraction></span> as of as of June 30, 2023. (see Note 5)</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="us-gaap:RelatedPartyTransactionsDisclosureTextBlock"><p id="xdx_800_eus-gaap--RelatedPartyTransactionsDisclosureTextBlock_ztu6d6SglaJh" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b>NOTE
11 &#8211; <span id="xdx_824_zzKJBZngoQre">RELATED PARTY TRANSACTIONS</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="us-gaap:ScheduleOfRelatedPartyTransactionsTableTextBlock"><p id="xdx_898_eus-gaap--ScheduleOfRelatedPartyTransactionsTableTextBlock_zbhtP16UzIu6" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">The
relationship of related parties is summarized as follow:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; display: none; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span><span id="xdx_8BA_zzSzL3DVP4Cb">SCHEDULE
OF RELATIONSHIP OF RELATED PARTIES</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; width: 49%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Name
    of Related Party</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 2%; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; width: 49%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Relationship
    to the Company</b></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Silong
    Chen</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_903_ecustom--RelationshipToCompany_c20220701__20230630__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--MrSilongChenMember_z2KmecFAbtR6" title="Relationship to the Company"><ix:nonNumeric contextRef="From2022-07-012023-06-30_custom_MrSilongChenMember" name="DOGZ:RelationshipToCompany">Chief
    Executive Officer; Chairman of the Board of Directors</ix:nonNumeric></span></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Junqiang
    Chen</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_907_ecustom--RelationshipToCompany_c20220701__20230630__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--JunqiangChenAndCaiyuanHeMember_z7nTgv2SoOYa" title="Relationship to the Company"><ix:nonNumeric contextRef="From2022-07-012023-06-30_custom_JunqiangChenAndCaiyuanHeMember" name="DOGZ:RelationshipToCompany">Relative
    of Mr. Silong Chen</ix:nonNumeric></span></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Linsun
    Smart Technology Co., Ltd (&#8220;Linsun&#8221;)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_901_ecustom--RelationshipToCompany_c20220701__20230630__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--LinsunSmartTechnologyCoLtdMember_zC2X3BapqRvl" title="Relationship to the Company"><ix:nonNumeric contextRef="From2022-07-012023-06-30_custom_LinsunSmartTechnologyCoLtdMember" name="DOGZ:RelationshipToCompany">Equity
    investee -<span id="xdx_908_eus-gaap--EquityMethodInvestmentOwnershipPercentage_iI_pid_dp_uPure_c20230630__srt--ScheduleOfEquityMethodInvestmentEquityMethodInvesteeNameAxis__custom--LinsunSmartTechnologyCoLtdMember_zMjmysnh7Poj" title="Equity ownership percentage" class="xdx_phnt_RGlzY2xvc3VyZSAtIFNDSEVEVUxFIE9GIFJFTEFUSU9OU0hJUCBPRiBSRUxBVEVEIFBBUlRJRVMgKERldGFpbHMpIChQYXJlbnRoZXRpY2FsKQA_"><ix:nonFraction name="us-gaap:EquityMethodInvestmentOwnershipPercentage" contextRef="AsOf2023-06-30_custom_LinsunSmartTechnologyCoLtdMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">10</ix:nonFraction></span>% of the ownership</ix:nonNumeric></span></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Dogness
    Network Technology Co., Ltd (&#8220;Dogness Network&#8221;)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_907_ecustom--RelationshipToCompany_c20220701__20230630__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--DognessNetworkTechnologyCoLtdMember_zCB85dPbXc5b" title="Relationship to the Company"><ix:nonNumeric contextRef="From2022-07-012023-06-30_custom_DognessNetworkTechnologyCoLtdMember" name="DOGZ:RelationshipToCompany">Equity
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  <tr style="font: 10pt Times New Roman, Times, Serif">
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</ix:nonNumeric><p id="xdx_8AB_zA48dVQ1fAI8" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b>(1)
Due from related parties</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="DOGZ:ScheduleOfDueFromRelatedPartiesTableTextBlock"><p id="xdx_890_ecustom--ScheduleOfDueFromRelatedPartiesTableTextBlock_zgK02IViHkz" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">Due
from related parties consist of mainly rent receivables from the following:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; display: none; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span><span id="xdx_8BF_zCJ0T3efTq94">SCHEDULE
OF DUE FROM RELATED PARTIES</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">As of</td><td style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">As of</td><td style="font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">June 30, 2022</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td></tr>
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    <td style="width: 64%">Linsun</td><td style="width: 2%">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Dogness Network</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_984_eus-gaap--OtherReceivablesNetCurrent_iI_c20230630__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--DognessNetworkTechnologyCoLtdMember_ziSoSrvr1ujg" title="Due from related parties" style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1654">-</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left; padding-bottom: 1.5pt">Dogness Technology</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td id="xdx_981_eus-gaap--OtherReceivablesNetCurrent_iI_c20230630__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--DognessTechnologyMember_zOsB1fpDZPg7" title="Due from related parties" style="border-bottom: Black 1.5pt solid; text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1658">-</span></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-bottom: 2.5pt">Total</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_98E_eus-gaap--OtherReceivablesNetCurrent_iI_c20230630__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__us-gaap--RelatedPartyMember_zYarNV20bh7b" title="Due from related parties" style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:OtherReceivablesNetCurrent" contextRef="AsOf2023-06-30_us-gaap_RelatedPartyMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">87,430</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_989_eus-gaap--OtherReceivablesNetCurrent_iI_c20220630__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__us-gaap--RelatedPartyMember_z2PUkiaah5ea" title="Due from related parties" style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:OtherReceivablesNetCurrent" contextRef="AsOf2022-06-30_us-gaap_RelatedPartyMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">105,403</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
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</ix:nonNumeric><p id="xdx_8AD_ze2sCt6gimd" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b>(2)
Due to related parties</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="DOGZ:ScheduleOfDueToRelatedPartiesTableTableBlock"><p id="xdx_89D_ecustom--ScheduleOfDueToRelatedPartiesTableTableBlock_zyk1xlct1Sy3" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">Due
to related parties consist of the following:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; display: none; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span><span id="xdx_8BA_zDokrKwxe2b3">SCHEDULE
OF DUE TO RELATED PARTIES</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">As of</td><td style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">As of</td><td style="font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">June 30, 2023</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">June 30, 2022</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 64%; text-align: left">Mr. Silong Chen</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td id="xdx_981_eus-gaap--OtherLiabilitiesCurrent_iI_c20230630__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--MrSilongChenMember_zQeTK6pt25fj" title="Due to related party" style="width: 14%; text-align: right"><ix:nonFraction name="us-gaap:OtherLiabilitiesCurrent" contextRef="AsOf2023-06-30_custom_MrSilongChenMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">80,327</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td id="xdx_987_eus-gaap--OtherLiabilitiesCurrent_iI_c20220630__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--MrSilongChenMember_z6ERKH8vQIGl" title="Due to related party" style="width: 14%; text-align: right"><ix:nonFraction name="us-gaap:OtherLiabilitiesCurrent" contextRef="AsOf2022-06-30_custom_MrSilongChenMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">130,468</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1.5pt">Dogness Technology</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td id="xdx_983_eus-gaap--OtherLiabilitiesCurrent_iI_c20230630__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--DognessTechnologyMember_zwvPwqVwu7qg" title="Due to related party" style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="us-gaap:OtherLiabilitiesCurrent" contextRef="AsOf2023-06-30_custom_DognessTechnologyMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">5,516</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td id="xdx_986_eus-gaap--OtherLiabilitiesCurrent_iI_c20220630__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--DognessTechnologyMember_zqhI5ChcfX34" title="Due to related party" style="border-bottom: Black 1.5pt solid; text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1674">-</span></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 2.5pt">Total</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_983_eus-gaap--OtherLiabilitiesCurrent_iI_c20230630__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__us-gaap--RelatedPartyMember_zwzl7F0VQ1yl" title="Due to related party" style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:OtherLiabilitiesCurrent" contextRef="AsOf2023-06-30_us-gaap_RelatedPartyMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">85,843</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_985_eus-gaap--OtherLiabilitiesCurrent_iI_c20220630__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__us-gaap--RelatedPartyMember_zMnS2jK54Yh6" title="Due to related party" style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:OtherLiabilitiesCurrent" contextRef="AsOf2022-06-30_us-gaap_RelatedPartyMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">130,468</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
  </table>

</ix:nonNumeric><p id="xdx_8AA_zjnhARDDkAJ9" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">Mr.
Silong Chen periodically provides working capital loans to support the Company&#8217;s operations when needed. Such advances are non-interest
bearing and due on demand.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


<ix:exclude><!-- Field: Page; Sequence: 163; Value: 14 -->
    <div style="border-bottom: Black 1.5pt solid; margin-bottom: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="text-align: center; width: 100%">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->23<!-- Field: /Sequence --></td></tr></table></div>
    <div style="break-before: page; margin-top: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="width: 100%">&#160;</td></tr></table></div>
    <!-- Field: /Page --></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>DOGNESS
(INTERNATIONAL) CORPORATION</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
amounts in USD)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b>NOTE
11 &#8211; RELATED PARTY TRANSACTIONS (continued)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b>(3)
Loan guarantee provided by related parties</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">In
connection with the Company&#8217;s bank borrowings, Mr. Silong Chen pledged his personal assets as collateral and signed guarantee agreements
to provide guarantee to the Company&#8217;s long-term bank loans. (See Note 8).</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b>(4)
Sales to related parties</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0.5in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="DOGZ:ScheduleOfRevenueFromRelatedPartiesTableTextBlock"><p id="xdx_89E_ecustom--ScheduleOfRevenueFromRelatedPartiesTableTextBlock_ztTSIC45ZKe6" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">Revenue
from related parties consisted of the following:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; display: none; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span><span id="xdx_8B8_zboWjEgThZvf">SCHEDULE
OF REVENUE FROM RELATED PARTIES</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 52%; text-align: left">Dogness Network</td><td style="width: 2%">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1.5pt">Dogness Technology</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td id="xdx_983_eus-gaap--Revenues_c20220701__20230630__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--DognessTechnologyMember_z0DKJ7ygp3d3" title="Total" style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="us-gaap:Revenues" contextRef="From2022-07-012023-06-30_custom_DognessTechnologyMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">156,194</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td id="xdx_98F_eus-gaap--Revenues_c20210701__20220630__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--DognessTechnologyMember_zP0B5P9vSbK7" title="Total" style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="us-gaap:Revenues" contextRef="From2021-07-012022-06-30_custom_DognessTechnologyMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">405,847</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td id="xdx_985_eus-gaap--Revenues_c20200701__20210630__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--DognessTechnologyMember_zxaoVGDN1lj3" title="Total" style="border-bottom: Black 1.5pt solid; text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1692">-</span></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 2.5pt">Total</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_984_eus-gaap--Revenues_c20220701__20230630_zXY6qVeyWBB2" title="Total" style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:Revenues" contextRef="From2022-07-01to2023-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,700,173</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
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    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_984_eus-gaap--Revenues_c20200701__20210630_zTfnGPFzqta1" title="Total" style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:Revenues" contextRef="From2020-07-012021-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,207,686</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
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</ix:nonNumeric><p id="xdx_8AD_z0fovmfhsNL7" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Cost
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30, 2023, 2022 and 2021, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b>(5)
Accounts receivable from related parties</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0.5in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="DOGZ:ScheduleOfAccountsReceivableFromRelatedPartiesTableTextBlock"><p id="xdx_897_ecustom--ScheduleOfAccountsReceivableFromRelatedPartiesTableTextBlock_zs3EYP6rlbOh" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">Accounts
receivable from related parties consisted of the following:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; display: none; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_8B8_zixRXQuN5Eci">SCHEDULE
OF ACCOUNTS RECEIVABLE FROM RELATED PARTIES</span></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">As of</td><td style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">As of</td><td style="font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">June 30, 2023</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">June 30, 2022</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Accounts receivable - related parties:</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="width: 64%; text-align: left">Dogness Network</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td id="xdx_98F_eus-gaap--AccountsReceivableNetCurrent_iI_c20230630__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--DognessNetworkTechnologyCoLtdMember_zpY8dDPMRjCf" title="Accounts receivable from related parties" style="width: 14%; text-align: right"><ix:nonFraction name="us-gaap:AccountsReceivableNetCurrent" contextRef="AsOf2023-06-30_custom_DognessNetworkTechnologyCoLtdMember28614453" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,133,092</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td id="xdx_989_eus-gaap--AccountsReceivableNetCurrent_iI_c20220630__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--DognessNetworkTechnologyCoLtdMember_z1WYnua4uzij" title="Accounts receivable from related parties" style="width: 14%; text-align: right"><ix:nonFraction name="us-gaap:AccountsReceivableNetCurrent" contextRef="AsOf2022-06-30_custom_DognessNetworkTechnologyCoLtdMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,036,476</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt">Dogness Technology</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td id="xdx_983_eus-gaap--AccountsReceivableNetCurrent_iI_c20230630__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--DognessTechnologyMember_zJilWW9CLDI1" title="Accounts receivable from related parties" style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="us-gaap:AccountsReceivableNetCurrent" contextRef="AsOf2023-06-30_custom_DognessTechnologyMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">139,292</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td id="xdx_985_eus-gaap--AccountsReceivableNetCurrent_iI_c20220630__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--DognessTechnologyMember_zXcSxvIiTUz3" title="Accounts receivable from related parties" style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="us-gaap:AccountsReceivableNetCurrent" contextRef="AsOf2022-06-30_custom_DognessTechnologyMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">58,379</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-bottom: 2.5pt">Total</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_98B_eus-gaap--AccountsReceivableNetCurrent_iI_c20230630__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__us-gaap--RelatedPartyMember_zZKWNdxEFJE9" title="Accounts receivable from related parties" style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:AccountsReceivableNetCurrent" contextRef="AsOf2023-06-30_us-gaap_RelatedPartyMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,272,384</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_986_eus-gaap--AccountsReceivableNetCurrent_iI_c20220630__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__us-gaap--RelatedPartyMember_zViGzxXleAA1" title="Accounts receivable from related parties" style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:AccountsReceivableNetCurrent" contextRef="AsOf2022-06-30_us-gaap_RelatedPartyMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,094,855</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
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</ix:nonNumeric><p id="xdx_8AD_zpD3X8lvXJB4" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">As
of June 30, 2023, total accounts receivable from related parties amounted to $<span id="xdx_90E_eus-gaap--AccountsReceivableNetCurrent_iI_c20230630__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__us-gaap--RelatedPartyMember_zDS7fVAqooVc" title="Accounts receivable related parties"><ix:nonFraction name="us-gaap:AccountsReceivableNetCurrent" contextRef="AsOf2023-06-30_us-gaap_RelatedPartyMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,272,384</ix:nonFraction></span>, of which $<span id="xdx_901_eus-gaap--ProceedsFromRelatedPartyDebt_c20230801__20230831_zEXSyAjkoGp" title="Proceeds from receivables from related parties"><ix:nonFraction name="us-gaap:ProceedsFromRelatedPartyDebt" contextRef="From2023-08-012023-08-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">164,807</ix:nonFraction></span> has been collected as of August
2023.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b>(6)
Advance to supplier- related party</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0.5in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="DOGZ:ScheduleOfAdvanceToSupplierFromRelatedPartiesTableTextBlock"><p id="xdx_89C_ecustom--ScheduleOfAdvanceToSupplierFromRelatedPartiesTableTextBlock_zsvRq0ZqQXo8" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">Advance
to supplier from related party consisted of the following:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; display: none; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;<span id="xdx_8B4_zI0wFB21lcXf">SCHEDULE OF ADVANCE TO SUPPLIER FROM RELATED PARTIES</span></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
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    <td colspan="2" style="font-weight: bold; text-align: center">As of</td><td style="font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">June 30, 2022</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="width: 64%; padding-bottom: 1.5pt">Linsun</td><td style="width: 2%; padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; width: 1%; text-align: left">$</td><td id="xdx_985_eus-gaap--AdvancesOnInventoryPurchases_iI_c20230630__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--LinsunSmartTechnologyCoLtdMember_zjEd53kaqMs8" title="Accounts payable to related parties" style="border-bottom: Black 1.5pt solid; width: 14%; text-align: right"><ix:nonFraction name="us-gaap:AdvancesOnInventoryPurchases" contextRef="AsOf2023-06-30_custom_LinsunSmartTechnologyCoLtdMember28616671" format="ixt:numdotdecimal" decimals="0" unitRef="USD">239,729</ix:nonFraction></td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="width: 2%; padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; width: 1%; text-align: left">$</td><td id="xdx_98B_eus-gaap--AdvancesOnInventoryPurchases_iI_c20220630__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--LinsunSmartTechnologyCoLtdMember_z9m5EUwro6Oa" title="Accounts payable to related parties" style="border-bottom: Black 1.5pt solid; width: 14%; text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1728">-</span></td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 2.5pt">Total</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_98C_eus-gaap--AdvancesOnInventoryPurchases_iI_c20230630_zqlTkO7LzP" title="Accounts payable to related parties" style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:AdvancesOnInventoryPurchases" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">239,729</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_98A_eus-gaap--AdvancesOnInventoryPurchases_iI_c20220630_zhXmhwbDKgn7" title="Accounts payable to related parties" style="border-bottom: Black 2.5pt double; text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1732">-</span></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
  </table>

</ix:nonNumeric><p id="xdx_8A0_zp5OvOpDPlAe" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b>(7)
Accounts payable to related party</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="DOGZ:ScheduleOfAccountsPayableFromRelatedPartiesTableTextBlock"><p id="xdx_896_ecustom--ScheduleOfAccountsPayableFromRelatedPartiesTableTextBlock_zenJPpe5zEm" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">Accounts
payableto related party consisted of the following:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; display: none; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span><span id="xdx_8BD_zLfnlc1sTLaj">SCHEDULE
OF ACCOUNTS PAYABLE TO RELATED PARTIES</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">As of</td><td style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">As of</td><td style="font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">June 30, 2023</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">June 30, 2022</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Accounts payable - related party</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="width: 64%; padding-bottom: 1.5pt">Linsun</td><td style="width: 2%; padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; width: 1%; text-align: left">$</td><td id="xdx_985_eus-gaap--AccountsPayableCurrent_iI_c20230630__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--LinsunSmartTechnologyCoLtdMember_z5gNMPI9BQ93" title="Accounts payable to related parties" style="border-bottom: Black 1.5pt solid; width: 14%; text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1736">-</span></td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="width: 2%; padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; width: 1%; text-align: left">$</td><td id="xdx_980_eus-gaap--AccountsPayableCurrent_iI_c20220630__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--LinsunSmartTechnologyCoLtdMember_zr5ITHIhCHf" title="Accounts payable to related parties" style="border-bottom: Black 1.5pt solid; width: 14%; text-align: right"><ix:nonFraction name="us-gaap:AccountsPayableCurrent" contextRef="AsOf2022-06-30_custom_LinsunSmartTechnologyCoLtdMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">393,625</ix:nonFraction></td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 2.5pt">Total</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_986_eus-gaap--AccountsPayableCurrent_iI_c20230630__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__us-gaap--RelatedPartyMember_zBgnHQcr31sf" title="Accounts payable to related parties" style="border-bottom: Black 2.5pt double; text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1740">-</span></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_985_eus-gaap--AccountsPayableCurrent_iI_c20220630__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__us-gaap--RelatedPartyMember_zE3VP1Uh0w6d" title="Accounts payable to related parties" style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:AccountsPayableCurrent" contextRef="AsOf2022-06-30_us-gaap_RelatedPartyMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">393,625</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
  </table>

</ix:nonNumeric><p id="xdx_8AE_zVqOG0bwftCi" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>


<ix:exclude><!-- Field: Page; Sequence: 164; Value: 14 -->
    <div style="border-bottom: Black 1.5pt solid; margin-bottom: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="text-align: center; width: 100%">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->24<!-- Field: /Sequence --></td></tr></table></div>
    <div style="break-before: page; margin-top: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="width: 100%">&#160;</td></tr></table></div>
    <!-- Field: /Page --></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>DOGNESS
(INTERNATIONAL) CORPORATION</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
amounts in USD)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b>NOTE
11 &#8211; RELATED PARTY TRANSACTIONS (continued)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b>(8)
Purchase from related parties</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">During
the years ended June 30, 2023, 2022 and 2021, the Company purchased certain pet product components and parts, such as smart pet water
and food feeding devices, from Linsun. Total purchases from Linsun amounted to $<span id="xdx_900_eus-gaap--RepaymentsOfRelatedPartyDebt_c20220701__20230630__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--LinsunSmartTechnologyCoLtdMember_zBhWaVEqOnrk" title="Related party debt"><ix:nonFraction name="us-gaap:RepaymentsOfRelatedPartyDebt" contextRef="From2022-07-012023-06-30_custom_LinsunSmartTechnologyCoLtdMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">565,548</ix:nonFraction></span>, $<span id="xdx_90A_eus-gaap--RepaymentsOfRelatedPartyDebt_c20210701__20220630__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--LinsunSmartTechnologyCoLtdMember_zP7j7pdUxu5e" title="Related party debt"><ix:nonFraction name="us-gaap:RepaymentsOfRelatedPartyDebt" contextRef="From2021-07-012022-06-30_custom_LinsunSmartTechnologyCoLtdMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">3,199,833</ix:nonFraction></span> and $<span id="xdx_906_eus-gaap--RepaymentsOfRelatedPartyDebt_c20200701__20210630__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--LinsunSmartTechnologyCoLtdMember_z3xNP8MkAN88" title="Related party debt"><ix:nonFraction name="us-gaap:RepaymentsOfRelatedPartyDebt" contextRef="From2020-07-012021-06-30_custom_LinsunSmartTechnologyCoLtdMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">3,015,442</ix:nonFraction></span> for the years ended
June 30, 2023, 2022 and 2021, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b>(9)
Lease arrangement with related parties</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">On
January 2, 2020, Dongguan Jiasheng signed a lease agreement with Linsun, which enabled Linsun to lease part of Dongguan Jiasheng&#8217;s
new production facilities of approximately <span id="xdx_908_eus-gaap--AreaOfLand_iI_uSqft_c20200102__us-gaap--TypeOfArrangementAxis__custom--LeaseAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--LinsunSmartTechnologyCoLtdMember_zuKSX6N98oDl" title="Area of land"><ix:nonFraction name="us-gaap:AreaOfLand" contextRef="AsOf2020-01-02_custom_LeaseAgreementMember_custom_LinsunSmartTechnologyCoLtdMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Sqft">8,460</ix:nonFraction></span> square meters for <span id="xdx_90E_eus-gaap--LesseeOperatingLeaseTermOfContract_iI_dc_c20200102__us-gaap--TypeOfArrangementAxis__custom--LeaseAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--LinsunSmartTechnologyCoLtdMember_zZSKepxawmRb" title="Lease term"><ix:nonNumeric contextRef="AsOf2020-01-02_custom_LeaseAgreementMember_custom_LinsunSmartTechnologyCoLtdMember" format="ixt-sec:durwordsen" name="us-gaap:LesseeOperatingLeaseTermOfContract">ten years</ix:nonNumeric></span>. <span id="xdx_900_eus-gaap--LesseeOperatingLeaseDescription_c20191230__20200102__us-gaap--TypeOfArrangementAxis__custom--LeaseAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--LinsunSmartTechnologyCoLtdMember_zQe3RrJ1mKC3" title="Lease description"><ix:nonNumeric contextRef="From2019-12-302020-01-02_custom_LeaseAgreementMember_custom_LinsunSmartTechnologyCoLtdMember" name="us-gaap:LesseeOperatingLeaseDescription">Annual lease payment from Linsun amounted to approximately
$<span id="xdx_904_eus-gaap--LessorOperatingLeasePaymentsToBeReceived_iI_c20200102__us-gaap--TypeOfArrangementAxis__custom--LeaseAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--LinsunSmartTechnologyCoLtdMember_zIxZTZHlhasl" title="Annual lease receivable"><ix:nonFraction name="us-gaap:LessorOperatingLeasePaymentsToBeReceived" contextRef="AsOf2020-01-02_custom_LeaseAgreementMember_custom_LinsunSmartTechnologyCoLtdMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">230,000</ix:nonFraction></span> and is subject to <span id="xdx_90D_ecustom--OperatingLeasesPercentage_pid_dp_uPure_c20191230__20200102__us-gaap--TypeOfArrangementAxis__custom--LeaseAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--LinsunSmartTechnologyCoLtdMember_zK53ZZowE90b" title="Operating leases percentage"><ix:nonFraction name="DOGZ:OperatingLeasesPercentage" contextRef="From2019-12-302020-01-02_custom_LeaseAgreementMember_custom_LinsunSmartTechnologyCoLtdMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">15</ix:nonFraction></span>% increase every three years</ix:nonNumeric></span>. For the year ended June 30, 2023, 2022 and 2021, the Company recorded rent
income of $<span id="xdx_903_ecustom--OperatingLeaseRentIncomeAmount_c20220701__20230630__us-gaap--TypeOfArrangementAxis__custom--LeaseAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--LinsunSmartTechnologyCoLtdMember_zIChENDBkTj" title="Operating rent income"><ix:nonFraction name="DOGZ:OperatingLeaseRentIncomeAmount" contextRef="From2022-07-012023-06-30_custom_LeaseAgreementMember_custom_LinsunSmartTechnologyCoLtdMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">434,625</ix:nonFraction></span>, $<span id="xdx_907_ecustom--OperatingLeaseRentIncomeAmount_c20210701__20220630__us-gaap--TypeOfArrangementAxis__custom--LeaseAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--LinsunSmartTechnologyCoLtdMember_zA3hoMkF7e8k" title="Operating rent income"><ix:nonFraction name="DOGZ:OperatingLeaseRentIncomeAmount" contextRef="From2021-07-012022-06-30_custom_LeaseAgreementMember_custom_LinsunSmartTechnologyCoLtdMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">462,210</ix:nonFraction></span> and $<span id="xdx_900_ecustom--OperatingLeaseRentIncomeAmount_c20200701__20210630__us-gaap--TypeOfArrangementAxis__custom--LeaseAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--LinsunSmartTechnologyCoLtdMember_zpzZLa98OLUd" title="Operating rent income"><ix:nonFraction name="DOGZ:OperatingLeaseRentIncomeAmount" contextRef="From2020-07-012021-06-30_custom_LeaseAgreementMember_custom_LinsunSmartTechnologyCoLtdMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">300,511</ix:nonFraction></span> as other income through leasing the manufacturing facilities to Linsun, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">On
August 1, 2020, Dongguan Jiasheng signed a lease agreement with Dogness Network, which enabled Dogness Network to lease part of Dongguan
Jiasheng&#8217;s new production facilities of approximately <span id="xdx_901_eus-gaap--AreaOfLand_iI_uSqft_c20200801__us-gaap--TypeOfArrangementAxis__custom--LeaseAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--DognessPetCultureDongguanCoLtdMember_zDENeRXSZiv5" title="Area of land"><ix:nonFraction name="us-gaap:AreaOfLand" contextRef="AsOf2020-08-01_custom_LeaseAgreementMember_custom_DognessPetCultureDongguanCoLtdMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Sqft">580</ix:nonFraction></span> square meters for <span id="xdx_90A_eus-gaap--LesseeOperatingLeaseTermOfContract_iI_dc_c20200801__us-gaap--TypeOfArrangementAxis__custom--LeaseAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--DognessPetCultureDongguanCoLtdMember_zqYdLEQCKOMa" title="Lease term"><ix:nonNumeric contextRef="AsOf2020-08-01_custom_LeaseAgreementMember_custom_DognessPetCultureDongguanCoLtdMember" format="ixt-sec:durwordsen" name="us-gaap:LesseeOperatingLeaseTermOfContract">ten years</ix:nonNumeric></span>. <span id="xdx_90F_eus-gaap--LesseeOperatingLeaseDescription_c20200801__20200801__us-gaap--TypeOfArrangementAxis__custom--LeaseAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--DognessPetCultureDongguanCoLtdMember_zhazsbo2EMcd" title="Lease description"><ix:nonNumeric contextRef="From2020-08-012020-08-01_custom_LeaseAgreementMember_custom_DognessPetCultureDongguanCoLtdMember" name="us-gaap:LesseeOperatingLeaseDescription">Annual lease payment from Dogness Network
amounted to approximately $<span id="xdx_900_eus-gaap--LessorOperatingLeasePaymentsToBeReceived_iI_c20200801__us-gaap--TypeOfArrangementAxis__custom--LeaseAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--DognessPetCultureDongguanCoLtdMember_zAVUUf8kSH2a" title="Annual lease receivable"><ix:nonFraction name="us-gaap:LessorOperatingLeasePaymentsToBeReceived" contextRef="AsOf2020-08-01_custom_LeaseAgreementMember_custom_DognessPetCultureDongguanCoLtdMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">35,000</ix:nonFraction></span> and is subject to <span id="xdx_90D_ecustom--OperatingLeasesPercentage_pid_dp_uPure_c20200801__20200801__us-gaap--TypeOfArrangementAxis__custom--LeaseAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--DognessPetCultureDongguanCoLtdMember_zT6TkAHYgRZf" title="Operating leases percentage"><ix:nonFraction name="DOGZ:OperatingLeasesPercentage" contextRef="From2020-08-012020-08-01_custom_LeaseAgreementMember_custom_DognessPetCultureDongguanCoLtdMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">15</ix:nonFraction></span>% increase every three years</ix:nonNumeric></span>. This lease agreement was terminated in October, 2022.
For the years ended June 30, 2023, 2022 and 2021, the Company recorded rent income of $<span id="xdx_901_ecustom--OperatingLeaseRentIncomeAmount_c20220701__20230630__us-gaap--TypeOfArrangementAxis__custom--LeaseAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--DognessPetCultureDongguanCoLtdMember_zdl2CuD8wgi6" title="Rental income"><ix:nonFraction name="DOGZ:OperatingLeaseRentIncomeAmount" contextRef="From2022-07-012023-06-30_custom_LeaseAgreementMember_custom_DognessPetCultureDongguanCoLtdMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">10,952</ix:nonFraction></span>, $<span id="xdx_90F_ecustom--OperatingLeaseRentIncomeAmount_c20210701__20220630__us-gaap--TypeOfArrangementAxis__custom--LeaseAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--DognessPetCultureDongguanCoLtdMember_zYPAqzf9ZvX5" title="Rental income"><ix:nonFraction name="DOGZ:OperatingLeaseRentIncomeAmount" contextRef="From2021-07-012022-06-30_custom_LeaseAgreementMember_custom_DognessPetCultureDongguanCoLtdMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">78,251</ix:nonFraction></span> and $<span id="xdx_907_ecustom--OperatingLeaseRentIncomeAmount_c20200701__20210630__us-gaap--TypeOfArrangementAxis__custom--LeaseAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--DognessPetCultureDongguanCoLtdMember_zyEQ7rJhxHS1" title="Rental income"><ix:nonFraction name="DOGZ:OperatingLeaseRentIncomeAmount" contextRef="From2020-07-012021-06-30_custom_LeaseAgreementMember_custom_DognessPetCultureDongguanCoLtdMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">52,796</ix:nonFraction></span> as other income through
leasing the manufacturing facilities to Dogness Network.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">On
August 1, 2020, Dongguan Jiasheng signed a lease agreement with Dogness Technology, which enabled Dogness Technology to lease part of
Dongguan Jiasheng&#8217;s new production facilities of approximately <span id="xdx_907_eus-gaap--AreaOfLand_iI_uSqft_c20200802__us-gaap--TypeOfArrangementAxis__custom--LeaseAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--GuangdongDognessBiotechnologyCoLtdMember_zyG8ESLykTee"><ix:nonFraction name="us-gaap:AreaOfLand" contextRef="AsOf2020-08-02_custom_LeaseAgreementMember_custom_GuangdongDognessBiotechnologyCoLtdMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Sqft">50</ix:nonFraction></span> square meters for <span id="xdx_905_eus-gaap--LesseeOperatingLeaseTermOfContract_iI_dc_c20200802__us-gaap--TypeOfArrangementAxis__custom--LeaseAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--GuangdongDognessBiotechnologyCoLtdMember_ztScOxzJQnNc"><ix:nonNumeric contextRef="AsOf2020-08-02_custom_LeaseAgreementMember_custom_GuangdongDognessBiotechnologyCoLtdMember" format="ixt-sec:durwordsen" name="us-gaap:LesseeOperatingLeaseTermOfContract">ten years</ix:nonNumeric></span>. Annual lease payment from Dogness
Technology amounted to $<span id="xdx_90E_eus-gaap--LessorOperatingLeasePaymentsToBeReceived_iI_c20200802__us-gaap--TypeOfArrangementAxis__custom--LeaseAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--GuangdongDognessBiotechnologyCoLtdMember_zLgd0FNu7bA1"><ix:nonFraction name="us-gaap:LessorOperatingLeasePaymentsToBeReceived" contextRef="AsOf2020-08-02_custom_LeaseAgreementMember_custom_GuangdongDognessBiotechnologyCoLtdMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,726</ix:nonFraction></span>. For the years ended June 30, 2023, 2022 and 2021, the Company recorded rent income of $<span id="xdx_904_ecustom--OperatingLeaseRentIncomeAmount_c20220701__20230630__us-gaap--TypeOfArrangementAxis__custom--LeaseAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--GongdongTechnologyMember_zLIXg8QxaIVh"><ix:nonFraction name="DOGZ:OperatingLeaseRentIncomeAmount" contextRef="From2022-07-012023-06-30_custom_LeaseAgreementMember_custom_GongdongTechnologyMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,584</ix:nonFraction></span>, $<span id="xdx_903_ecustom--OperatingLeaseRentIncomeAmount_c20210701__20220630__us-gaap--TypeOfArrangementAxis__custom--LeaseAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--GongdongTechnologyMember_zIfaI4nly5S8"><ix:nonFraction name="DOGZ:OperatingLeaseRentIncomeAmount" contextRef="From2021-07-012022-06-30_custom_LeaseAgreementMember_custom_GongdongTechnologyMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,706</ix:nonFraction></span> and
$<span id="xdx_90C_ecustom--OperatingLeaseRentIncomeAmount_c20200701__20210630__us-gaap--TypeOfArrangementAxis__custom--LeaseAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--GongdongTechnologyMember_zEBrc2VeglZ9"><ix:nonFraction name="DOGZ:OperatingLeaseRentIncomeAmount" contextRef="From2020-07-012021-06-30_custom_LeaseAgreementMember_custom_GongdongTechnologyMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,661</ix:nonFraction></span> as other income through leasing the manufacturing facilities to Dogness Technology.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="us-gaap:StockholdersEquityNoteDisclosureTextBlock"><p id="xdx_806_eus-gaap--StockholdersEquityNoteDisclosureTextBlock_zgpQSQ2JFukg" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b>NOTE
12 &#8211; <span id="xdx_820_zddSfnf1PWmb">EQUITY</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b>Common
Shares</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">Dogness
was established under the laws of BVI on July 11, 2016. The original authorized number of common shares was <span id="xdx_909_eus-gaap--CommonStockSharesAuthorized_iI_pid_c20160711_zh6Bmnjbkwza" title="Common stock, shares authorized"><ix:nonFraction name="us-gaap:CommonStockSharesAuthorized" contextRef="AsOf2016-07-11" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">15,000,000</ix:nonFraction></span> shares with par
value of $<span id="xdx_908_eus-gaap--CommonStockParOrStatedValuePerShare_iI_pid_c20160711_zOMuYexnKpTi" title="Common stock, par value"><ix:nonFraction name="us-gaap:CommonStockParOrStatedValuePerShare" contextRef="AsOf2016-07-11" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">0.002</ix:nonFraction></span> each. On April 26, 2017, Shareholders of the Company held a meeting (the &#8220;Meeting&#8221;) and approved the following
resolutions: (i) increase the authorized number of common shares to <span id="xdx_90C_eus-gaap--CommonStockSharesAuthorized_iI_pid_c20170426_zy74W0zJTug3" title="Common stock, shares authorized"><ix:nonFraction name="us-gaap:CommonStockSharesAuthorized" contextRef="AsOf2017-04-26" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">100,000,000</ix:nonFraction></span> shares with par value of $<span id="xdx_90D_eus-gaap--CommonStockParOrStatedValuePerShare_iI_pid_c20170426_zpp1pO90Fs15" title="Common stock, par value"><ix:nonFraction name="us-gaap:CommonStockParOrStatedValuePerShare" contextRef="AsOf2017-04-26" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">0.002</ix:nonFraction></span> each, of which <span id="xdx_90F_eus-gaap--CommonStockSharesIssued_iI_pid_c20170426_zkjQwyGF50Y1" title="Common stock, shares issued"><span id="xdx_90A_eus-gaap--CommonStockSharesOutstanding_iI_pid_c20170426_zsIv5lb3qa95" title="Common stock, shares outstanding"><ix:nonFraction name="us-gaap:CommonStockSharesIssued" contextRef="AsOf2017-04-26" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares"><ix:nonFraction name="us-gaap:CommonStockSharesOutstanding" contextRef="AsOf2017-04-26" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">15,000,000</ix:nonFraction></ix:nonFraction></span></span>
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.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">On
October 22, 2022, Shareholders of the Company held a meeting and approved a change to the maximum number of shares that the Company is
authorized to issue from <span id="xdx_909_eus-gaap--CommonStockSharesAuthorized_iI_pid_c20221022__srt--RangeAxis__srt--MinimumMember_zQfj9T1Mktyb" title="Common stock, shares authorized"><ix:nonFraction name="us-gaap:CommonStockSharesAuthorized" contextRef="AsOf2022-10-22_srt_MinimumMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">100,000,000</ix:nonFraction></span> made up of two classes with a par value of $<span id="xdx_901_eus-gaap--CommonStockParOrStatedValuePerShare_iI_pid_c20221022__srt--RangeAxis__srt--MinimumMember_zFXU7sKQxa72" title="Common stock, par value"><ix:nonFraction name="us-gaap:CommonStockParOrStatedValuePerShare" contextRef="AsOf2022-10-22_srt_MinimumMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">0.002</ix:nonFraction></span> each being <span id="xdx_90D_eus-gaap--CommonStockSharesAuthorized_iI_pid_c20221022__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember__srt--RangeAxis__srt--MinimumMember_zWUIqO98sRzc" title="Common stock, shares authorized"><ix:nonFraction name="us-gaap:CommonStockSharesAuthorized" contextRef="AsOf2022-10-22_us-gaap_CommonClassAMember_srt_MinimumMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">90,931,000</ix:nonFraction></span> Class A Shares and <span id="xdx_903_eus-gaap--CommonStockSharesAuthorized_iI_pid_c20221022__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassBMember__srt--RangeAxis__srt--MinimumMember_zwX10SFwGJG6" title="Common stock, shares authorized"><ix:nonFraction name="us-gaap:CommonStockSharesAuthorized" contextRef="AsOf2022-10-22_us-gaap_CommonClassBMember_srt_MinimumMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">9,069,000</ix:nonFraction></span>
Class B Shares to <span id="xdx_901_eus-gaap--CommonStockSharesAuthorized_iI_pid_c20221022__srt--RangeAxis__srt--MaximumMember_zl1PpjhJs8vh" title="Common stock, shares authorized"><ix:nonFraction name="us-gaap:CommonStockSharesAuthorized" contextRef="AsOf2022-10-22_srt_MaximumMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">110,000,000</ix:nonFraction></span> made up of two classes with a par value of $<span id="xdx_906_eus-gaap--CommonStockParOrStatedValuePerShare_iI_pid_c20221022__srt--RangeAxis__srt--MaximumMember_zpl4kXbdQ5n" title="Common stock, par value"><ix:nonFraction name="us-gaap:CommonStockParOrStatedValuePerShare" contextRef="AsOf2022-10-22_srt_MaximumMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">0.002</ix:nonFraction></span> each, being <span id="xdx_90A_eus-gaap--CommonStockSharesAuthorized_iI_pid_c20221022__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember__srt--RangeAxis__srt--MaximumMember_zVco4mFmOqCl" title="Common stock, shares authorized"><ix:nonFraction name="us-gaap:CommonStockSharesAuthorized" contextRef="AsOf2022-10-22_us-gaap_CommonClassAMember_srt_MaximumMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">90,931,000</ix:nonFraction></span> Class A shares and <span id="xdx_90D_eus-gaap--CommonStockSharesAuthorized_iI_pid_c20221022__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassBMember__srt--RangeAxis__srt--MaximumMember_zBO8gLeatlmi" title="Common stock, shares authorized"><ix:nonFraction name="us-gaap:CommonStockSharesAuthorized" contextRef="AsOf2022-10-22_us-gaap_CommonClassBMember_srt_MaximumMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">19,069,000</ix:nonFraction></span>
Class B shares</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b>Initial
Public Offering</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">On
December 18, 2017, the Company completed its initial public offering (&#8220;IPO&#8221;) of <span id="xdx_908_eus-gaap--StockIssuedDuringPeriodSharesNewIssues_pid_c20171217__20171218__us-gaap--SubsidiarySaleOfStockAxis__us-gaap--IPOMember__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember_zZ6KEUs9csBf" title="Shares issued, shares"><ix:nonFraction name="us-gaap:StockIssuedDuringPeriodSharesNewIssues" contextRef="From2017-12-172017-12-18_us-gaap_IPOMember_us-gaap_CommonClassAMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">10,913,631</ix:nonFraction></span> Class A common shares at a public
offering price of $<span id="xdx_905_eus-gaap--SharesIssuedPricePerShare_iI_pid_c20171218__us-gaap--SubsidiarySaleOfStockAxis__us-gaap--IPOMember__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember_zyLSGKec3kwg" title="Shares issued price per share"><ix:nonFraction name="us-gaap:SharesIssuedPricePerShare" contextRef="AsOf2017-12-18_us-gaap_IPOMember_us-gaap_CommonClassAMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">5.00</ix:nonFraction></span> per share. The gross proceeds were approximately $<span id="xdx_908_ecustom--GrossFromInitialPublicOffering_pn5n6_c20171217__20171218__us-gaap--SubsidiarySaleOfStockAxis__us-gaap--IPOMember__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember_zbnoMLvoYhEb" title="Gross from initial public offering"><ix:nonFraction name="DOGZ:GrossFromInitialPublicOffering" contextRef="From2017-12-172017-12-18_us-gaap_IPOMember_us-gaap_CommonClassAMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">54.6</ix:nonFraction></span> million before deducting placement agent&#8217;s commission
and other offering expenses, resulting in net proceeds of approximately $<span id="xdx_90A_eus-gaap--ProceedsFromIssuanceInitialPublicOffering_pn5n6_c20171217__20171218__us-gaap--SubsidiarySaleOfStockAxis__us-gaap--IPOMember__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember_zHYoXQ6USUJh" title="Proceeds from initial public offering"><ix:nonFraction name="us-gaap:ProceedsFromIssuanceInitialPublicOffering" contextRef="From2017-12-172017-12-18_us-gaap_IPOMember_us-gaap_CommonClassAMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">50.2</ix:nonFraction></span> million. In connection with the offering, the Company&#8217;s
Class A common shares began trading on the NASDAQ Global Market on December 20, 2017 under the symbol &#8220;DOGZ.&#8221;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


<ix:exclude><!-- Field: Page; Sequence: 165; Value: 14 -->
    <div style="border-bottom: Black 1.5pt solid; margin-bottom: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="text-align: center; width: 100%">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->25<!-- Field: /Sequence --></td></tr></table></div>
    <div style="break-before: page; margin-top: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="width: 100%">&#160;</td></tr></table></div>
    <!-- Field: /Page --></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>DOGNESS
(INTERNATIONAL) CORPORATION</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
amounts in USD)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b>NOTE
12 &#8211; EQUITY (continued)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b>Equity
Financing</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><i>January
2021 equity financing</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">On
January 20, 2021, the Company closed a securities purchase agreement with certain institutional investors for the sale of <span id="xdx_903_eus-gaap--SaleOfStockNumberOfSharesIssuedInTransaction_pid_c20210118__20210120__us-gaap--TypeOfArrangementAxis__custom--SecuritiesPurchaseAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__us-gaap--InvestorMember__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember_z3kO2uoKRJoc" title="Number of shares issuance of sales"><ix:nonFraction name="us-gaap:SaleOfStockNumberOfSharesIssuedInTransaction" contextRef="From2021-01-182021-01-20_custom_SecuritiesPurchaseAgreementMember_us-gaap_InvestorMember_us-gaap_CommonClassAMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">3,455,130</ix:nonFraction></span> Class
A common shares in a registered offering at the price of $<span id="xdx_90D_eus-gaap--SharesIssuedPricePerShare_iI_pid_c20210120__us-gaap--TypeOfArrangementAxis__custom--SecuritiesPurchaseAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__us-gaap--InvestorMember__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember_zWcNMs5vPlta" title="Shares issued price per share"><ix:nonFraction name="us-gaap:SharesIssuedPricePerShare" contextRef="AsOf2021-01-20_custom_SecuritiesPurchaseAgreementMember_us-gaap_InvestorMember_us-gaap_CommonClassAMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">2.15</ix:nonFraction></span> per common share. After the payment of expenses, the Company received
approximately $<span id="xdx_901_eus-gaap--ProceedsFromIssuanceOfCommonStock_pn5n6_c20210118__20210120__us-gaap--TypeOfArrangementAxis__custom--SecuritiesPurchaseAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__us-gaap--InvestorMember__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember_z4zwSwtBTMJf" title="Proceeds from sale of common shares"><ix:nonFraction name="us-gaap:ProceedsFromIssuanceOfCommonStock" contextRef="From2021-01-182021-01-20_custom_SecuritiesPurchaseAgreementMember_us-gaap_InvestorMember_us-gaap_CommonClassAMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">6.6</ix:nonFraction></span> million in net proceeds from the sale of the common shares.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><i>July
2021 equity financing</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">On
July 19, 2021, the Company closed a securities purchase agreement with certain institutional investors for the sale of <span id="xdx_90F_eus-gaap--SaleOfStockNumberOfSharesIssuedInTransaction_c20210717__20210719__us-gaap--TypeOfArrangementAxis__custom--SecuritiesPurchaseAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__us-gaap--InvestorMember__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember_z3u5JNtJBYmb"><ix:nonFraction name="us-gaap:SaleOfStockNumberOfSharesIssuedInTransaction" contextRef="From2021-07-172021-07-19_custom_SecuritiesPurchaseAgreementMember_us-gaap_InvestorMember_us-gaap_CommonClassAMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">2,178,120</ix:nonFraction></span> Class
A common shares in a registered offering at the price of $<span id="xdx_90A_eus-gaap--SharesIssuedPricePerShare_iI_c20210719__us-gaap--TypeOfArrangementAxis__custom--SecuritiesPurchaseAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__us-gaap--InvestorMember__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember_z8eRJErrQJzi"><ix:nonFraction name="us-gaap:SharesIssuedPricePerShare" contextRef="AsOf2021-07-19_custom_SecuritiesPurchaseAgreementMember_us-gaap_InvestorMember_us-gaap_CommonClassAMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">1.82</ix:nonFraction></span> per common share. After payment of expenses, the Company received approximately
$<span id="xdx_900_eus-gaap--ProceedsFromIssuanceOfCommonStock_pn5n6_c20210717__20210719__us-gaap--TypeOfArrangementAxis__custom--SecuritiesPurchaseAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__us-gaap--InvestorMember__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember_ziqyHxaAgqC8"><ix:nonFraction name="us-gaap:ProceedsFromIssuanceOfCommonStock" contextRef="From2021-07-172021-07-19_custom_SecuritiesPurchaseAgreementMember_us-gaap_InvestorMember_us-gaap_CommonClassAMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">3.5</ix:nonFraction></span> million in net proceeds from the sale of the common shares.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><i>February
2022 equity financing</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">On
February 24, 2022, the Company closed a securities purchase agreement with certain institutional investors for the sale of <span id="xdx_903_eus-gaap--SaleOfStockNumberOfSharesIssuedInTransaction_c20220223__20220224__us-gaap--TypeOfArrangementAxis__custom--SecuritiesPurchaseAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__us-gaap--InvestorMember__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember_zCe0XPaPXeX3" title="Number of shares issuance of sales"><ix:nonFraction name="us-gaap:SaleOfStockNumberOfSharesIssuedInTransaction" contextRef="From2022-02-232022-02-24_custom_SecuritiesPurchaseAgreementMember_us-gaap_InvestorMember_us-gaap_CommonClassAMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">1,966,251</ix:nonFraction></span>
Class A common shares in a registered offering at the price of $<span id="xdx_90F_eus-gaap--SharesIssuedPricePerShare_iI_c20220224__us-gaap--TypeOfArrangementAxis__custom--SecuritiesPurchaseAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__us-gaap--InvestorMember__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember_zM6HNaLZg4E8" title="Shares issued price per share"><ix:nonFraction name="us-gaap:SharesIssuedPricePerShare" contextRef="AsOf2022-02-24_custom_SecuritiesPurchaseAgreementMember_us-gaap_InvestorMember_us-gaap_CommonClassAMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">2.88</ix:nonFraction></span> per common share. After payment of expenses, the Company received
approximately $<span id="xdx_905_eus-gaap--ProceedsFromIssuanceOfCommonStock_pn5n6_c20220223__20220224__us-gaap--TypeOfArrangementAxis__custom--SecuritiesPurchaseAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__us-gaap--InvestorMember__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember_zi5ymaaCfwa3" title="Proceeds from sale of common shares"><ix:nonFraction name="us-gaap:ProceedsFromIssuanceOfCommonStock" contextRef="From2022-02-232022-02-24_custom_SecuritiesPurchaseAgreementMember_us-gaap_InvestorMember_us-gaap_CommonClassAMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">4.7</ix:nonFraction></span> million in net proceeds from the sale of the common shares.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><i>June
2022 equity financing</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">On
June 3, 2022, the Company closed a securities purchase agreement with certain institutional investors for the sale of <span id="xdx_903_eus-gaap--SaleOfStockNumberOfSharesIssuedInTransaction_c20220602__20220603__us-gaap--TypeOfArrangementAxis__custom--SecuritiesPurchaseAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__us-gaap--InvestorMember__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember_zTCvZA6FxM7c"><ix:nonFraction name="us-gaap:SaleOfStockNumberOfSharesIssuedInTransaction" contextRef="From2022-06-022022-06-03_custom_SecuritiesPurchaseAgreementMember_us-gaap_InvestorMember_us-gaap_CommonClassAMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">3,636,365</ix:nonFraction></span> Class
A common shares in a registered offering at the price of $<span id="xdx_905_eus-gaap--SharesIssuedPricePerShare_iI_c20220603__us-gaap--TypeOfArrangementAxis__custom--SecuritiesPurchaseAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__us-gaap--InvestorMember__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember_zDrKXmphEwmg"><ix:nonFraction name="us-gaap:SharesIssuedPricePerShare" contextRef="AsOf2022-06-03_custom_SecuritiesPurchaseAgreementMember_us-gaap_InvestorMember_us-gaap_CommonClassAMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">3.30</ix:nonFraction></span> per common share. After payment of expenses, the Company received approximately
$<span id="xdx_903_eus-gaap--ProceedsFromIssuanceOfCommonStock_pn5n6_c20220602__20220603__us-gaap--TypeOfArrangementAxis__custom--SecuritiesPurchaseAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__us-gaap--InvestorMember__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember_z70GSKhKUUQb"><ix:nonFraction name="us-gaap:ProceedsFromIssuanceOfCommonStock" contextRef="From2022-06-022022-06-03_custom_SecuritiesPurchaseAgreementMember_us-gaap_InvestorMember_us-gaap_CommonClassAMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">10.9</ix:nonFraction></span> million in net proceeds from the sale of the common shares.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b>Common
Shares Issued for Service</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">On
April 15, 2021, the Company signed a consulting agreement with Real Miracle Investments Limited (&#8220;Real Miracle&#8217;) 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 <span id="xdx_90D_eus-gaap--StockIssuedDuringPeriodSharesIssuedForServices_c20210414__20210415__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember__dei--LegalEntityAxis__custom--RealMiracleInvestmentsLimitedMember_zalLqC4BC4ph" title="Number of shares issued"><ix:nonFraction name="us-gaap:StockIssuedDuringPeriodSharesIssuedForServices" contextRef="From2021-04-142021-04-15_us-gaap_CommonClassAMember_custom_RealMiracleInvestmentsLimitedMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">250,000</ix:nonFraction></span> of the Company&#8217;s Class A common shares within ten days upon signing the agreement.
On April 28, 2021, these shares were issued to Real Miracle. These shares were measured at $<span id="xdx_906_eus-gaap--StockIssuedDuringPeriodValueIssuedForServices_c20210414__20210415__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember__dei--LegalEntityAxis__custom--RealMiracleInvestmentsLimitedMember_zCNxwY7JhbS8" title="Number of shares issued, value"><ix:nonFraction name="us-gaap:StockIssuedDuringPeriodValueIssuedForServices" contextRef="From2021-04-142021-04-15_us-gaap_CommonClassAMember_custom_RealMiracleInvestmentsLimitedMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">387,500</ix:nonFraction></span> which was based on the value of the
Company&#8217;s Class A common shares at the agreement date and amortized over the service period.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">On
December 15, 2022, the Company signed a consulting agreement with Real Miracle Investments Limited (&#8220;Real Miracle&#8217;) to provide
strategic business and marketing consulting services to the Company for nine months from December 15, 2022. As the consideration for
the service, Real Miracle is entitled to receive <span id="xdx_90E_eus-gaap--StockIssuedDuringPeriodSharesIssuedForServices_c20221214__20221215__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember__dei--LegalEntityAxis__custom--RealMiracleInvestmentsLimitedMember_zF6hYFqiuHwi" title="Number of shares issued"><ix:nonFraction name="us-gaap:StockIssuedDuringPeriodSharesIssuedForServices" contextRef="From2022-12-142022-12-15_us-gaap_CommonClassAMember_custom_RealMiracleInvestmentsLimitedMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">300,000</ix:nonFraction></span> of the Company&#8217;s Class A common shares within ten days upon signing the
agreement. On December 19, 2022, these shares were issued to Real Miracle. These shares were measured at $<span id="xdx_905_eus-gaap--StockIssuedDuringPeriodValueIssuedForServices_c20221214__20221215__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember__dei--LegalEntityAxis__custom--RealMiracleInvestmentsLimitedMember_zctbKYyKfln2" title="Number of shares issued, value"><ix:nonFraction name="us-gaap:StockIssuedDuringPeriodValueIssuedForServices" contextRef="From2022-12-142022-12-15_us-gaap_CommonClassAMember_custom_RealMiracleInvestmentsLimitedMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">334,500</ix:nonFraction></span> which was based on
the value of the Company&#8217;s Class A common shares at the agreement date and amortized over the service period.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">On
January 26, 2023, the Board adopted resolutions to grant total <span id="xdx_900_eus-gaap--StockIssuedDuringPeriodSharesIssuedForServices_c20230125__20230126__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--SilongChenMember_zjZ8sLA8d7b6" title="Number of shares issued"><ix:nonFraction name="us-gaap:StockIssuedDuringPeriodSharesIssuedForServices" contextRef="From2023-01-252023-01-26_us-gaap_CommonClassAMember_custom_SilongChenMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">1,500,000</ix:nonFraction></span> Class A common shares to Mr. Silong Chen, the Chief Executive
Officer of the Company as part of the annual salary. These shares shall be issued equally on January 26, 2023, 2024 and 2025. On January
26, 2023, the Company issued <span id="xdx_90B_eus-gaap--StockIssuedDuringPeriodSharesIssuedForServices_c20230125__20230126__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--SilongChenMember__us-gaap--VestingAxis__us-gaap--ShareBasedCompensationAwardTrancheOneMember_ziWt3HtXPvW4" title="Number of shares issued"><ix:nonFraction name="us-gaap:StockIssuedDuringPeriodSharesIssuedForServices" contextRef="From2023-01-252023-01-26_us-gaap_CommonClassAMember_custom_SilongChenMember_us-gaap_ShareBasedCompensationAwardTrancheOneMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">500,000</ix:nonFraction></span> Class A common shares to Mr. Silong Chen as the first tranche of the salary shares. These shares
were measured at $<span id="xdx_901_eus-gaap--StockIssuedDuringPeriodValueIssuedForServices_c20230125__20230126__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--SilongChenMember_zqXbh395gsO6" title="Number of shares issued, value"><ix:nonFraction name="us-gaap:StockIssuedDuringPeriodValueIssuedForServices" contextRef="From2023-01-252023-01-26_us-gaap_CommonClassAMember_custom_SilongChenMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,455,000</ix:nonFraction></span> which was based on the value of the Company&#8217;s Class A common shares at the granted date and amortized
over the service period.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
January 26, 2023, the Board adopted resolutions to grant <span id="xdx_90E_eus-gaap--StockIssuedDuringPeriodSharesIssuedForServices_c20230125__20230126__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--YunhaoChenMember_zThzVnAyIlMa" title="Number of shares issued"><ix:nonFraction name="us-gaap:StockIssuedDuringPeriodSharesIssuedForServices" contextRef="From2023-01-252023-01-26_us-gaap_CommonClassAMember_custom_YunhaoChenMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">150,000</ix:nonFraction></span> Class A common shares to Dr. Yunhao Chen, the Chief Financial Officer
of the Company as part of the annual salary. These shares shall be issued equally on January 26, 2023, 2024 and 2025. On January 26,
2023, the Company issued <span id="xdx_90E_eus-gaap--StockIssuedDuringPeriodSharesIssuedForServices_c20230125__20230126__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--YunhaoChenMember__us-gaap--VestingAxis__us-gaap--ShareBasedCompensationAwardTrancheOneMember_zhbnt6F3q188" title="Number of shares issued"><ix:nonFraction name="us-gaap:StockIssuedDuringPeriodSharesIssuedForServices" contextRef="From2023-01-252023-01-26_us-gaap_CommonClassAMember_custom_YunhaoChenMember_us-gaap_ShareBasedCompensationAwardTrancheOneMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">50,000</ix:nonFraction></span> Class A common shares to Dr. Yunhao Chen as the first tranche of the salary shares. These shares were
measured at $<span id="xdx_907_eus-gaap--StockIssuedDuringPeriodValueIssuedForServices_c20230125__20230126__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--YunhaoChenMember_zk90HhdBJe47" title="Number of shares issued, value"><ix:nonFraction name="us-gaap:StockIssuedDuringPeriodValueIssuedForServices" contextRef="From2023-01-252023-01-26_us-gaap_CommonClassAMember_custom_YunhaoChenMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">145,500</ix:nonFraction></span> which was based on the value of the Company&#8217;s Class A common shares at the granted date and amortized over
the service period. The unissued shares were forfeited due to the resignation of Dr. Yunhao Chen as the Company&#8217;s Chief Financial
Officer on August 1, 2023.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>


<ix:exclude><!-- Field: Page; Sequence: 166; Value: 14 -->
    <div style="border-bottom: Black 1.5pt solid; margin-bottom: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="text-align: center; width: 100%">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->26<!-- Field: /Sequence --></td></tr></table></div>
    <div style="break-before: page; margin-top: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="width: 100%">&#160;</td></tr></table></div>
    <!-- Field: /Page --></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>DOGNESS
(INTERNATIONAL) CORPORATION</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
amounts in USD)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b>NOTE
12 &#8211; EQUITY (continued)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">As
of June 30, 2023, the Company had an aggregate of <span id="xdx_908_eus-gaap--CommonStockSharesOutstanding_iI_c20230630_zm05ZeSZglph" title="Shares outstanding, shares"><ix:nonFraction name="us-gaap:CommonStockSharesOutstanding" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">40,124,259</ix:nonFraction></span> common shares outstanding, consisting of <span id="xdx_90E_eus-gaap--CommonStockSharesOutstanding_iI_c20230630__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember_z9aWy0JXc2tf" title="Shares outstanding, shares"><ix:nonFraction name="us-gaap:CommonStockSharesOutstanding" contextRef="AsOf2023-06-30_us-gaap_CommonClassAMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">31,055,259</ix:nonFraction></span> Class A and <span id="xdx_90F_eus-gaap--CommonStockSharesOutstanding_iI_c20230630__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassBMember_zCTQHJhXfith" title="Shares outstanding, shares"><ix:nonFraction name="us-gaap:CommonStockSharesOutstanding" contextRef="AsOf2023-06-30_us-gaap_CommonClassBMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">9,069,000</ix:nonFraction></span>
Class B common shares; respectively. As of June 30, 2022, the Company had an aggregate of <span id="xdx_90B_eus-gaap--CommonStockSharesOutstanding_iI_c20220630_zyGlnctpU221" title="Shares outstanding, shares"><ix:nonFraction name="us-gaap:CommonStockSharesOutstanding" contextRef="AsOf2022-06-30" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">39,274,259</ix:nonFraction></span> common shares outstanding, consisting
of <span id="xdx_902_eus-gaap--CommonStockSharesOutstanding_iI_c20220630__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember_zyduNcJTFSgi" title="Shares outstanding, shares"><ix:nonFraction name="us-gaap:CommonStockSharesOutstanding" contextRef="AsOf2022-06-30_us-gaap_CommonClassAMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">30,205,259</ix:nonFraction></span> Class A and <span id="xdx_90B_eus-gaap--CommonStockSharesOutstanding_iI_c20220630__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassBMember_z7q4OuCAPS81" title="Shares outstanding, shares"><ix:nonFraction name="us-gaap:CommonStockSharesOutstanding" contextRef="AsOf2022-06-30_us-gaap_CommonClassBMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">9,069,000</ix:nonFraction></span> Class B common shares; respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b>Warrants</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
connection with and upon closing of the IPO on December 18, 2017, the Company agreed to issue <span id="xdx_907_eus-gaap--ClassOfWarrantOrRightOutstanding_iI_c20171218__us-gaap--StatementEquityComponentsAxis__custom--PublicOfferingWarrantsMember_z7JwPfRtxcEg" title="Warrants issue"><ix:nonFraction name="us-gaap:ClassOfWarrantOrRightOutstanding" contextRef="AsOf2017-12-18_custom_PublicOfferingWarrantsMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">500,000</ix:nonFraction></span> warrants to the underwriters and
to register herein warrants to purchase up to a total of up to <span id="xdx_904_eus-gaap--ClassOfWarrantOrRightNumberOfSecuritiesCalledByEachWarrantOrRight_iI_pid_c20171218__us-gaap--StatementEquityComponentsAxis__custom--PublicOfferingWarrantsMember__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember_zDZbsuwIRJ92" title="Warrants to purchase common stock"><ix:nonFraction name="us-gaap:ClassOfWarrantOrRightNumberOfSecuritiesCalledByEachWarrantOrRight" contextRef="AsOf2017-12-18_custom_PublicOfferingWarrantsMember_us-gaap_CommonClassAMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">500,000</ix:nonFraction></span> Class A common shares (equal to 5% of the aggregate number of
Class A common shares sold in the IPO).</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">These
warrants carry a term of <span id="xdx_900_eus-gaap--WarrantsAndRightsOutstandingTerm_iI_dc_c20171218__us-gaap--StatementEquityComponentsAxis__custom--PublicOfferingWarrantsMember__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember_zXoVe1s2PcC7" title="Warrants term"><ix:nonNumeric contextRef="AsOf2017-12-18_custom_PublicOfferingWarrantsMember_us-gaap_CommonClassAMember" format="ixt-sec:durwordsen" name="us-gaap:WarrantsAndRightsOutstandingTerm">three years</ix:nonNumeric></span> 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 $<span id="xdx_90A_eus-gaap--ClassOfWarrantOrRightExercisePriceOfWarrantsOrRights1_iI_pid_c20171218__us-gaap--StatementEquityComponentsAxis__custom--PublicOfferingWarrantsMember__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember_zAQn1chWJah1" title="Warrants exercise price"><ix:nonFraction name="us-gaap:ClassOfWarrantOrRightExercisePriceOfWarrantsOrRights1" contextRef="AsOf2017-12-18_custom_PublicOfferingWarrantsMember_us-gaap_CommonClassAMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">6.25</ix:nonFraction></span> per share. These underwriter warrants
expired on December 18, 2020.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
connection of January 2021 equity financing, warrants carry a term of thirty
(30) months after the issuance date</span> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">to purchase
an aggregate of <span id="xdx_904_eus-gaap--ClassOfWarrantOrRightNumberOfSecuritiesCalledByEachWarrantOrRight_iI_pid_c20210131__us-gaap--TypeOfArrangementAxis__custom--SecuritiesPurchaseAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__us-gaap--InvestorMember_zNn6DP0rUfql"><ix:nonFraction name="us-gaap:ClassOfWarrantOrRightNumberOfSecuritiesCalledByEachWarrantOrRight" contextRef="AsOf2021-01-31_custom_SecuritiesPurchaseAgreementMember_us-gaap_InvestorMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">1,727,565</ix:nonFraction>
</span></span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">common shares for $<span id="xdx_907_eus-gaap--SharesIssuedPricePerShare_iI_pid_c20210131__us-gaap--TypeOfArrangementAxis__custom--SecuritiesPurchaseAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__us-gaap--InvestorMember_zvRtUSqGHhXg"><ix:nonFraction name="us-gaap:SharesIssuedPricePerShare" contextRef="AsOf2021-01-31_custom_SecuritiesPurchaseAgreementMember_us-gaap_InvestorMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">2.70</ix:nonFraction>
</span></span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">per share were issued to the investors and warrants
carrying a term of thirty (30) months commencing six months after the issuance date to purchase an aggregate of <span id="xdx_90B_eus-gaap--ClassOfWarrantOrRightNumberOfSecuritiesCalledByEachWarrantOrRight_iI_pid_c20210131__us-gaap--TypeOfArrangementAxis__custom--SecuritiesPurchaseAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--PlacementAgentMember_zPDES6Zc8Sq2"><ix:nonFraction name="us-gaap:ClassOfWarrantOrRightNumberOfSecuritiesCalledByEachWarrantOrRight" contextRef="AsOf2021-01-31_custom_SecuritiesPurchaseAgreementMember_custom_PlacementAgentMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">276,410</ix:nonFraction>
</span></span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">common shares for $<span id="xdx_907_eus-gaap--SharesIssuedPricePerShare_iI_pid_c20210131__us-gaap--TypeOfArrangementAxis__custom--SecuritiesPurchaseAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--PlacementAgentMember_ztvoNhyAGxCd"><ix:nonFraction name="us-gaap:SharesIssuedPricePerShare" contextRef="AsOf2021-01-31_custom_SecuritiesPurchaseAgreementMember_custom_PlacementAgentMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">2.70</ix:nonFraction>
</span></span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">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 $<span id="xdx_903_eus-gaap--ProceedsFromIssuanceOfWarrants_pn5n6_c20210118__20210131__us-gaap--TypeOfArrangementAxis__custom--SecuritiesPurchaseAgreementMember_zJpcpkrZd6zi"><ix:nonFraction name="us-gaap:ProceedsFromIssuanceOfWarrants" contextRef="From2021-01-182021-01-31_custom_SecuritiesPurchaseAgreementMember" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="USD">5.4</ix:nonFraction>
</span></span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">million. These warrants were recorded at their
fair value on the date of grant as a component of shareholders&#8217; equity. <span id="xdx_900_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardNonOptionEquityInstrumentsExercised_c20210701__20220630__us-gaap--TypeOfArrangementAxis__custom--SecuritiesPurchaseAgreementMember_zstSU7Df5l42"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardNonOptionEquityInstrumentsExercised" contextRef="From2021-07-012022-06-30_custom_SecuritiesPurchaseAgreementMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">1,727,565</ix:nonFraction>
</span></span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">warrants to the investors were exercised during
year ended June 30, 2022. <span id="xdx_902_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardNonOptionEquityInstrumentsExercised_do_c20220701__20230630__us-gaap--TypeOfArrangementAxis__custom--SecuritiesPurchaseAgreementMember_zPadaPFifmJ8"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardNonOptionEquityInstrumentsExercised" contextRef="From2022-07-012023-06-30_custom_SecuritiesPurchaseAgreementMember" format="ixt-sec:numwordsen" decimals="INF" unitRef="Shares">No
</ix:nonFraction></span></span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">warrants were exercised during year ended June
30, 2023.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
connection of July 2021 equity financing, the Company also issued warrants to purchase <span id="xdx_90D_eus-gaap--ClassOfWarrantOrRightNumberOfSecuritiesCalledByEachWarrantOrRight_iI_pid_c20210731__us-gaap--TypeOfArrangementAxis__custom--SecuritiesPurchaseAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__us-gaap--InvestorMember_zxkcSua9WNUi"><ix:nonFraction name="us-gaap:ClassOfWarrantOrRightNumberOfSecuritiesCalledByEachWarrantOrRight" contextRef="AsOf2021-07-31_custom_SecuritiesPurchaseAgreementMember_us-gaap_InvestorMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">174,249</ix:nonFraction></span> common shares to the placement agent exercisable
at $<span id="xdx_908_eus-gaap--SharesIssuedPricePerShare_iI_pid_c20210731__us-gaap--TypeOfArrangementAxis__custom--SecuritiesPurchaseAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__us-gaap--InvestorMember_zR86uRJVhRT4"><ix:nonFraction name="us-gaap:SharesIssuedPricePerShare" contextRef="AsOf2021-07-31_custom_SecuritiesPurchaseAgreementMember_us-gaap_InvestorMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">1.82</ix:nonFraction></span> per share with expiration date on July 15, 2024. <span id="xdx_90C_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardNonOptionEquityInstrumentsExercised_do_c20220701__20230630__us-gaap--TypeOfArrangementAxis__custom--SecuritiesPurchaseAgreementMember_zpjqc58Qray3"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardNonOptionEquityInstrumentsExercised" contextRef="From2022-07-012023-06-30_custom_SecuritiesPurchaseAgreementMember" format="ixt-sec:numwordsen" decimals="INF" unitRef="Shares">No</ix:nonFraction></span> warrants were exercised during year ended June 30, 2023.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
connection of June 2022 equity financing, the Company also issued warrants to purchase <span id="xdx_903_eus-gaap--ClassOfWarrantOrRightNumberOfSecuritiesCalledByEachWarrantOrRight_iI_pid_c20220630__us-gaap--TypeOfArrangementAxis__custom--SecuritiesPurchaseAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__us-gaap--InvestorMember_zUvgf8Jk4xCj"><ix:nonFraction name="us-gaap:ClassOfWarrantOrRightNumberOfSecuritiesCalledByEachWarrantOrRight" contextRef="AsOf2022-06-30_custom_SecuritiesPurchaseAgreementMember_us-gaap_InvestorMember" format="ixt:numunitdecimalin" decimals="INF" unitRef="Shares">2,181,81</ix:nonFraction></span> common shares to the investors at $<span id="xdx_903_eus-gaap--SharesIssuedPricePerShare_iI_pid_c20220630__us-gaap--TypeOfArrangementAxis__custom--SecuritiesPurchaseAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__us-gaap--InvestorMember_zenkXimF4s49"><ix:nonFraction name="us-gaap:SharesIssuedPricePerShare" contextRef="AsOf2022-06-30_custom_SecuritiesPurchaseAgreementMember_us-gaap_InvestorMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">4.20</ix:nonFraction></span>
per share with expiration date on <span id="xdx_90C_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardExpirationDate_pid_dd_c20220630__20220630__us-gaap--TypeOfArrangementAxis__custom--SecuritiesPurchaseAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__us-gaap--InvestorMember_zdR0GEHlksv7" title="Expiration date"><ix:nonNumeric contextRef="From2022-06-302022-06-30_custom_SecuritiesPurchaseAgreementMember_us-gaap_InvestorMember" format="ixt:datemonthdayyearen" name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardExpirationDate">June 3, 2024</ix:nonNumeric></span>. <span id="xdx_909_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardNonOptionEquityInstrumentsExercised_do_c20220701__20230630__us-gaap--TypeOfArrangementAxis__custom--SecuritiesPurchaseAgreementMember_zKjVCqlFffn4"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardNonOptionEquityInstrumentsExercised" contextRef="From2022-07-012023-06-30_custom_SecuritiesPurchaseAgreementMember" format="ixt-sec:numwordsen" decimals="INF" unitRef="Shares">No</ix:nonFraction></span> warrants were exercised during year ended June 30, 2023.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">Management
determined that these warrants meet the requirements for equity classification under ASC 815-40 because they are indexed to its own shares.
The warrants were recorded at their fair value on the date of grant as a component of shareholders&#8217; equity. As of June 30, 2023,
<span id="xdx_90C_eus-gaap--ClassOfWarrantOrRightOutstanding_iI_pid_c20230630__us-gaap--TypeOfArrangementAxis__custom--SecuritiesPurchaseAgreementMember_zNVKp1Gqz2j1" title="Warrant outstanding"><ix:nonFraction name="us-gaap:ClassOfWarrantOrRightOutstanding" contextRef="AsOf2023-06-30_custom_SecuritiesPurchaseAgreementMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">2,632,478</ix:nonFraction></span> warrants in connection with three equity financings as mentioned above were outstanding, with weighted average exercise price
of $<span id="xdx_905_eus-gaap--ClassOfWarrantOrRightExercisePriceOfWarrantsOrRights1_iI_pid_c20230630__us-gaap--TypeOfArrangementAxis__custom--SecuritiesPurchaseAgreementMember_z0vMidpKYVAg" title="Warrant exercise price"><ix:nonFraction name="us-gaap:ClassOfWarrantOrRightExercisePriceOfWarrantsOrRights1" contextRef="AsOf2023-06-30_custom_SecuritiesPurchaseAgreementMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">3.88</ix:nonFraction></span> and weighted average remaining life of <span id="xdx_90D_eus-gaap--WarrantsAndRightsOutstandingTerm_iI_dtY_c20230630__us-gaap--TypeOfArrangementAxis__custom--SecuritiesPurchaseAgreementMember_z86tuKYN1eE5" title="Warrants weighted average remaining  term"><ix:nonNumeric contextRef="AsOf2023-06-30_custom_SecuritiesPurchaseAgreementMember" format="ixt-sec:duryear" name="us-gaap:WarrantsAndRightsOutstandingTerm">1.72</ix:nonNumeric></span> years.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b>Statutory
Reserve</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">The
Company&#8217;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 (&#8220;PRC GAAP&#8221;). <span id="xdx_900_ecustom--StatutoryReserveDescription_c20220701__20230630_zTcWTz5gvB6g" title="Statutory reserve description"><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" name="DOGZ:StatutoryReserveDescription">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&#8217;s
registered capital</ix:nonNumeric></span>. Appropriations to the discretionary surplus reserve are made at the discretion of the Board of Directors. The Company
allocated $<span id="xdx_900_eus-gaap--StatutoryAccountingPracticesStatutoryCapitalAndSurplusBalance_iI_dxL_c20230630_zej8YVb8lY3d" title="Allocatiion to statutory reserve::XDX::-"><span style="-sec-ix-hidden: xdx2ixbrl1907">Nil</span></span>, $<span id="xdx_90C_eus-gaap--StatutoryAccountingPracticesStatutoryCapitalAndSurplusBalance_iI_dxL_c20220630_zOHM9QJLjMyg" title="Allocatiion to statutory reserve::XDX::-"><span style="-sec-ix-hidden: xdx2ixbrl1909">Nil</span></span> and $<span id="xdx_90C_eus-gaap--StatutoryAccountingPracticesStatutoryCapitalAndSurplusBalance_iI_c20210630_zbNVoJoTs6P"><ix:nonFraction name="us-gaap:StatutoryAccountingPracticesStatutoryCapitalAndSurplusBalance" contextRef="AsOf2021-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">99,727</ix:nonFraction></span> to statutory reserves during the years ended June 30, 2023, 2022 and 2021 in accordance with PRC regulations,
respectively. The restricted amounts as determined by the PRC statutory laws both totaled $<span id="xdx_904_ecustom--RestrictedReserve_iI_c20230630_zrBmdD8316yh" title="Restricted reserve"><span id="xdx_90F_ecustom--RestrictedReserve_iI_c20220630_zTlH8dnRESs7" title="Restricted reserve"><ix:nonFraction name="DOGZ:RestrictedReserve" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD"><ix:nonFraction name="DOGZ:RestrictedReserve" contextRef="AsOf2022-06-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">291,443</ix:nonFraction></ix:nonFraction></span></span> as of June 30, 2023 and 2022, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>


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    <div style="break-before: page; margin-top: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="width: 100%">&#160;</td></tr></table></div>
    <!-- Field: /Page --></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>DOGNESS
(INTERNATIONAL) CORPORATION</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
amounts in USD)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="us-gaap:EarningsPerShareTextBlock"><p id="xdx_800_eus-gaap--EarningsPerShareTextBlock_zom8OyGWOoJ6" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b>NOTE
13 &#8211; <span id="xdx_82E_zBjVZ5Xsd6H4">(LOSS) EARNINGS PER SHARE</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">For
the year ended June 30, 2023, potential shares of common stock from the unexercised options and unexercised options are excluded from
diluted net loss per share as such amounts are anti-dilutive.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">For
the years ended June 30, 2022, 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. As a result, a total of <span id="xdx_903_eus-gaap--AntidilutiveSecuritiesExcludedFromComputationOfEarningsPerShareAmount_c20210701__20220630_zGCJqHPAyzdi" title="Antidilutive securities excluded from computation of earnings per share, amount"><ix:nonFraction name="us-gaap:AntidilutiveSecuritiesExcludedFromComputationOfEarningsPerShareAmount" contextRef="From2021-07-012022-06-30" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">301,975</ix:nonFraction></span> unexercised options were included in
the computation of diluted earnings per share for the years ended June 30, 2022.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
the years ended June 30, 2021, 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. As a result, a total of <span id="xdx_900_eus-gaap--AntidilutiveSecuritiesExcludedFromComputationOfEarningsPerShareAmount_c20200701__20210630_zvpE1thXs72k" title="Antidilutive securities excluded from computation of earnings per share, amount"><ix:nonFraction name="us-gaap:AntidilutiveSecuritiesExcludedFromComputationOfEarningsPerShareAmount" contextRef="From2020-07-012021-06-30" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">55,444</ix:nonFraction></span> unexercised options were included in
the computation of diluted earnings per share for the years ended June 30, 2021.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="us-gaap:ScheduleOfEarningsPerShareBasicAndDilutedTableTextBlock"><p id="xdx_89A_eus-gaap--ScheduleOfEarningsPerShareBasicAndDilutedTableTextBlock_zaskNMyvVLT" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">The
following table presents a reconciliation of basic and diluted net (loss) income per share:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; display: none; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_8B9_zpHt2fZrUnA2">SCHEDULE
OF EARNINGS PER SHARE, BASIC AND DILUTED</span></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
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    <td style="text-align: left; padding-bottom: 1.5pt">Dilutive securities -unexercised warrants and options</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr id="xdx_409_eus-gaap--WeightedAverageNumberOfDilutedSharesOutstanding_i_pdd" style="vertical-align: bottom; background-color: White">
    <td>Weighted average number of common shares outstanding &#8211; diluted</td><td>&#160;</td>
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    <td style="padding-bottom: 1.5pt">Earnings (loss) per share - Basic</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction name="us-gaap:EarningsPerShareBasic" contextRef="From2022-07-01to2023-06-30" format="ixt:numdotdecimal" decimals="INF" sign="-" unitRef="USDPShares">0.18</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr id="xdx_401_eus-gaap--EarningsPerShareDiluted_i_pdd" style="vertical-align: bottom; background-color: White">
    <td style="padding-bottom: 1.5pt">Earnings (loss) per share &#8211; Diluted</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction name="us-gaap:EarningsPerShareDiluted" contextRef="From2022-07-01to2023-06-30" format="ixt:numdotdecimal" decimals="INF" sign="-" unitRef="USDPShares">0.18</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  </table>

</ix:nonNumeric><p id="xdx_8A5_zh5255pHwBrc" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="us-gaap:OptionIndexedToIssuersEquityDescriptionTextBlock"><p id="xdx_800_eus-gaap--OptionIndexedToIssuersEquityDescriptionTextBlock_zkNBVa5RDoE" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b>NOTE
14 &#8211; <span id="xdx_821_zQlm86gFQexl">OPTIONS</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">On
November 10, 2017, the Company signed a consulting agreement to engage TJ Capital Management, L.P. (&#8220;TJ Capital&#8221;) to provide
strategic consulting services to the Company in matters relating to investor relations, capital markets and shareholder value creation
strategy.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">As
the part of the agreement, TJ Capital was granted options to purchase <span id="xdx_903_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsGrantsInPeriod_c20171110__20171110__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--TjCapitalManagementLPMember_zsCMRHLn3459" title="Stock options grants to purchase"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsGrantsInPeriod" contextRef="From2017-11-102017-11-10_custom_TjCapitalManagementLPMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">160,000</ix:nonFraction></span> of the Company&#8217;s Class A common shares. The options
are exercisable at a purchase price of $<span id="xdx_90F_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsExercisableWeightedAverageExercisePrice_iI_c20171110__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--TjCapitalManagementLPMember_zJymGtlHiYz4" title="Stock options exercise purchase price"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsExercisableWeightedAverageExercisePrice" contextRef="AsOf2017-11-10_custom_TjCapitalManagementLPMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">1.50</ix:nonFraction></span> per share with no restriction for sale, among which options <span id="xdx_900_ecustom--OptionsVested_iI_c20171110__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--TjCapitalManagementLPMember__us-gaap--SubsidiarySaleOfStockAxis__custom--IPOMember1Member_zwnYfLaqDTy2" title="Options vested"><ix:nonFraction name="DOGZ:OptionsVested" contextRef="AsOf2017-11-10_custom_TjCapitalManagementLPMember_custom_IPOMember1Member" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">60,000</ix:nonFraction></span> shares were to vest <span id="xdx_90D_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardFairValueAssumptionsExpectedTerm1_dtM_c20171110__20171110__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--TjCapitalManagementLPMember__us-gaap--SubsidiarySaleOfStockAxis__custom--IPOMember1Member_zUGNjWlwZsea" title="Share-based payment award fair value assumptions expected term"><ix:nonNumeric contextRef="From2017-11-102017-11-10_custom_TjCapitalManagementLPMember_custom_IPOMember1Member" format="ixt-sec:durmonth" name="us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardFairValueAssumptionsExpectedTerm1">7</ix:nonNumeric></span>
months after the Company&#8217;s IPO date, <span id="xdx_90D_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsVestedAndExpectedToVestOutstandingNumber_iI_c20171110__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--TjCapitalManagementLPMember__us-gaap--SubsidiarySaleOfStockAxis__custom--IPOMember2Member_z1zHLYZvld9d" title="Options vested"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsVestedAndExpectedToVestOutstandingNumber" contextRef="AsOf2017-11-10_custom_TjCapitalManagementLPMember_custom_IPOMember2Member" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">50,000</ix:nonFraction></span> shares were to vest <span id="xdx_902_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardFairValueAssumptionsExpectedTerm1_dtM_c20171110__20171110__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--TjCapitalManagementLPMember__us-gaap--SubsidiarySaleOfStockAxis__custom--IPOMember2Member_zRYsllua27jl" title="Share-based payment award fair value assumptions expected term"><ix:nonNumeric contextRef="From2017-11-102017-11-10_custom_TjCapitalManagementLPMember_custom_IPOMember2Member" format="ixt-sec:durmonth" name="us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardFairValueAssumptionsExpectedTerm1">10</ix:nonNumeric></span> months after the IPO date, and <span id="xdx_90F_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsVestedAndExpectedToVestOutstandingNumber_iI_c20171110__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--TjCapitalManagementLPMember__us-gaap--SubsidiarySaleOfStockAxis__custom--IPOMember3Member_zNJnA1qetxxg" title="Options vested"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsVestedAndExpectedToVestOutstandingNumber" contextRef="AsOf2017-11-10_custom_TjCapitalManagementLPMember_custom_IPOMember3Member" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">50,000</ix:nonFraction></span> shares were to vest <span id="xdx_90C_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardFairValueAssumptionsExpectedTerm1_dtM_c20171110__20171110__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--TjCapitalManagementLPMember__us-gaap--SubsidiarySaleOfStockAxis__custom--IPOMember3Member_zbjLwSo7Pwhg" title="Share-based payment award fair value assumptions expected term"><ix:nonNumeric contextRef="From2017-11-102017-11-10_custom_TjCapitalManagementLPMember_custom_IPOMember3Member" format="ixt-sec:durmonth" name="us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardFairValueAssumptionsExpectedTerm1">15</ix:nonNumeric></span>
months after the IPO date.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">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 share-based compensation
expenses were accrued up to the date of the termination of this agreement, because TJ Capital had not provided the services.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">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 options to purchase <span id="xdx_90A_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsGrantsInPeriod_c20190730__20190730__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--TjCapitalManagementLPMember__us-gaap--TypeOfArrangementAxis__custom--CorporateAndExecutiveServiceAgreementMember_zOwp2YIfzuVl" title="Stock options grants to purchase"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsGrantsInPeriod" contextRef="From2019-07-302019-07-30_custom_TjCapitalManagementLPMember_custom_CorporateAndExecutiveServiceAgreementMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">160,000</ix:nonFraction></span> of the Company&#8217;s
Class A common shares. The options are exercisable at a purchase price of $<span id="xdx_90B_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsExercisableWeightedAverageExercisePrice_iI_c20190730__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--TjCapitalManagementLPMember__us-gaap--TypeOfArrangementAxis__custom--CorporateAndExecutiveServiceAgreementMember_zk1fbUStZ2Vk" title="Stock options exercise purchase price"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsExercisableWeightedAverageExercisePrice" contextRef="AsOf2019-07-30_custom_TjCapitalManagementLPMember_custom_CorporateAndExecutiveServiceAgreementMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">1.50</ix:nonFraction></span> per share, and the options shall be deemed to be fully
paid at a rate of <span id="xdx_901_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsVestedAndExpectedToVestOutstandingNumber_iI_c20190730__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--TjCapitalManagementLPMember__us-gaap--TypeOfArrangementAxis__custom--CorporateAndExecutiveServiceAgreementMember_z1n2Y4v7Exik" title="Options vested"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsVestedAndExpectedToVestOutstandingNumber" contextRef="AsOf2019-07-30_custom_TjCapitalManagementLPMember_custom_CorporateAndExecutiveServiceAgreementMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">6,667</ix:nonFraction></span> 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 $<span id="xdx_904_ecustom--AggregatedFairValueOfOptionsGranted_iI_pp0p0_c20190730__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--TjCapitalManagementLPMember__us-gaap--TypeOfArrangementAxis__custom--CorporateAndExecutiveServiceAgreementMember_z3I85GivXDU1" title="Aggregated fair value of options granted"><ix:nonFraction name="DOGZ:AggregatedFairValueOfOptionsGranted" contextRef="AsOf2019-07-30_custom_TjCapitalManagementLPMember_custom_CorporateAndExecutiveServiceAgreementMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">284,300</ix:nonFraction></span>. The fair value has been estimated
using the Black-Scholes pricing model with the following weighted-average assumptions: market value of underlying Class A common shares
of $<span id="xdx_906_eus-gaap--SharePrice_iI_c20190730__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--TjCapitalManagementLPMember__us-gaap--TypeOfArrangementAxis__custom--CorporateAndExecutiveServiceAgreementMember_zcAKJH4ez6Fa" title="Share price"><ix:nonFraction name="us-gaap:SharePrice" contextRef="AsOf2019-07-30_custom_TjCapitalManagementLPMember_custom_CorporateAndExecutiveServiceAgreementMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">2.90</ix:nonFraction></span>; risk free rate of <span id="xdx_90F_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsRiskFreeInterestRate_pid_dp_uPure_c20190730__20190730__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--TjCapitalManagementLPMember__us-gaap--TypeOfArrangementAxis__custom--CorporateAndExecutiveServiceAgreementMember_zC8wHOMp8pAa" title="Share-based payment award, fair value assumptions, risk free interest rate"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsRiskFreeInterestRate" contextRef="From2019-07-302019-07-30_custom_TjCapitalManagementLPMember_custom_CorporateAndExecutiveServiceAgreementMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">1.85</ix:nonFraction></span>%; expected term of <span id="xdx_907_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardFairValueAssumptionsExpectedTerm1_dtY_c20190730__20190730__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--TjCapitalManagementLPMember__us-gaap--TypeOfArrangementAxis__custom--CorporateAndExecutiveServiceAgreementMember_zjZV0f2CinOb" title="Share-based payment award fair value assumptions expected term"><ix:nonNumeric contextRef="From2019-07-302019-07-30_custom_TjCapitalManagementLPMember_custom_CorporateAndExecutiveServiceAgreementMember" format="ixt-sec:duryear" name="us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardFairValueAssumptionsExpectedTerm1">2</ix:nonNumeric></span> years; exercise price of the options of $<span id="xdx_90E_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExercisePrice_iI_c20190730__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--TjCapitalManagementLPMember__us-gaap--TypeOfArrangementAxis__custom--CorporateAndExecutiveServiceAgreementMember_zJpNg28ZYuJj" title="Share-based payment award, fair value assumptions, exercise price"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExercisePrice" contextRef="AsOf2019-07-30_custom_TjCapitalManagementLPMember_custom_CorporateAndExecutiveServiceAgreementMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">1.50</ix:nonFraction></span>; volatility of <span id="xdx_900_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExpectedVolatilityRate_pid_dp_uPure_c20190730__20190730__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--TjCapitalManagementLPMember__us-gaap--TypeOfArrangementAxis__custom--CorporateAndExecutiveServiceAgreementMember_zaRh3SPQ0nh5" title="Share-based payment award, fair value assumptions, expected volatility rate"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExpectedVolatilityRate" contextRef="From2019-07-302019-07-30_custom_TjCapitalManagementLPMember_custom_CorporateAndExecutiveServiceAgreementMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">77.0</ix:nonFraction></span>%; and expected
future dividends of $<span id="xdx_905_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExpectedDividendPayments_pp0p0_dxL_c20190730__20190730__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--TjCapitalManagementLPMember__us-gaap--TypeOfArrangementAxis__custom--CorporateAndExecutiveServiceAgreementMember_zQKc7mh01Owg" title="Share-based payment award, fair value assumptions, expected dividend payments::XDX::-"><span style="-sec-ix-hidden: xdx2ixbrl1984">Nil</span></span>.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


<ix:exclude><!-- Field: Page; Sequence: 168; Value: 14 -->
    <div style="border-bottom: Black 1.5pt solid; margin-bottom: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="text-align: center; width: 100%">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->28<!-- Field: /Sequence --></td></tr></table></div>
    <div style="break-before: page; margin-top: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="width: 100%">&#160;</td></tr></table></div>
    <!-- Field: /Page --></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>DOGNESS
(INTERNATIONAL) CORPORATION</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
amounts in USD)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b>NOTE
14 &#8211; OPTIONS (continued)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">Pursuant
to the consulting agreement signed between TJ Capital and the Company, TJ Capital opted to exercise <span id="xdx_90E_eus-gaap--StockIssuedDuringPeriodSharesStockOptionsExercised_c20190730__20190730__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--TjCapitalManagementLPMember__us-gaap--TypeOfArrangementAxis__custom--ConsultingAgreementMember_zmuNX3adPqV1" title="Options exercised"><ix:nonFraction name="us-gaap:StockIssuedDuringPeriodSharesStockOptionsExercised" contextRef="From2019-07-302019-07-30_custom_TjCapitalManagementLPMember_custom_ConsultingAgreementMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">10,000</ix:nonFraction></span> share options on a cashless
basis. On February 18, 2021, the Company issued <span id="xdx_903_eus-gaap--StockIssuedDuringPeriodSharesNewIssues_c20210218__20210218__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--TjCapitalManagementLPMember__us-gaap--TypeOfArrangementAxis__custom--ConsultingAgreementMember_zsnzN06XXEo9" title="Number of shares issued under public offering"><ix:nonFraction name="us-gaap:StockIssuedDuringPeriodSharesNewIssues" contextRef="From2021-02-182021-02-18_custom_TjCapitalManagementLPMember_custom_ConsultingAgreementMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">6,053</ix:nonFraction></span> common shares to TJ Capital. During the year ended June 30, 2022, TJ Capital further
opted to exercise <span id="xdx_90A_eus-gaap--StockIssuedDuringPeriodSharesStockOptionsExercised_c20210701__20220630__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--TjCapitalManagementLPMember__us-gaap--TypeOfArrangementAxis__custom--ConsultingAgreementMember_zxYXKPPiB1Ul" title="Options exercised"><ix:nonFraction name="us-gaap:StockIssuedDuringPeriodSharesStockOptionsExercised" contextRef="From2021-07-012022-06-30_custom_TjCapitalManagementLPMember_custom_ConsultingAgreementMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">60,000</ix:nonFraction></span>, <span id="xdx_900_ecustom--StockIssuedDuringPeriodSharesStockOptionsOnCashlessBasis_c20210701__20220630__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--TjCapitalManagementLPMember__us-gaap--TypeOfArrangementAxis__custom--ConsultingAgreementMember_zzMQczFnnoni" title="Stock options on cashless basis, shares"><ix:nonFraction name="DOGZ:StockIssuedDuringPeriodSharesStockOptionsOnCashlessBasis" contextRef="From2021-07-012022-06-30_custom_TjCapitalManagementLPMember_custom_ConsultingAgreementMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">60,000</ix:nonFraction></span> and <span id="xdx_906_ecustom--StockIssuedDuringPeriodSharesStockOptionsOnCashlessBasis_c20210701__20220630__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--TjCapitalManagementLPMember__us-gaap--TypeOfArrangementAxis__custom--ConsultingAgreementMember__us-gaap--AwardTypeAxis__us-gaap--EmployeeStockOptionMember_zAeUQqjFbIe5" title="Stock options on cashless basis, shares"><ix:nonFraction name="DOGZ:StockIssuedDuringPeriodSharesStockOptionsOnCashlessBasis" contextRef="From2021-07-012022-06-30_custom_TjCapitalManagementLPMember_custom_ConsultingAgreementMember_us-gaap_EmployeeStockOptionMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">10,000</ix:nonFraction></span> share options on a cashless basis, respectively. On November 4, 2021, December 1, 2021 and
January 3, 2022, the Company issued <span id="xdx_90B_eus-gaap--StockIssuedDuringPeriodSharesNewIssues_c20211104__20211104__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--TjCapitalManagementLPMember__us-gaap--TypeOfArrangementAxis__custom--ConsultingAgreementMember_zbwv975XJ8yh" title="Number of shares issued under public offering"><ix:nonFraction name="us-gaap:StockIssuedDuringPeriodSharesNewIssues" contextRef="From2021-11-042021-11-04_custom_TjCapitalManagementLPMember_custom_ConsultingAgreementMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">36,440</ix:nonFraction></span>, <span id="xdx_904_eus-gaap--StockIssuedDuringPeriodSharesNewIssues_c20211201__20211201__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--TjCapitalManagementLPMember__us-gaap--TypeOfArrangementAxis__custom--ConsultingAgreementMember_zRlJe4u1eoJd" title="Number of shares issued under public offering"><ix:nonFraction name="us-gaap:StockIssuedDuringPeriodSharesNewIssues" contextRef="From2021-12-012021-12-01_custom_TjCapitalManagementLPMember_custom_ConsultingAgreementMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">41,928</ix:nonFraction></span> and <span id="xdx_908_eus-gaap--StockIssuedDuringPeriodSharesNewIssues_c20220103__20220103__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--TjCapitalManagementLPMember__us-gaap--TypeOfArrangementAxis__custom--ConsultingAgreementMember_zSFDqMahfd0e" title="Number of shares issued"><ix:nonFraction name="us-gaap:StockIssuedDuringPeriodSharesNewIssues" contextRef="From2022-01-032022-01-03_custom_TjCapitalManagementLPMember_custom_ConsultingAgreementMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">24,382</ix:nonFraction></span> common shares to TJ Capital, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">On
May 28, 2017, the Company signed an employment agreement with Dr. Yunhao Chen, the Chief Financial Officer of the Company. As part of
the compensation, the Company agreed to grant Ms. Chen options to purchase up to <span id="xdx_902_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsGrantsInPeriod_c20170528__20170528__us-gaap--TypeOfArrangementAxis__custom--EmploymentAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--DrYunhaoChenMember__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember_zn8MGn1W3pPa" title="Stock options grants to purchase"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsGrantsInPeriod" contextRef="From2017-05-282017-05-28_custom_EmploymentAgreementMember_custom_DrYunhaoChenMember_us-gaap_CommonClassAMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">120,000</ix:nonFraction></span> Class A common shares, at an exercise price
of $<span id="xdx_90E_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsExercisableWeightedAverageExercisePrice_iI_c20170528__us-gaap--TypeOfArrangementAxis__custom--EmploymentAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--DrYunhaoChenMember__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember_z3GDmiguKIQ4" title="Stock options exercise purchase price"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsExercisableWeightedAverageExercisePrice" contextRef="AsOf2017-05-28_custom_EmploymentAgreementMember_custom_DrYunhaoChenMember_us-gaap_CommonClassAMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">1.50</ix:nonFraction></span> per share. The grant was effective at the IPO date and the options vest at a rate of <span id="xdx_905_ecustom--OptionsVested_iI_c20170528__us-gaap--TypeOfArrangementAxis__custom--EmploymentAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--DrYunhaoChenMember__us-gaap--SubsidiarySaleOfStockAxis__us-gaap--IPOMember_zjJG9jxcVts8" title="Options vested"><ix:nonFraction name="DOGZ:OptionsVested" contextRef="AsOf2017-05-28_custom_EmploymentAgreementMember_custom_DrYunhaoChenMember_us-gaap_IPOMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">5,000</ix:nonFraction></span> per month, beginning one month following
completion of the IPO.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">The
aggregate fair value of the options granted to Dr. Yunhao Chen, the CFO, was $<span id="xdx_90A_ecustom--AggregatedFairValueOfOptionsGranted_c20170528__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--DrYunhaoChenMember_pp0p0"><ix:nonFraction name="DOGZ:AggregatedFairValueOfOptionsGranted" contextRef="AsOf2017-05-28_custom_DrYunhaoChenMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">440,840</ix:nonFraction></span>. The fair value has been estimated using the <span id="xdx_90B_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsMethodUsed_c20170528__20170528__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--DrYunhaoChenMember_zAdhEjDNX9Ak"><ix:nonNumeric contextRef="From2017-05-282017-05-28_custom_DrYunhaoChenMember" name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsMethodUsed">Black-Scholes
pricing model</ix:nonNumeric></span> with the following weighted-average assumptions: market value of underlying Class A common shares of $<span id="xdx_90B_eus-gaap--SharePrice_iI_c20170528__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--DrYunhaoChenMember_zGDIu1n9sb8i"><ix:nonFraction name="us-gaap:SharePrice" contextRef="AsOf2017-05-28_custom_DrYunhaoChenMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">5.00</ix:nonFraction></span>; risk free rate
of <span id="xdx_90B_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsRiskFreeInterestRate_pid_dp_uPure_c20170528__20170528__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--DrYunhaoChenMember_zIoM4boWty69"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsRiskFreeInterestRate" contextRef="From2017-05-282017-05-28_custom_DrYunhaoChenMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">1.84</ix:nonFraction></span>%; expected term of <span id="xdx_902_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardFairValueAssumptionsExpectedTerm1_dtY_c20170528__20170528__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--DrYunhaoChenMember_zPqPBaf9hHPc"><ix:nonNumeric contextRef="From2017-05-282017-05-28_custom_DrYunhaoChenMember" format="ixt-sec:duryear" name="us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardFairValueAssumptionsExpectedTerm1">2</ix:nonNumeric></span> years; exercise price of the options of $<span id="xdx_90C_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExercisePrice_c20170528__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--DrYunhaoChenMember_pdd"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExercisePrice" contextRef="AsOf2017-05-28_custom_DrYunhaoChenMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">1.50</ix:nonFraction></span>; volatility of <span id="xdx_909_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExpectedVolatilityRate_pid_dp_uPure_c20170528__20170528__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--DrYunhaoChenMember_zd5QMH8kdSPj"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExpectedVolatilityRate" contextRef="From2017-05-282017-05-28_custom_DrYunhaoChenMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">69.5</ix:nonFraction></span>%; and expected future dividends of $<span id="xdx_904_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExpectedDividendPayments_pp0p0_dxL_c20170528__20170528__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--DrYunhaoChenMember_zRHLvrassUie" title="::XDX::-"><span style="-sec-ix-hidden: xdx2ixbrl2014">Nil</span></span>.
On January 18, Dr. Yunhao Chen opted to exercise <span id="xdx_904_eus-gaap--StockIssuedDuringPeriodSharesStockOptionsExercised_c20220118__20220118__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--DrYunhaoChenMember_zj4vSjuIjn95"><ix:nonFraction name="us-gaap:StockIssuedDuringPeriodSharesStockOptionsExercised" contextRef="From2022-01-182022-01-18_custom_DrYunhaoChenMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">120,000</ix:nonFraction></span> shares options at the exercise price of $<span id="xdx_90E_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExercisePrice_iI_c20220118__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--DrYunhaoChenMember_zoR3DAVFCl86"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExercisePrice" contextRef="AsOf2022-01-18_custom_DrYunhaoChenMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">1.50</ix:nonFraction></span> and the Company issued <span id="xdx_908_eus-gaap--StockIssuedDuringPeriodSharesNewIssues_c20220118__20220118__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--DrYunhaoChenMember_znOw5EC5CYPg"><ix:nonFraction name="us-gaap:StockIssuedDuringPeriodSharesNewIssues" contextRef="From2022-01-182022-01-18_custom_DrYunhaoChenMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">120,000</ix:nonFraction></span>
common shares to Dr. Yunhao Chen.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">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 <span id="xdx_901_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsGrantsInPeriod_c20170528__20170528__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--MrSilongChenMember__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember_ze0FaiTUBq8e" title="Stock options grants to purchase"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsGrantsInPeriod" contextRef="From2017-05-282017-05-28_custom_MrSilongChenMember_us-gaap_CommonClassAMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">360,000</ix:nonFraction></span> Class A common shares, at an exercise price
of $<span id="xdx_90A_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsExercisableWeightedAverageExercisePrice_c20170528__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--MrSilongChenMember__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember_pdd" title="Stock options exercise purchase price"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsExercisableWeightedAverageExercisePrice" contextRef="AsOf2017-05-28_custom_MrSilongChenMember_us-gaap_CommonClassAMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">1.50</ix:nonFraction></span> per share. The grant was effective at the IPO date and the options vest at a rate of <span id="xdx_909_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsVestedAndExpectedToVestOutstandingNumber_iI_c20170528__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--MrSilongChenMember__us-gaap--SubsidiarySaleOfStockAxis__us-gaap--IPOMember_zhB16h3iaRv4" title="Options vested"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsVestedAndExpectedToVestOutstandingNumber" contextRef="AsOf2017-05-28_custom_MrSilongChenMember_us-gaap_IPOMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">10,000</ix:nonFraction></span> per month, beginning one month following
completion of the IPO. On October 31, 2019, Mr. Silong Chen voluntarily waived the remaining unvested <span id="xdx_909_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsNonvestedNumberOfShares_c20191031__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--MrSilongChenMember_pdd" title="Stock options non vested shares"><ix:nonFraction name="us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsNonvestedNumberOfShares" contextRef="AsOf2019-10-31_custom_MrSilongChenMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">140,000</ix:nonFraction></span> options.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">The
aggregate fair value of the options granted to Mr. Silong Chen was $<span id="xdx_909_ecustom--AggregatedFairValueOfOptionsGranted_c20170528__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--MrSilongChenMember_pp0p0" title="Aggregated fair value of options granted"><ix:nonFraction name="DOGZ:AggregatedFairValueOfOptionsGranted" contextRef="AsOf2017-05-28_custom_MrSilongChenMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">1,385,500</ix:nonFraction></span>. The fair value has been estimated using the <span id="xdx_901_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsMethodUsed_c20170528__20170528__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--MrSilongChenMember_z74D9QeG3cV7" title="Share-based payment award, fair value assumptions, method used"><ix:nonNumeric contextRef="From2017-05-282017-05-28_custom_MrSilongChenMember" name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsMethodUsed">Black-Scholes
pricing model</ix:nonNumeric></span> with the following weighted-average assumptions: market value of underlying Class A common shares of $<span id="xdx_90A_eus-gaap--SharePrice_iI_c20170528__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--MrSilongChenMember_zQm5U4MQ4lQ9" title="Share price"><ix:nonFraction name="us-gaap:SharePrice" contextRef="AsOf2017-05-28_custom_MrSilongChenMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">5.00</ix:nonFraction></span>; risk free rate
of <span id="xdx_90A_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsRiskFreeInterestRate_pid_dp_uPure_c20170528__20170528__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--MrSilongChenMember_zI1Wf9XjSgK9" title="Share-based payment award, fair value assumptions, risk free interest rate"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsRiskFreeInterestRate" contextRef="From2017-05-282017-05-28_custom_MrSilongChenMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">1.94</ix:nonFraction></span>%; expected term of <span id="xdx_909_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardFairValueAssumptionsExpectedTerm1_dtY_c20170528__20170528__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--MrSilongChenMember_zRVvQRi9PkS8" title="Share-based payment award fair value assumptions expected term"><ix:nonNumeric contextRef="From2017-05-282017-05-28_custom_MrSilongChenMember" format="ixt-sec:duryear" name="us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardFairValueAssumptionsExpectedTerm1">3</ix:nonNumeric></span> years; exercise price of the options of $<span id="xdx_90D_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExercisePrice_c20170528__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--MrSilongChenMember_pdd" title="Share-based payment award, fair value assumptions, exercise price"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExercisePrice" contextRef="AsOf2017-05-28_custom_MrSilongChenMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">1.50</ix:nonFraction></span>; volatility of <span id="xdx_90B_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExpectedVolatilityRate_pid_dp_uPure_c20170528__20170528__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--MrSilongChenMember_z0Jkp7WuGYW6" title="Share-based payment award, fair value assumptions, expected volatility rate"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExpectedVolatilityRate" contextRef="From2017-05-282017-05-28_custom_MrSilongChenMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">74.7</ix:nonFraction></span>%; and expected future dividends of $<span id="xdx_909_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExpectedDividendPayments_pp0p0_dxL_c20170528__20170528__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--MrSilongChenMember_zSigQo1HXBe5" title="Share-based payment award, fair value assumptions, expected dividend payments::XDX::-"><span style="-sec-ix-hidden: xdx2ixbrl2041">Nil</span></span>.
These options <span style="background-color: white">were expired</span>.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">On
January 26, 2023, the Board adopted resolutions to issue incentive stock options of total <span id="xdx_900_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsGrantsInPeriod_c20230126__20230126__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--MrSilongChenMember__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember_zzxGNUhrwIy9" title="Stock options grants to purchase"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsGrantsInPeriod" contextRef="From2023-01-262023-01-26_custom_MrSilongChenMember_us-gaap_CommonClassAMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">1,500,000</ix:nonFraction></span> to Mr. Silong Chen under the Company&#8217;s
2018 Stock Incentive Plan as part of compensations. These options shall be vested equally on January 26, 2023, 2024 and 2025 with exercise
price of $<span id="xdx_900_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsExercisableWeightedAverageExercisePrice_iI_c20230126__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--MrSilongChenMember__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember_zEk5M8ekvrxi" title="Stock options exercise purchase price"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsExercisableWeightedAverageExercisePrice" contextRef="AsOf2023-01-26_custom_MrSilongChenMember_us-gaap_CommonClassAMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">1</ix:nonFraction></span> per share.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">The
aggregate fair value of the options granted to Mr. Silong Chen was $<span id="xdx_90F_ecustom--AggregatedFairValueOfOptionsGranted_iI_pp0p0_c20230126__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--MrSilongChenMember_zNElflisA87h" title="Aggregated fair value of options granted"><ix:nonFraction name="DOGZ:AggregatedFairValueOfOptionsGranted" contextRef="AsOf2023-01-26_custom_MrSilongChenMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">941,813</ix:nonFraction></span>. The fair value has been estimated using the <span id="xdx_90F_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsMethodUsed_c20230126__20230126__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--MrSilongChenMember_zO9qKaUbU6F7" title="Share-based payment award, fair value assumptions, method used"><ix:nonNumeric contextRef="From2023-01-262023-01-26_custom_MrSilongChenMember" name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsMethodUsed">Black-Scholes
pricing model</ix:nonNumeric></span> with the following weighted-average assumptions: market value of underlying Class A common shares of $<span id="xdx_908_eus-gaap--SharePrice_iI_c20230126__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--MrSilongChenMember_z3ERQyWLhRp" title="Share price"><ix:nonFraction name="us-gaap:SharePrice" contextRef="AsOf2023-01-26_custom_MrSilongChenMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">0.97</ix:nonFraction></span>; risk free rate
of <span id="xdx_906_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsRiskFreeInterestRate_pid_dp_uPure_c20230126__20230126__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--MrSilongChenMember_z6e1ZH8xMhFl" title="Share-based payment award, fair value assumptions, risk free interest rate"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsRiskFreeInterestRate" contextRef="From2023-01-262023-01-26_custom_MrSilongChenMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">4.17</ix:nonFraction></span>% based upon the PRC&#8217;s Company&#8217;s bank lending rate; expected term of <span id="xdx_906_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardFairValueAssumptionsExpectedTerm1_dtY_c20230126__20230126__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--MrSilongChenMember_zK22XQJgRI13" title="Share-based payment award fair value assumptions expected term"><ix:nonNumeric contextRef="From2023-01-262023-01-26_custom_MrSilongChenMember" format="ixt-sec:duryear" name="us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardFairValueAssumptionsExpectedTerm1">5</ix:nonNumeric></span> years; exercise price of the options of $<span id="xdx_909_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExercisePrice_iI_c20230126__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--MrSilongChenMember_zG4BSb9qivk8" title="Share-based payment award, fair value assumptions, exercise price"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExercisePrice" contextRef="AsOf2023-01-26_custom_MrSilongChenMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">1.00</ix:nonFraction></span>;
volatility of <span id="xdx_909_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExpectedVolatilityRate_pid_dp_uPure_c20230126__20230126__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--MrSilongChenMember_ztQOuZmnRvhb" title="Share-based payment award, fair value assumptions, expected volatility rate"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExpectedVolatilityRate" contextRef="From2023-01-262023-01-26_custom_MrSilongChenMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">128.8</ix:nonFraction></span>% based upon the Company&#8217;s historical stock price; and expected future dividends of $<span id="xdx_907_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExpectedDividendPayments_pp0p0_dxL_c20230126__20230126__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--MrSilongChenMember_zEmgls1Tt0Sk" title="Share-based payment award, fair value assumptions, expected dividend payments::XDX::-"><span style="-sec-ix-hidden: xdx2ixbrl2061">Nil</span></span>. These options expire
on January 26, 2028.</span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">On
January 26, 2023, the Board adopted resolutions to issue incentive stock options of total <span id="xdx_904_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsGrantsInPeriod_c20230126__20230126__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--DrYunhaoChenMember__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember_ztMQS7FlhWG8" title="Stock options grants to purchase"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsGrantsInPeriod" contextRef="From2023-01-262023-01-26_custom_DrYunhaoChenMember_us-gaap_CommonClassAMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">150,000</ix:nonFraction></span> to Dr. Yunhao Chen under the Company&#8217;s
2018 Stock Incentive Plan as part of compensations. These options shall be vested equally on January 26, 2023, 2024 and 2025 with exercise
price of $<span id="xdx_901_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsExercisableWeightedAverageExercisePrice_iI_c20230126__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--DrYunhaoChenMember__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember_zXiVIrJbKAr1" title="Stock options exercise purchase price"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsExercisableWeightedAverageExercisePrice" contextRef="AsOf2023-01-26_custom_DrYunhaoChenMember_us-gaap_CommonClassAMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">1</ix:nonFraction></span> per share.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">The
aggregate fair value of the options granted to Dr. Yunhao Chen was $<span id="xdx_90C_ecustom--AggregatedFairValueOfOptionsGranted_iI_pp0p0_c20230126__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--DrYunhaoChenMember_z43Ru7KN5Zl7"><ix:nonFraction name="DOGZ:AggregatedFairValueOfOptionsGranted" contextRef="AsOf2023-01-26_custom_DrYunhaoChenMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">94,181</ix:nonFraction></span></span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">.
The fair value has been estimated using the <span id="xdx_90E_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsMethodUsed_c20230126__20230126__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--DrYunhaoChenMember_znLpwy5jTSw4"><ix:nonNumeric contextRef="From2023-01-262023-01-26_custom_DrYunhaoChenMember" name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsMethodUsed">Black-Scholes
pricing model</ix:nonNumeric></span></span> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">with the
following weighted-average assumptions: market value of underlying Class A common shares of $<span id="xdx_90C_eus-gaap--SharePrice_iI_c20230126__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--DrYunhaoChenMember_zvt09lSeFnz1"><ix:nonFraction name="us-gaap:SharePrice" contextRef="AsOf2023-01-26_custom_DrYunhaoChenMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">0.97</ix:nonFraction></span></span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">;
risk free rate of <span id="xdx_907_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsRiskFreeInterestRate_pid_dp_uPure_c20230126__20230126__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--DrYunhaoChenMember_zLoDnNh6snN2"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsRiskFreeInterestRate" contextRef="From2023-01-262023-01-26_custom_DrYunhaoChenMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">4.17</ix:nonFraction></span></span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">%;
expected term of <span id="xdx_903_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardFairValueAssumptionsExpectedTerm1_dtY_c20230126__20230126__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--DrYunhaoChenMember_z2LccqOlaHTk"><ix:nonNumeric contextRef="From2023-01-262023-01-26_custom_DrYunhaoChenMember" format="ixt-sec:duryear" name="us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardFairValueAssumptionsExpectedTerm1">10</ix:nonNumeric>
</span></span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">years; exercise price
of the options of $<span id="xdx_90C_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExercisePrice_iI_c20230126__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--DrYunhaoChenMember_zU5NL9fntmti"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExercisePrice" contextRef="AsOf2023-01-26_custom_DrYunhaoChenMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">1.00</ix:nonFraction></span></span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">;
volatility of <span id="xdx_905_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExpectedVolatilityRate_pid_dp_uPure_c20230126__20230126__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--DrYunhaoChenMember_zOsQoAKDhtN4"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExpectedVolatilityRate" contextRef="From2023-01-262023-01-26_custom_DrYunhaoChenMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">128.8</ix:nonFraction></span></span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">%;
and expected future dividends of $<span id="xdx_907_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExpectedDividendPayments_pp0p0_dxL_c20230126__20230126__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--DrYunhaoChenMember_zcgx94wDiNwj" title="::XDX::-"><span style="-sec-ix-hidden: xdx2ixbrl2073">Nil</span></span></span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">.
<span id="xdx_901_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsVestedNumberOfShares_pip0_c20230126__20230126__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--DrYunhaoChenMember_zvBysi1NCZf9" title="Number of options vested"><ix:nonFraction name="us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsVestedNumberOfShares" contextRef="From2023-01-262023-01-26_custom_DrYunhaoChenMember" format="ixt:numdotdecimal" decimals="INF" scale="0" unitRef="Shares">50,000</ix:nonFraction></span> options vested on January 26, 2023, and the unvested options were forfeited  due to the resignation of Dr. Yunhao Chen as the
Company&#8217;s Chief Financial Officer on August 1, 2023. There is no unrecognized compensation associated with these options.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">The
Company recorded $<span id="xdx_908_eus-gaap--ShareBasedCompensation_pp0p0_c20220701__20230630_zCwbZDzul3Ji" title="Share-based compensation for services"><ix:nonFraction name="us-gaap:ShareBasedCompensation" contextRef="From2022-07-01to2023-06-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">1,243,385</ix:nonFraction></span>,
$<span id="xdx_90D_eus-gaap--ShareBasedCompensation_pp0p0_c20210701__20220630_zwJeYUHYgH8h" title="Share-based compensation for services"><ix:nonFraction name="us-gaap:ShareBasedCompensation" contextRef="From2021-07-012022-06-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">11,831</ix:nonFraction> </span>and
$<span id="xdx_908_eus-gaap--ShareBasedCompensation_pp0p0_c20200701__20210630_zyE3sGOFNqh6" title="Share-based compensation for services"><ix:nonFraction name="us-gaap:ShareBasedCompensation" contextRef="From2020-07-012021-06-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">529,658</ix:nonFraction></span>
stock-based compensation expense for the years ended June 30, 2023, 2022 and 2021, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


<ix:exclude><!-- Field: Page; Sequence: 169; Value: 14 -->
    <div style="border-bottom: Black 1.5pt solid; margin-bottom: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="text-align: center; width: 100%">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->29<!-- Field: /Sequence --></td></tr></table></div>
    <div style="break-before: page; margin-top: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="width: 100%">&#160;</td></tr></table></div>
    <!-- Field: /Page --></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>DOGNESS
(INTERNATIONAL) CORPORATION</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
amounts in USD)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b>NOTE
14 &#8211; OPTIONS (continued)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="us-gaap:ScheduleOfShareBasedCompensationActivityTableTextBlock"><p id="xdx_896_eus-gaap--ScheduleOfShareBasedCompensationActivityTableTextBlock_z4IDLPRS3D8" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">The
following table summarized the Company&#8217;s share option activity:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; display: none; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_8B8_zx74XzpFduie">SCHEDULE
OF SHARE OPTION ACTIVITY</span></span></p>

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  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom; background-color: White">
    <td>Cancelled</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_98E_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsForfeituresInPeriod_iN_di_c20200701__20210630_zXJDvWJlm9xd" title="Number of Options, Cancelled" style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl2101">-</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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    <td style="border-bottom: Black 2.5pt double; text-align: left">&#160;</td><td id="xdx_984_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingNumber_iS_c20210701__20220630_z6SXkh1Klqc4" title="Number of Options Outstanding, Beginning Balance" style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingNumber" contextRef="AsOf2021-06-30" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">490,000</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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</ix:nonNumeric><p id="xdx_8AB_zTfNiASJjj2g" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="us-gaap:SegmentReportingDisclosureTextBlock"><p id="xdx_809_eus-gaap--SegmentReportingDisclosureTextBlock_z136cfiUVGI4" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b>NOTE
15 &#8211; <span id="xdx_824_zCbJrhZbW1Cl">SEGMENT</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">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&#8217;s chief
operating decision maker in order to allocate resources and assess performance of the segment.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">The
management of the Company concludes that it has only <span id="xdx_908_eus-gaap--NumberOfOperatingSegments_dc_uInteger_c20220701__20230630_zoSCAVw1YXWc" title="Number of reporting segment"><ix:nonFraction name="us-gaap:NumberOfOperatingSegments" contextRef="From2022-07-01to2023-06-30" format="ixt-sec:numwordsen" decimals="INF" unitRef="Integer">one</ix:nonFraction></span> reporting segment. The Company designs, process and manufactures fashionable
and high-quality leashes, collars and harnesses to complement cats&#8217; and dogs&#8217; appearances, as well as intelligent pet products.
The Company also provides dyeing services to external customers, as well as pet grooming service. The dyeing service is to utilize the
existing production capacity and the pet grooming service is immaterial. Therefore, the Company concludes that essentially the Company&#8217;s
products and services have similar economic characteristics with respect to raw materials, vendors, marketing and promotions, customers
and methods of distribution, hence the Company has only one reporting segment.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b><span style="text-decoration: underline">Revenue
by products and services</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="us-gaap:ScheduleOfRevenueByMajorCustomersByReportingSegmentsTableTextBlock"><p id="xdx_892_eus-gaap--ScheduleOfRevenueByMajorCustomersByReportingSegmentsTableTextBlock_z6dctyxLbgq2" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">The
summary of total revenues by product and service categories consisted of the following</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; display: none; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_8BE_zwnxbmGcQ64i">SCHEDULE OF REVENUES BY PRODUCT CATEGORIES</span></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Dyeing services</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td id="xdx_980_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_pp0p0_c20200701__20210630__srt--ProductOrServiceAxis__us-gaap--ServiceMember_zNXMGpzlrgJh" title="Revenues" style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax" contextRef="From2020-07-012021-06-30_us-gaap_ServiceMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">846,873</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 2.5pt">Total revenue</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_98D_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_pp0p0_c20220701__20230630_zz25r3ZqCOX5" title="Revenues" style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax" contextRef="From2022-07-01to2023-06-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">17,584,454</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
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    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_98D_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_pp0p0_c20200701__20210630_zHLMLTWo1VUc" title="Revenues" style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax" contextRef="From2020-07-012021-06-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">24,320,121</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
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</ix:nonNumeric><p id="xdx_8A9_zpeKmlrjU4Jl" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


<ix:exclude><!-- Field: Page; Sequence: 170; Value: 14 -->
    <div style="border-bottom: Black 1.5pt solid; margin-bottom: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="text-align: center; width: 100%">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->30<!-- Field: /Sequence --></td></tr></table></div>
    <div style="break-before: page; margin-top: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="width: 100%">&#160;</td></tr></table></div>
    <!-- Field: /Page --></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>DOGNESS
(INTERNATIONAL) CORPORATION</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
amounts in USD)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b>NOTE
15 &#8211; SEGMENT (continued)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b><span style="text-decoration: underline">Revenue
by geographic area</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="us-gaap:RevenueFromExternalCustomersByGeographicAreasTableTextBlock"><p id="xdx_89A_eus-gaap--RevenueFromExternalCustomersByGeographicAreasTableTextBlock_zn6U26XnfQuk" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">Geographic
information about the revenues, which are classified based on customers, is set out as follows:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; display: none; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span><span id="xdx_8B7_zqJGemdSru97">SCHEDULE
OF REVENUES BY GEOGRAPHIC INFORMATION</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold">Geographic location</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2023</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2021</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 52%; text-align: left">Sales to international markets</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td id="xdx_98F_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_pp0p0_c20220701__20230630__srt--StatementGeographicalAxis__custom--InternationalMarketsMember_z2ObkSa3hfHk" title="Total Revenues" style="width: 12%; text-align: right"><ix:nonFraction name="us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax" contextRef="From2022-07-012023-06-30_custom_InternationalMarketsMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">11,253,079</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td id="xdx_98F_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_pp0p0_c20210701__20220630__srt--StatementGeographicalAxis__custom--InternationalMarketsMember_zpgJDyS6LY3f" title="Total Revenues" style="width: 12%; text-align: right"><ix:nonFraction name="us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax" contextRef="From2021-07-012022-06-30_custom_InternationalMarketsMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">14,542,323</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td id="xdx_98C_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_pp0p0_c20200701__20210630__srt--StatementGeographicalAxis__custom--InternationalMarketsMember_zEPAdlsL4ia2" title="Total Revenues" style="width: 12%; text-align: right"><ix:nonFraction name="us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax" contextRef="From2020-07-012021-06-30_custom_InternationalMarketsMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">10,627,253</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1.5pt">Sales to China domestic markets</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td id="xdx_987_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_pp0p0_c20220701__20230630__srt--StatementGeographicalAxis__custom--ChinaMarketMember_zjTC76t6H3M" title="Total Revenues" style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax" contextRef="From2022-07-012023-06-30_custom_ChinaMarketMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">6,331,375</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td id="xdx_989_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_pp0p0_c20210701__20220630__srt--StatementGeographicalAxis__custom--ChinaMarketMember_zV0x8hoc7QId" title="Total Revenues" style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax" contextRef="From2021-07-012022-06-30_custom_ChinaMarketMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">12,552,874</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td id="xdx_987_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_pp0p0_c20200701__20210630__srt--StatementGeographicalAxis__custom--ChinaMarketMember_zZTV7YM0eQD6" title="Total Revenues" style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax" contextRef="From2020-07-012021-06-30_custom_ChinaMarketMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">13,692,868</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 2.5pt">Total revenue</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_982_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_pp0p0_c20220701__20230630_zvX4pPMUsZta" title="Total Revenues" style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax" contextRef="From2022-07-01to2023-06-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">17,584,454</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_982_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_pp0p0_c20210701__20220630_zcIkFG26p6Vb" title="Total Revenues" style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax" contextRef="From2021-07-012022-06-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">27,095,197</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td id="xdx_980_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_pp0p0_c20200701__20210630_zWI9NymhVTw9" title="Total Revenues" style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax" contextRef="From2020-07-012021-06-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">24,320,121</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
  </table>

</ix:nonNumeric><p id="xdx_8A3_znQXO0Bo1494" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="us-gaap:ConcentrationRiskDisclosureTextBlock"><p id="xdx_809_eus-gaap--ConcentrationRiskDisclosureTextBlock_zb9bw1C5TtXh" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b>NOTE
16 &#8211; <span id="xdx_826_zXtTAxTzOOV6">CONCENTRATIONS AND CREDIT RISK</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">A
majority of the Company&#8217;s expense transactions are denominated in RMB and a significant portion of the Company and its subsidiaries&#8217;
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&#8217;s
Bank of China (&#8220;PBOC&#8221;). Remittances in currencies other than RMB by the Company in China must be processed through the PBOC
or other China foreign exchange regulatory bodies which require certain supporting documentation in order to effect the remittance.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">As
of June 30, 2023 and 2022, $<span id="xdx_908_eus-gaap--CashEquivalentsAtCarryingValue_iI_pp0p0_c20230630_zCpHFu09c4Ka" title="Cash and cash equivalents"><ix:nonFraction name="us-gaap:CashEquivalentsAtCarryingValue" contextRef="AsOf2023-06-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">271,636</ix:nonFraction></span> and $<span id="xdx_90A_eus-gaap--CashEquivalentsAtCarryingValue_iI_pp0p0_c20220630_zA9XXU8mKMRf" title="Cash and cash equivalents"><ix:nonFraction name="us-gaap:CashEquivalentsAtCarryingValue" contextRef="AsOf2022-06-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">423,172</ix:nonFraction></span> of the Company&#8217;s cash and cash equivalents was on deposit at financial institutions
in mainland China 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&#8217;s short-term investments deposited with PRC banks are also
not insured.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">As
of June 30, 2023, two customers aggregately accounted for <span id="xdx_90A_eus-gaap--ConcentrationRiskPercentage1_pid_dp_uPure_c20220701__20230630__srt--MajorCustomersAxis__custom--TwoCustomersMember__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--AccountsReceivableMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember_zpljUri5UM34" title="Concentration Risk, Percentage"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2022-07-012023-06-30_custom_TwoCustomersMember_us-gaap_AccountsReceivableMember_us-gaap_CustomerConcentrationRiskMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">54.6</ix:nonFraction></span>% of the Company&#8217;s total accounts receivable, with related party
customer, Dogness Network accounted for <span id="xdx_901_eus-gaap--ConcentrationRiskPercentage1_pid_dp_uPure_c20220701__20230630__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--AccountsReceivableMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember__dei--LegalEntityAxis__custom--DognessNetworkMember_zSf8av9LWtYi" title="Concentration Risk, Percentage"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2022-07-012023-06-30_us-gaap_AccountsReceivableMember_us-gaap_CustomerConcentrationRiskMember_custom_DognessNetworkMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">38.7</ix:nonFraction></span>%, and one third party customer accounted for <span id="xdx_909_eus-gaap--ConcentrationRiskPercentage1_pid_dp_uPure_c20220701__20230630__srt--MajorCustomersAxis__custom--CustomerMember__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--AccountsReceivableMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember_zUo9KDNlkoFc" title="Concentration Risk, Percentage"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2022-07-012023-06-30_custom_CustomerMember_us-gaap_AccountsReceivableMember_us-gaap_CustomerConcentrationRiskMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">15.9</ix:nonFraction></span>% of the Company&#8217;s total accounts
receivable, respectively. As of June 30, 2022, two customers aggregately accounted for <span id="xdx_901_eus-gaap--ConcentrationRiskPercentage1_pid_dp_uPure_c20210701__20220630__srt--MajorCustomersAxis__custom--TwoCustomersMember__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--AccountsReceivableMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember_z6YktGlXfulf" title="Concentration Risk, Percentage"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2021-07-012022-06-30_custom_TwoCustomersMember_us-gaap_AccountsReceivableMember_us-gaap_CustomerConcentrationRiskMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">57.4</ix:nonFraction></span>% of the Company&#8217;s total accounts receivable,
with related party customer, Dogness Network accounted for <span id="xdx_90F_eus-gaap--ConcentrationRiskPercentage1_pid_dp_uPure_c20210701__20220630__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--AccountsReceivableMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember__dei--LegalEntityAxis__custom--DognessNetworkMember_z9Cdv0k3Mcz" title="Concentration Risk, Percentage"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2021-07-012022-06-30_us-gaap_AccountsReceivableMember_us-gaap_CustomerConcentrationRiskMember_custom_DognessNetworkMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">37.7</ix:nonFraction></span>%, and one third party customer accounted for <span id="xdx_909_eus-gaap--ConcentrationRiskPercentage1_pid_dp_uPure_c20210701__20220630__srt--MajorCustomersAxis__custom--CustomerMember__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--AccountsReceivableMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember_zpC6eIPf9n1d" title="Concentration Risk, Percentage"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2021-07-012022-06-30_custom_CustomerMember_us-gaap_AccountsReceivableMember_us-gaap_CustomerConcentrationRiskMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">19.7</ix:nonFraction></span>% of the Company&#8217;s
total accounts receivable, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">As
of June 30, 2023, two third party suppliers accounted for <span id="xdx_905_eus-gaap--ConcentrationRiskPercentage1_pid_dp_uPure_c20220701__20230630__srt--MajorCustomersAxis__custom--SupplierOneMember__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--AccountsPayableMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--SupplierConcentrationRiskMember_zv4kxPAmK5H6" title="Concentration Risk, Percentage"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2022-07-012023-06-30_custom_SupplierOneMember_us-gaap_AccountsPayableMember_us-gaap_SupplierConcentrationRiskMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">13.7</ix:nonFraction></span> and <span id="xdx_906_eus-gaap--ConcentrationRiskPercentage1_pid_dp_uPure_c20220701__20230630__srt--MajorCustomersAxis__custom--SupplierTwoMember__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--AccountsPayableMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--SupplierConcentrationRiskMember_z9CSyDLi21o4" title="Concentration Risk, Percentage"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2022-07-012023-06-30_custom_SupplierTwoMember_us-gaap_AccountsPayableMember_us-gaap_SupplierConcentrationRiskMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">11.2</ix:nonFraction></span>% of the Company&#8217;s total account payable. As of June 30,
2022, one related party supplier, Linsun, accounted for <span id="xdx_901_eus-gaap--ConcentrationRiskPercentage1_pid_dp_uPure_c20210701__20220630__srt--MajorCustomersAxis__custom--SupplierOneMember__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--AccountsPayableMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--SupplierConcentrationRiskMember_zAxBXJuJeIc3" title="Concentration Risk, Percentage"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2021-07-012022-06-30_custom_SupplierOneMember_us-gaap_AccountsPayableMember_us-gaap_SupplierConcentrationRiskMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">27.6</ix:nonFraction></span>% of the Company&#8217;s total account payable, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">For
the years ended June 30, 2023, 2022 and 2021, sales to the customers outside of China accounted for <span id="xdx_907_eus-gaap--ConcentrationRiskPercentage1_pid_dp_uPure_c20220701__20230630__srt--MajorCustomersAxis__custom--CustomersMember__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--SalesRevenueNetMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember_zL0FtqfuKh47" title="Concentration Risk, Percentage"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2022-07-012023-06-30_custom_CustomersMember_us-gaap_SalesRevenueNetMember_us-gaap_CustomerConcentrationRiskMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">64.0</ix:nonFraction></span>%, <span id="xdx_907_eus-gaap--ConcentrationRiskPercentage1_pid_dp_uPure_c20210701__20220630__srt--MajorCustomersAxis__custom--CustomersMember__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--SalesRevenueNetMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember_z0od56To22rl" title="Concentration Risk, Percentage"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2021-07-012022-06-30_custom_CustomersMember_us-gaap_SalesRevenueNetMember_us-gaap_CustomerConcentrationRiskMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">53.7</ix:nonFraction></span>% and <span id="xdx_909_eus-gaap--ConcentrationRiskPercentage1_pid_dp_uPure_c20200701__20210630__srt--MajorCustomersAxis__custom--CustomersMember__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--SalesRevenueNetMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember_zbPAofELWCY9" title="Concentration Risk, Percentage"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2020-07-012021-06-30_custom_CustomersMember_us-gaap_SalesRevenueNetMember_us-gaap_CustomerConcentrationRiskMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">43.7</ix:nonFraction></span>% of the Company&#8217;s
total revenue, respectively. For the year ended June 30, 2023, four customers accounted for <span id="xdx_903_eus-gaap--ConcentrationRiskPercentage1_pid_dp_uPure_c20220701__20230630__srt--MajorCustomersAxis__custom--CustomersOneMember__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--SalesRevenueNetMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember_zd3hNUbo8O4h" title="Concentration Risk, Percentage"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2022-07-012023-06-30_custom_CustomersOneMember_us-gaap_SalesRevenueNetMember_us-gaap_CustomerConcentrationRiskMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">15.4</ix:nonFraction></span>%, <span id="xdx_90E_eus-gaap--ConcentrationRiskPercentage1_pid_dp_uPure_c20220701__20230630__srt--MajorCustomersAxis__custom--CustomersTwoMember__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--SalesRevenueNetMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember_zMej6VqicKrj" title="Concentration Risk, Percentage"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2022-07-012023-06-30_custom_CustomersTwoMember_us-gaap_SalesRevenueNetMember_us-gaap_CustomerConcentrationRiskMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">11.6</ix:nonFraction></span>%, <span id="xdx_90A_eus-gaap--ConcentrationRiskPercentage1_pid_dp_uPure_c20220701__20230630__srt--MajorCustomersAxis__custom--CustomersThreeMember__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--SalesRevenueNetMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember_zjr6zmJgEcl5" title="Concentration Risk, Percentage"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2022-07-012023-06-30_custom_CustomersThreeMember_us-gaap_SalesRevenueNetMember_us-gaap_CustomerConcentrationRiskMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">8.8</ix:nonFraction></span>% and <span id="xdx_902_eus-gaap--ConcentrationRiskPercentage1_pid_dp_uPure_c20220701__20230630__srt--MajorCustomersAxis__custom--CustomersFourMember__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--SalesRevenueNetMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember_zNxSmT0QSMAg" title="Concentration Risk, Percentage"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2022-07-012023-06-30_custom_CustomersFourMember_us-gaap_SalesRevenueNetMember_us-gaap_CustomerConcentrationRiskMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">5.3</ix:nonFraction></span>% of the Company&#8217;s
total revenue, respectively. For the year ended June 30, 2022, four customers accounted for <span id="xdx_901_eus-gaap--ConcentrationRiskPercentage1_pid_dp_uPure_c20210701__20220630__srt--MajorCustomersAxis__custom--CustomersOneMember__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--SalesRevenueNetMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember_zVctCoCf5Pbc" title="Concentration Risk, Percentage"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2021-07-012022-06-30_custom_CustomersOneMember_us-gaap_SalesRevenueNetMember_us-gaap_CustomerConcentrationRiskMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">23.4</ix:nonFraction></span>%, <span id="xdx_904_eus-gaap--ConcentrationRiskPercentage1_pid_dp_uPure_c20210701__20220630__srt--MajorCustomersAxis__custom--CustomersTwoMember__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--SalesRevenueNetMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember_zhnTMAuT0D63" title="Concentration Risk, Percentage"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2021-07-012022-06-30_custom_CustomersTwoMember_us-gaap_SalesRevenueNetMember_us-gaap_CustomerConcentrationRiskMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">6.7</ix:nonFraction></span>%, <span id="xdx_903_eus-gaap--ConcentrationRiskPercentage1_pid_dp_uPure_c20210701__20220630__srt--MajorCustomersAxis__custom--CustomersThreeMember__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--SalesRevenueNetMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember_z8mlIyX74sH2" title="Concentration Risk, Percentage"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2021-07-012022-06-30_custom_CustomersThreeMember_us-gaap_SalesRevenueNetMember_us-gaap_CustomerConcentrationRiskMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">6.7</ix:nonFraction></span>% and <span id="xdx_901_eus-gaap--ConcentrationRiskPercentage1_pid_dp_uPure_c20210701__20220630__srt--MajorCustomersAxis__custom--CustomersFourMember__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--SalesRevenueNetMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember_zJRQ3rlDwdJ2" title="Concentration Risk, Percentage"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2021-07-012022-06-30_custom_CustomersFourMember_us-gaap_SalesRevenueNetMember_us-gaap_CustomerConcentrationRiskMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">5.7</ix:nonFraction></span>% of the Company&#8217;s
total revenue, respectively. For the year ended June 30, 2021, three customers accounted for <span id="xdx_905_eus-gaap--ConcentrationRiskPercentage1_pid_dp_uPure_c20200701__20210630__srt--MajorCustomersAxis__custom--CustomersOneMember__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--SalesRevenueNetMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember_zzu58oe0aaN9" title="Concentration Risk, Percentage"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2020-07-012021-06-30_custom_CustomersOneMember_us-gaap_SalesRevenueNetMember_us-gaap_CustomerConcentrationRiskMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">32.0</ix:nonFraction></span>%, <span id="xdx_900_eus-gaap--ConcentrationRiskPercentage1_pid_dp_uPure_c20200701__20210630__srt--MajorCustomersAxis__custom--CustomersTwoMember__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--SalesRevenueNetMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember_zVd7h7tDavV7" title="Concentration Risk, Percentage"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2020-07-012021-06-30_custom_CustomersTwoMember_us-gaap_SalesRevenueNetMember_us-gaap_CustomerConcentrationRiskMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">9.1</ix:nonFraction></span>% and <span id="xdx_90C_eus-gaap--ConcentrationRiskPercentage1_pid_dp_uPure_c20200701__20210630__srt--MajorCustomersAxis__custom--CustomersThreeMember__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--SalesRevenueNetMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember_zDjgyHDlkZL" title="Concentration Risk, Percentage"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2020-07-012021-06-30_custom_CustomersThreeMember_us-gaap_SalesRevenueNetMember_us-gaap_CustomerConcentrationRiskMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">6.9</ix:nonFraction></span>% of the Company&#8217;s
total revenue, respectively</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">For
the year ended June 30, 2023, one third party accounted for <span id="xdx_906_eus-gaap--ConcentrationRiskPercentage1_pid_dp_uPure_c20220701__20230630__srt--MajorCustomersAxis__custom--ThirdPartyOneMember__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--AssetsTotalMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--SupplierConcentrationRiskMember_zQDZDGsdrtFg"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2022-07-012023-06-30_custom_ThirdPartyOneMember_us-gaap_AssetsTotalMember_us-gaap_SupplierConcentrationRiskMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">34.1</ix:nonFraction></span>% of the Company&#8217;s total raw materials purchases. For the year
ended June 30, 2022, one related party Linsun accounted for <span id="xdx_909_eus-gaap--ConcentrationRiskPercentage1_pid_dp_uPure_c20210701__20220630__srt--MajorCustomersAxis__custom--RelatedPartyOneMember__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--AssetsTotalMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--SupplierConcentrationRiskMember_z5BnkANBx6Zg"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2021-07-012022-06-30_custom_RelatedPartyOneMember_us-gaap_AssetsTotalMember_us-gaap_SupplierConcentrationRiskMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">30.9</ix:nonFraction></span>% of the Company&#8217;s total raw materials purchases. For the year
ended June 30, 2021, one related party Linsun accounted for <span id="xdx_90C_eus-gaap--ConcentrationRiskPercentage1_pid_dp_uPure_c20200701__20210630__srt--MajorCustomersAxis__custom--RelatedPartyOneMember__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--AssetsTotalMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--SupplierConcentrationRiskMember_zWqrNDD4ul88"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2020-07-012021-06-30_custom_RelatedPartyOneMember_us-gaap_AssetsTotalMember_us-gaap_SupplierConcentrationRiskMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">26.9</ix:nonFraction></span>% of the Company&#8217;s total raw materials purchases.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2022-07-01to2023-06-30" escape="true" name="us-gaap:SubsequentEventsTextBlock"><p id="xdx_80F_eus-gaap--SubsequentEventsTextBlock_zLus5VsVKJfi" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b>NOTE
17 &#8211; <span id="xdx_82B_zBC6aymWrYzi">SUBSEQUENT EVENTS</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company has evaluated the impact of events that have occurred subsequent to June 30, 2023, through the issuance date of the consolidated
financial statements, and concluded that no subsequent events have occurred that would require recognition in the consolidated financial
statements or disclosure in the notes to the consolidated financial statements.</span></p>

</ix:nonNumeric><p id="xdx_81D_zrrcTwpQqCLk" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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[{"type": "20-F", "sequence": "1", "filename": "form20-f.htm", "secsgml_size_bytes": 2793541}]
{"company-data": {"conformed-name": "Dogness (International) Corp", "cik": "0001707303", "assigned-sic": "3990", "irs-number": "000000000", "state-of-incorporation": "D8", "fiscal-year-end": "0630"}, "filing-values": {"form-type": "20-F", "act": "34", "file-number": "001-38304", "film-number": "231321601"}, "business-address": {"street1": "NO. 16 N. DONGKE ROAD", "street2": "TONGSHA INDUSTRIAL ZONE", "city": "DONGGUAN, GUANGDONG", "state": "F4", "zip": "523217", "phone": "86 769 88753300"}, "mail-address": {"street1": "NO. 16 N. DONGKE ROAD", "street2": "TONGSHA INDUSTRIAL ZONE", "city": "DONGGUAN, GUANGDONG", "state": "F4", "zip": "523217"}}
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
20-F
(Mark
One)
☐
REGISTRATION STATEMENT PURSUANT TO SECTION 12(B) OR 12(G) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the fiscal year ended
June 30
,
2023
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
☐
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date
of event requiring this shell company report
For
the transition period from            to
Commission
file number
001-38304
Dogness
(International) Corporation
(Exact
name of Registrant as specified in its charter)
British
Virgin Islands
(Jurisdiction
of incorporation or organization)
Tongsha
Industrial Estate
,
East District
Dongguan
,
Guangdong
523217
People's
Republic of
China
(Address
of principal executive offices)
Aihua
Cao, Chief Financial Officer
Telephone:
(+86)
18820609835
of08@dogness.com
Tongsha Industrial Estate, East District
Dongguan
,
Guangdong
523217
People's
Republic of
China
Securities
registered or to be registered pursuant to Section 12(b) of the Act:
Title
    of each class
Name
    of each exchange on which registered
Common
    Shares, $0.002 par value per share
NASDAQ
Global Market
Securities
registered or to be registered pursuant to Section 12(g) of the Act:
None
Securities
for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
Indicate
the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered
by the annual report:
31,055,259
Class A Common Shares and
9,069,000
Class B Common Shares.
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
☐
Yes ☒
No
If
this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934.
☐
Yes ☒
No
Indicate
by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
☒
Yes
☐ No
Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data
File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant was required to submit and post such files).
☒
Yes
☐ No
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth
company. See definition of "large accelerated filer, "accelerated filer," and "emerging growth company"
in Rule 12b-2 of the Exchange Act.
Large
    accelerated filer ☐
Accelerated
    filer ☐
Non-accelerated
    filer
☒
Emerging
    growth company
☐
If
an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant
has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided
pursuant to Section 13(a) of the Exchange Act. ☐
†
The term "new or revised financial accounting standard" refers to any update issued by the Financial Accounting Standards
Board to its Accounting Standards Codification after April 5, 2012.
If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements.
☐
Indicate
by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b).
☐
Indicate
by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP
☒
International
    Financial Reporting Standards as issued
by
    the International Accounting Standards Board ☐
Other
    ☐
If
"Other" has been checked in response to the previous question, indicate by check mark which financial statement item the
registrant has elected to follow.
☐
Item 17 ☐ Item 18
If
this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities
Exchange Act of 1934).
☐
Yes ☒
No
(APPLICABLE
ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Indicate
by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
☐
Yes ☐ No
Table
of Contents
Part I
Item
    1.
Identity of Directors, Senior Management and Advisers
4
Item
    2.
Offer Statistics and Expected Timetable
4
Item
    3.
Key Information
4
Item
    4.
Information on the Company
53
Item
    4A.
Unresolved Staff Comments
72
Item
    5.
Operating and Financial Review and Prospects
72
Item
    6.
Directors, Senior Management and Employees
97
Item
    7.
Major Shareholders and Related Party Transactions
118
Item
    8.
Financial Information
122
Item
    9.
The Offer and Listing
123
Item
    10.
Additional Information
123
Item
    11.
Quantitative and Qualitative Disclosures About Market Risk
130
Item
    12.
Description of Securities Other than Equity Securities
131
Part II
Item
    13.
Defaults, Dividend Arrearages and Delinquencies
131
Item
    14.
Material Modifications to the Rights of Securities Holders and Use of Proceeds
131
Item
    15.
Controls and Procedures
131
Item
    16.
[Reserved]
132
Item
    16A.
Audit Committee Financial Expert
132
Item
    16B.
Code of Ethics
132
Item
    16C.
Principal Accountant Fees and Services
132
Item
    16D.
Exemptions from the Listing Standards for Audit Committees
133
Item
    16E.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
133
Item
    16F.
Change in Registrant's Certifying Accountant
133
Item
    16G.
Corporate Governance
133
Item
    16H.
Mine Safety Disclosure
134
Part III.
Item
    17.
Financial Statements
135
Item
    18.
Financial Statements
135
Item
    19.
Exhibits
135
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
Statements
in this annual report with respect to the Company's current plans, estimates, strategies and beliefs and other statements that
are not historical facts are forward-looking statements about the future performance of the Company. Forward-looking statements include,
but are not limited to, those statements using words such as "believe," "expect," "plans," "strategy,"
"prospects," "forecast," "estimate," "project," "anticipate," "aim,"
"intend," "seek," "may," "might," "could" or "should," and words
of similar meaning in connection with a discussion of future operations, financial performance, events or conditions. From time to time,
oral or written forward-looking statements may also be included in other materials released to the public. These statements are based
on management's assumptions, judgments and beliefs in light of the information currently available to it. The Company cautions
investors that a number of important risks and uncertainties could cause actual results to differ materially from those discussed in
the forward-looking statements, including but not limited to, our ability to continue as a going concern, product and service demand
and acceptance, changes in technology, economic conditions, the impact of competition and pricing, government regulation, and other risks
contained in reports filed by the company with the Securities and Exchange Commission. Therefore, investors should not place undue reliance
on such forward-looking statements. Actual results may differ significantly from those set forth in the forward-looking statements.
All
such forward-looking statements, whether written or oral, and whether made by or on behalf of the company, are expressly qualified by
the cautionary statements and any other cautionary statements which may accompany the forward-looking statements. In addition, the company
disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.
Part
I
We
are not a Chinese operating company but a British Virgin Islands holding company with operations conducted by our subsidiaries
established in Delaware, mainland China, Hong Kong Special Administrative Region of the People's Republic of China and British
Virgin Islands. Therefore, investing in our securities involves unique and a high degree of risk. You should carefully read and
consider the risk factors of this report (beginning on page 8), especially the risk factors under the caption "Risks Related
to Our Corporate Structure and Operation" (beginning on Page 20
) and "Risks Related to Doing Business in
China" (beginning on Page 29).
Unless
otherwise indicated or the context requires otherwise, references in this prospectus to "China" or the "PRC"
are to the mainland of People's Republic of China, Taiwan, Hong Kong Special Administrative Region of the People's Republic
of China ("HKSAR" or "Hong Kong"), and the special administrative regions of Macau (for the purposes of this
prospectus only); "mainland China" are to the mainland of the People's Republic of China, excluding Taiwan Hong Kong,
and Macau (for the purposes of this prospectus only); "Mainland China Subsidiaries" refer to our subsidiaries incorporated
in mainland China, including Dogness Intelligent Technology (Dongguan) Co., Ltd., a mainland China company ("Dongguan Dogness"),
Dongguan Jiasheng Enterprise Co., Ltd., a mainland China company ("Dongguan Jiasheng"), Zhangzhou Meijia Metal Product Co.,
Ltd, a mainland China company ("Meijia"), and Dogness Intelligence Technology Co., Ltd., a mainland China company ("Intelligence
Guangzhou"); "Hong Kong Subsidiaries" refer to our subsidiaries incorporated in Hong Kong, including Jiasheng Enterprise
(Hongkong) Co., Limited, a Hong Kong company ("HK Jiasheng") and Dogness (Hongkong) Pet's Products Co., Limited, a
Hong Kong company ("HK Dogness"). We will also refer to all of our subsidiaries, as the "Subsidiaries".
The
Securities registered under the Securities Act and the Exchange Act are of the off-shore holding company Dogness (International) Corporation
(the "Company"), a British Virgin Islands company, which owns equity interests, directly or indirectly, of the operating
subsidiaries. Subsidiaries conduct operations in China and the holding company does not conduct operations in China.
We
are subject to legal and operational risks associated with being based in and having the majority of the company's operations in
mainland China and Hong Kong. These risks include, among others, the following:
●
PRC
    government interference
. The Chinese government may intervene or influence the operation of our Hong Kong and mainland China
    operating entities and exercise significant oversight and discretion over the conduct of their business and may intervene in or influence
    their operations at any time with little advance notice, or may exert more control over offerings conducted overseas and/or foreign
    investment in China-based issuers, which could result in a material change in our operations and/or the value of our Class A Common
    Shares. Any actions by the Chinese government to exert more oversight and control over offerings that are conducted overseas and/or
    foreign investment in China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer
    Securities to investors and cause the value of such securities to significantly decline or be worthless.
See Risk Factors –
    Risks Related to Doing Business in China
– "China's economic, political and social conditions, as well as changes
    in any government policies, laws and regulations may be quick with little advance notice and, could have a material adverse effect
    on our business and the value of our Class A Common Shares
" and "
The Chinese government exerts substantial influence
    over the manner in which we must conduct our business activities and may intervene or influence our operations at any time, which
    could result in a material change in our operations and the value of our Class A Common Shares"
and "
The Chinese
    government exerts oversight and control over overseas offerings and listing conducted by China-based issuers under the Listing Records
    Rules and/or the Confidentiality Provisions, which could significantly limit or completely hinder our ability to offer or continue
    to offer our Class A Common Shares to investors and could cause the value of our Class A Common Shares to significantly decline or
    become worthless
".
●
Uncertain
    PRC legal enforcement
.
The mainland China legal system is based on written statutes. Prior court decisions may be cited
    for reference but have limited precedential value. We conduct our business primarily through our subsidiaries established in China.
    These subsidiaries are generally subject to laws and regulations applicable to foreign investment in China. However, since these
    laws and regulations are relatively new and the mainland China legal system continues to rapidly evolve, the interpretations of many
    laws, regulations and rules are not always uniform and enforcement of these laws, regulations and rules involves uncertainties, which
    may limit legal protections available to us.
See Risk Factors – Risks Related to Doing Business in China
– "Uncertainties
    with respect to the mainland China legal system could have a material adverse effect on us
".
●
Shareholder
    enforcement risk
.
Since we conduct a significant portion of our operations in mainland China, the majority of our assets
    are located in mainland China, and all of our directors, officers or senior management other than Yunhao Chen, are located in mainland
    China, it may be more difficult for shareholders to enforce liabilities and enforce judgments on those individuals. Our PRC legal
    counsel, Guangdong Jiamao Law Firm,  has advised us that mainland China does not have treaties providing for the reciprocal
    recognition and enforcement of judgments of courts with the Cayman Islands and many other countries and regions. Therefore, recognition
    and enforcement in mainland China of judgments of a court in any of these jurisdictions outside mainland China in relation to any
    matter not subject to a binding arbitration provision may be difficult or impossible.
See Risk Factors – Risks Related
    to Doing Business in China – "You may experience difficulties in effecting service of legal process, enforcing foreign
    judgments or bringing original actions in mainland China against us or Hong Kong or other foreign laws, and the ability of U.S. authorities
    to bring actions in mainland China may also be limited".
1
●
Repatriation
    of offering proceeds to PRC
. In utilizing the proceeds of this offering in the manner described in "Use of Proceeds,"
    as an offshore holding company of our PRC operating subsidiary, we may decide to make loans or additional contributions to our PRC
    subsidiary or the VIE. Certain governmental registrations, submissions or approvals need to be completed or obtained in this regard.
    Failure to complete such registrations, submissions or obtain such approvals, our ability to use the proceeds from our initial public
    offering and to capitalize or otherwise fund our PRC operations may be negatively affected.
See Risk Factors – Risks Related
    to Doing Business in China – "
We must remit the offering proceeds to China before they may be used to benefit our
    business in China, the process of which may be time-consuming, and we cannot assure that we can finish all necessary governmental
    registration processes in a timely manner"
and "
PRC regulation of loans and direct investment by offshore holding
    companies to mainland China entities may delay or prevent us from using the proceeds of this Offering to make loans or additional
    capital contributions to our Mainland China Subsidiary, which could materially and adversely affect our liquidity and our ability
    to fund and expand our business"
.
●
Restriction
    on currency conversion.
The PRC government imposes control on the convertibility of the RMB into foreign currencies and, in certain
    cases, the remittance of currency out of mainland China. We receive a majority of our revenues in Renminbi, which currently is not
    a freely convertible currency. Restrictions on currency conversion imposed by the PRC government may limit our ability to use revenues
    generated in Renminbi to fund our expenditures denominated in foreign currencies or our business activities outside mainland China.
See Risk Factors – Risks Related to Doing Business in China – "
Governmental control of currency conversion
    may limit our ability to use our revenues effectively and the ability of our Mainland China Subsidiaries to obtain financing
".
●
Restrictions
    on dividend payment
. As a holding company, we rely principally on dividends and other distributions on equity from our subsidiaries,
    including those based in China, for our cash requirements, including for services of any debt we may incur. Our Mainland China Subsidiaries'
    ability to distribute dividends is based upon their distributable earnings. Current PRC regulations permit our Mainland China Subsidiaries
    to pay dividends to their respective shareholders only out of their accumulated profits, if any, determined in accordance with PRC
    accounting standards and regulations. In addition, if our Mainland China Subsidiaries incur debt on their own behalf in the future,
    the instruments governing the debt may restrict their ability to pay dividends or make other payments to us. Any limitation on the
    ability of our Mainland China Subsidiaries to distribute dividends or other payments to their respective shareholders could materially
    and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends
    or otherwise fund and conduct our business.
See Risk Factors – Risks Related to Doing Business in China – "
We
    may rely on dividends and other distributions on equity paid by our subsidiaries, including those based in the PRC, for our cash
    and financing requirements we may have, and any limitation on the ability of our Mainland China Subsidiaries to make payments to
    us could have a material and adverse effect on our ability to conduct our business
".
●
Possibility
    to be classified as "Resident Enterprise."
Under the Enterprise Income Tax Law, Dogness may be classified as a "Resident
    Enterprise" of China. Such classification will likely result in unfavorable tax consequences to us and our shareholders outside
    of mainland China, including repayment of any underpayments and penalties for underpayment.
See Risk Factors – Risks Related
    to Doing Business in China – "
We may be classified as a "resident enterprise" for mainland China enterprise
    income tax purposes; such classification could result in unfavorable tax consequences to us and our non-mainland China shareholders"
.
Recently,
the PRC government initiated a series of regulatory actions and statements to regulate business operations in China with little advance
notice, including cracking down on illegal activities in the securities market, adopting new measures to impose filing requirements on
China-based companies for their initial public offerings or listings in overseas stock markets and extend the scope of cybersecurity
reviews, and expanding the efforts in anti-monopoly enforcement.
On
July 6, 2021, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council
jointly released the Opinions on Severely Cracking Down on Illegal Securities Activities According to Law, or the Opinions. The Opinions
emphasized the need to strengthen the administration over illegal securities activities, and the need to strengthen the supervision over
overseas listings by Chinese companies. Effective measures, such as promoting the construction of relevant regulatory systems will be
taken to deal with the risks and incidents of China-concept overseas listed companies, and cybersecurity and data privacy protection
requirements, etc. The Opinions and any related implementing rules to be enacted may subject us to compliance requirement in the future.
2
On
February 17, 2023, with the approval of the State Council, China Securities Regulatory Commission (the "CSRC") issued the
relevant system and rules for the management of overseas listing records, which will be implemented from March 31, 2023. A total of six
institutional rules (the "Listing Records Rules") have been issued this time, including the Trial Measures for the Administration
of Overseas Issuance and Listing of Securities by Domestic Enterprises (hereinafter referred to as the "Trial Measures")
and five supporting guidelines. Under the Listing Records Rules, a company established in mainland China seeking securities offering
and listing, by both direct or indirect means, in an overseas market is required to undertake filing procedures with the CSRC for its
overseas offering and listing activities. The Trial Measures also set forth a list of circumstance under which overseas offering and
listing by domestic companies established in mainland China is prohibit, including: (i) where such securities offering and listing is
explicitly prohibited by the PRC laws; (ii) where the intended securities offering and listing may endanger national security as reviewed
and determined by competent PRC authorities under the State Council in accordance with PRC laws; (iii) where the domestic company established
in mainland China, or its controlling shareholders and the actual controller, have committed crimes such as corruption, bribery, embezzlement,
misappropriation of property or undermining the order of the socialist market economy during the latest three (3) years; (iv) where the
domestic company established in mainland China seeking securities offering and listing is suspected of committing crimes or major violations
of laws and regulations, and is under investigation according to law, and no conclusion has yet been made thereof; and (v) where there
are material ownership disputes over equity held by the controlling shareholder of the company established in mainland China or by other
shareholders that are controlled by the controlling shareholder and/or actual controller. In accordance with the Trial Measures, the
listing and trading of our Class A Common Shares on Nasdaq is deemed as an indirect overseas offering and listing by domestic companies
established in mainland China, and thus, we are subject to the Listing Records Rules and the relevant filing procedures as required.
Further, we believe, as of the date of this annual report, none of the circumstances prohibiting the overseas offering and listing by
domestic companies established in mainland China as listed above applies to us, and we can offer and continue to offer our Class A Common
Shares on Nasdaq.
In
accordance with the Notice on the Arrangement for the Filing of Overseas Offering and Listing by Domestic Companies issued by the CSRC
along with the Listing Records Rules on the same day, we are deemed as an "Existing Issuer" because we have been listed overseas
before March 31, 2023. Under such Notice, we are not required to undertake the initial filing procedure immediately. However, we shall
carry out filing procedures as required in a timely manner for the subsequent events, including any further follow-up offerings on Nasdaq,
dual and/or secondary offering and listing on different overseas markets, and occurrence of material events including change of control,
investigations or sanctions imposed by overseas securities regulatory agencies or other relevant competent authorities, change of listing
status or transfer of listing segment, and voluntary or mandatory delisting. If we or our Mainland China Subsidiaries in future fail
to undertake filing procedures as stipulated in the Trial Measures, or offer and list securities in an overseas market in violation of
the Trial Measures, the CSRC may order rectification, issue warnings to us and/or our Mainland China Subsidiaries, and impose a fine
of between RMB 1,000,000 yuan and RMB 10,000,000 yuan. The CSRC may also inform its regulatory counterparts in the overseas jurisdictions,
such as the SEC, via cross-border securities regulatory cooperation mechanisms.
Further,
on February 24, 2023, the CSRC, together with Ministry of Finance, National Administration of State Secrets Protection, and National
Archives Administration of China, released the Provisions on Strengthening the Confidentiality and Archives Administration Related to
the Overseas Securities Offering and Listing by Domestic Enterprises (the "Confidentiality Provisions"), which will come
into effect on March 31, 2023 with the Trial Measures. Under the Confidentiality Provisions, domestic companies established in mainland
China seeking overseas offering and listing, by both direct and indirect means, are required to institute a sound confidentiality and
archives system. If such domestic companies established in mainland China intend to, either directly or through its overseas listed entity,
publicly disclose or provide to relevant individuals or entities including securities companies, securities service providers and overseas
regulators, any documents and materials that contain state secrets or working secrets of government agencies, they shall obtain approval
from competent authorities and complete the relevant filing procedure with the competent secrecy administrative department prior to their
disclosure or provision of such documents and materials. Further, if they provide or publicly disclose documents and materials which
may adversely affect national security or public interests, they shall strictly follow the corresponding procedures in accordance with
relevant laws and regulations. Once effective, any failure or perceived failure by us or our subsidiaries to comply with the above confidentiality
and archives administration requirements under the Confidentiality Provisions and other relevant PRC laws and regulations may cause relevant
entities to be held legally liable by competent authorities, and referred to the judicial organ to be investigated for criminal liability
if suspected of committing a crime. As of the date of this annual report, we believe that we and our subsidiaries have not provided or
publicly disclosed any documents or materials involving state secrets or work secrets of PRC government agencies or any of which may
adversely affect national security or public interests, to relevant securities companies, securities service institutions, overseas regulatory
agencies and other entities and individuals. We intend to strictly comply with the Confidentiality Provisions and other relevant PRC
laws and regulations in our offering and listing on Nasdaq in future.
3
However,
any failure of us or our Mainland China Subsidiaries to fully comply with the Listing Records Rules and/or the Confidentiality Provisions,
once effective, may significantly limit or completely hinder our ability to offer or continue to offer our Class A Common Shares on Nasdaq,
cause significant disruption to our business operations, severely damage our reputation, materially and adversely affect our financial
condition and results of operations and cause our Class A Common Shares to significantly decline in value or become worthless. See "Risk
Factor — Risks Related to Doing Business in China —
The Chinese government exerts oversight and control over overseas
offerings and listing conducted by China-based issuers under the Listing Records Rules and the Confidentiality Provisions, which could
significantly limit or completely hinder our ability to offer or continue to offer our Class A Common Shares to investors and could cause
the value of our Class A Common Shares to significantly decline or become worthless."
We
or our Subsidiaries may also be subject to PRC laws relating to the use, sharing, retention, security and transfer of confidential and
private information, such as personal information and other data. On November 14, 2021, the Cyberspace Administration of China ("CAC")
released the Regulations on the Network Data Security Management (Draft for Comments), or the Data Security Management Regulations Draft,
to solicit public opinion and comments till December 13, 2021, which has not been promulgated as of the date of this annual report. Pursuant
to the Data Security Management Regulations Draft, data processors holding more than one million users/users' individual information
shall be subject to cybersecurity review before listing abroad. Data processing activities refers to activities such as the collection,
retention, use, processing, transmission, provision, disclosure, or deletion of data. According to the latest amended Cybersecurity Review
Measures, which was promulgated on November 16, 2021 and became effective on February 15, 2022, an online platform operator holding more
than one million users/users' individual information shall be subject to cybersecurity review before listing abroad. As of the
date of this annual report, we have not been informed by any PRC governmental authority of any requirement that we or our Subsidiaries
file for approval for this offering. We don't believe that we or any of our Subsidiaries will be subject to either the amended
Cybersecurity Review Measures or the Data Security Management Regulations Draft since none of us hold more than one million users/users'
individual information. However, it is uncertain how the above mentioned new laws or regulations will be enacted, interpreted or implemented,
and whether it will affect us. Since the regulatory actions are new, it is highly uncertain how soon legislative or administrative regulation
making bodies will respond and what existing or new laws or regulations or detailed implementations and interpretations will be modified
or promulgated, if any, and the potential impact such modified or new laws and regulations will have on our Subsidiaries' daily
business operation, their ability to accept foreign investments, and our ability to continue to list or offer securities on an U.S. exchange.
See "Risk Factor —
Risks Related to Doing Business in China
—
The Chinese government exerts substantial influence
over the manner in which we must conduct our business activities and may intervene or influence our operations at any time, which could
result in a material change in our operations and the value of our Class A Common Shares.
"
On
February 7, 2021, the Anti-Monopoly Committee of the State Council promulgated the Anti-monopoly Guidelines for the Platform Economy
Sector, or the Anti-monopoly Guideline, aiming to improve anti-monopoly administration on online platforms. The Anti-monopoly Guideline,
operating as the compliance guidance under the then-existing PRC anti-monopoly regulatory regime for platform economy operators, specifically
prohibits certain acts of the platform economy operators that may have the effect of eliminating or limiting market competition, such
as concentration of undertakings. The PRC anti-monopoly regulatory regime started with the Anti-Monopoly Law promulgated by the Standing
Committee of the National People's Congress of China ("SCNPC") on August 30, 2007 and effective on August 1, 2008,
which requires that transactions which are deemed concentrations and involve parties with specified turnover thresholds must be cleared
by the Ministry of Commerce of China ("MOFCOM") before they can be completed. In addition, on February 3, 2011, the General
Office of the State Council promulgated a Notice on Establishing the Security Review System for Mergers and Acquisitions of Domestic
Enterprises by Foreign Investors, or Circular 6, which officially established a security review system for mergers and acquisitions of
domestic enterprises by foreign investors. Further, on August 25, 2011, MOFCOM promulgated the Regulations on Implementation of Security
Review System for the Merger and Acquisition of Domestic Enterprises by Foreign Investors, or the MOFCOM Security Review Regulations,
which became effective on September 1, 2011, to implement Circular 6. Under Circular 6, a security review is required for mergers and
acquisitions by foreign investors having "national defense and security" concerns and mergers and acquisitions by which foreign
investors may acquire the "de facto control" of domestic enterprises with "national security" concerns. Under
the MOFCOM Security Review Regulations, MOFCOM will focus on the substance and actual impact of the transaction when deciding whether
a specific merger or acquisition is subject to security review. If MOFCOM decides that a specific merger or acquisition is subject to
security review, it will submit it to the Inter-Ministerial Panel, an authority established under the Circular 6 led by the NDRC, and
MOFCOM under the leadership of the State Council, to carry out the security review. The regulations prohibit foreign investors from bypassing
the security review by structuring transactions through trusts, indirect investments, leases, loans, control through contractual arrangements
or offshore transactions.
Item
1. Identity of Directors, Senior Management and Advisers
Not
applicable for annual reports on Form 20-F.
Item
2. Offer Statistics and Expected Timetable
Not
applicable for annual reports on Form 20-F.
Item
3. Key Information
4
Dividend
Distributions and Cash Transfer among Dogness and the Subsidiaries
As
a holding company, we may rely on dividends and other distributions on equity paid by our subsidiaries, including those based in mainland
China, for our cash and financing requirements. If any of our Mainland China Subsidiaries incurs debt on its own behalf in the future,
the instruments governing such debt may restrict their ability to pay dividends to us. To date, none of the Subsidiaries has made any
dividends or distributions to Dogness, and Dogness has not made any dividends or distributions to our shareholders. We anticipate that
we will retain any earnings to support operations and to finance the growth and development of our business. Therefore, we do not expect
to pay Company cash dividends in the foreseeable future.   Under British Virgin Islands law, we may only pay dividends from
surplus (the excess, if any, at the time of the determination of the total assets of our company over the sum of our liabilities, as
shown in our books of account, plus our capital), and we must be solvent before and after the dividend payment in the sense that we will
be able to satisfy our liabilities as they become due in the ordinary course of business; and the realizable value of assets of our company
will not be less than the sum of our total liabilities, other than deferred taxes as shown on our books of account, and our capital.
If we determine to pay dividends on any of our Common Shares in the future, as a holding company, we will be dependent on receipt of
funds from our Hong Kong subsidiaries, HK Jiasheng and HK Dogness. Current PRC regulations permit the Mainland China Subsidiaries to
pay dividends to HK Dogness only out of their accumulated profits, if any, determined in accordance with Chinese accounting standards
and regulations. In addition, each of our subsidiaries in mainland China is required to set aside at least 10% of its after-tax profits
each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital. Each of such entity in mainland
China is also required to further set aside a portion of its after-tax profits to fund the employee welfare fund, although the amount
to be set aside, if any, is determined at the discretion of its board of directors. Although the statutory reserves can be used, among
other ways, to increase the registered capital and eliminate future losses in excess of retained earnings of the respective companies,
the reserve funds are not distributable as cash dividends except in the event of liquidation.
The
PRC government also imposes controls on the conversion of RMB into foreign currencies and, in certain cases, the remittance of currencies
out of mainland China. We receive a majority of our revenues in Renminbi, which currently is not a freely convertible currency. Restrictions
on currency conversion imposed by the PRC government may limit our ability to use revenues generated in Renminbi to fund our expenditures
denominated in foreign currencies or our business activities outside China. Under China's existing foreign exchange regulations,
Renminbi may be freely converted into foreign currency for payments relating to current account transactions, which include among other
things dividend payments and payments for the import of goods and services, by complying with certain procedural requirements. Our Mainland
China Subsidiaries are able to pay dividends in foreign currencies to us without prior approval from the related government agencies,
by complying with certain procedural requirements. Our Mainland China Subsidiaries may also retain foreign currency in their respective
current account bank accounts for use in payment of international current account transactions. However, we cannot assure you that the
PRC government will not at its discretion take measures in the future to restrict access to foreign currencies for current account transactions.
Conversion
of Renminbi into foreign currencies, and of foreign currencies into Renminbi, for payments relating to capital account transactions,
which principally includes investments and loans, generally requires the approval of China's State Administration of Foreign Exchange
("SAFE") or other relevant PRC governmental authorities. Any foreign loans procured by our Mainland China Subsidiaries is
required to be registered with SAFE or its local branches or satisfy relevant requirements. According to the relevant PRC regulations
on foreign-invested enterprises in China, capital contributions to our Mainland China Subsidiaries are subject to the approval of or
filing with State Administration for Market Regulation in its local branches, the Ministry of Commerce in its local branches and registration
with a local bank authorized by SAFE. For these capital account transactions, we must take the steps legally required under the PRC laws,
for example, we will open a special foreign exchange account, remit the offering proceeds into such special foreign exchange account,
and apply for settlement of the foreign exchange. The timing of the process is difficult to estimate because the efficiencies of different
SAFE branches can vary materially. In light of the various requirements imposed by PRC regulations on loans to, and direct investment
in, mainland China entities by offshore holding companies, we cannot assure you that we will be able to complete the necessary government
registrations or obtain the necessary government approvals on a timely basis, if at all, with respect to future loans by us to our Mainland
China Subsidiaries or with respect to future capital contributions by us to our Mainland China Subsidiaries. If we fail to complete such
registrations or obtain such approvals, our ability to use the proceeds from this offering and to capitalize or otherwise fund our mainland
China operations may be negatively affected, which could materially and adversely affect our liquidity, our ability to fund and expand
our business and our Common Shares. On the other hand, restrictions on the convertibility of the Renminbi for capital account transactions
could affect the ability of our Mainland China Subsidiaries to make investments overseas or to obtain foreign currency through debt or
equity financing, including by means of loans or capital contributions from us. We cannot assure you that the registration process will
not delay or prevent the conversion of Renminbi for use outside of China.  Currently, we have installed cash management policies
or procedures in place that dictate how funds are transferred, under an umbrella of corporate policies and financial reporting policies.
Even though our policies do not specifically address the limitations, as discussed above, on the amount of funds the Company can transfer
out of China, if we decide to transfer cash out of China in the future, all relevant transfers will be conducted in compliance with such
limitations. Please see "Risk Factor
—
Risks Related to Doing Business in China
— China's economic,
political and social conditions, as well as changes in any government policies, laws and regulations, could have a material adverse effect
on our business"; "
Risk Factor
—
Risks Related to Doing Business in China
— We may rely on
dividends and other distributions on equity paid by our subsidiaries, including those based in mainland China, for our cash and financing
requirements we may have, and any limitation on the ability of our Mainland China Subsidiaries to make payments to us could have a material
and adverse effect on our ability to conduct our business"; "
Risk Factor
—
Risks Related to Doing Business
in China
— PRC regulation of loans and direct investment by offshore holding companies to mainland China entities may delay
or prevent us from using the proceeds of this Offering to make loans or additional capital contributions to our Mainland China Subsidiary,
which could materially and adversely affect our liquidity and our ability to fund and expand our business"; "
Risk Factor
—
Risks Related to Doing Business in China
— Governmental control of currency conversion may limit our ability
to use our revenues effectively and the ability of our Mainland China Subsidiaries to obtain financing"; and
'Risk Factor
—
Risks Related to Doing Business in China
— We must remit the offering proceeds to China before they may
be used to benefit our business in China, the process of which may be time-consuming, and we cannot assure that we can finish all necessary
governmental registration processes in a timely manner.
"
5
In
addition, the transfer of funds among our Mainland China Subsidiaries are subject to the Provisions of the Supreme People's Court
on Several Issues Concerning the Application of Law in the Trial of Private Lending Cases (2020 Revision, the "Provisions on Private
Lending Cases"), which was implemented on August 20, 2020 to regulate the financing activities between natural persons, legal persons
and unincorporated organizations. The Provisions on Private Lending Cases does not prohibit using cash generated from one subsidiary
to fund the operations of another subsidiary in China.  As of the date of this annual report, no cash generated from one subsidiary
has been used to fund another subsidiary's operations, expect for the financing obtained by the Company be transferred to operating
entities for their operations. We have not been notified of any other restriction which could limit our Mainland China Subsidiaries'
ability to transfer cash between subsidiaries in China, and do not anticipate any difficulties or limitations in our ability to transfer
cash between subsidiaries. As of the date of this annual report, no cash generated from one subsidiary has been used to fund another
subsidiary's operations; for that reason, our cash management policies do not specifically address this type of transfers between
subsidiaries. We do not anticipate any occasions where cash generated from one subsidiary needs to be transferred to another subsidiary
and will comply with PRC laws discussed above should we decide to conduct such a transfer.
Cash
flow between Dogness and the Subsidiaries primarily consists of transfers from Dogness to these Subsidiaries for short-term working capital
loan, which is mainly used in payment of operating expenses and investments. To date, there are no other assets transferred between Dogness
and the Subsidiaries except for the below cash transfers:
●
For
    the year ended June 30, 2021, Dogness transferred $505,850 to the Delaware subsidiary, Dogness Group LLC, for short term working
    capital loan purpose and transferred $2,581,533 to HK Dogness for short term working capital loan purpose. The source of funds was
    the registered direct public offering we completed on January 20,2021 with net proceeds of $6.6 million. For the year ended June
    30, 2021, Dogness also received cash repayment transferred from HK Dogness in the amount of $304.
●
For
    the year ended June 30, 2022, Dogness transferred $186,500 to the Delaware subsidiary, Dogness Group LLC, for working capital loan
    purpose and transferred $15,577,896 to HK Dogness for working capital loan purpose. The source of the funds was mainly from the equity
    financing and the exercise of warrants in fiscal 2022. For the year ended June 30, 2022, Dogness also received cash payment transferred
    from HK Dogness in the amount of $1,999,787.
●
For
    the year ended June 30, 2023, Dogness transferred $13.3 million to HK Dogness for working capital loan purpose. The source of the
    funds was mainly from the equity financing and the exercise of warrants in fiscal 2022.
In
the future, cash proceeds raised from overseas financing activities may be transferred by Dogness to the Subsidiaries via capital contribution
or shareholder loans, as the case may be.
6
A.
Selected Financial Data
In
the table below, we provide you with historical selected financial data for the fiscal years ended June 30, 2023, 2022, and 2021. This
information is derived from our consolidated financial statements included elsewhere in this annual report. Historical results are not
necessarily indicative of the results that may be expected for any future period. When you read this historical selected financial data,
it is important that you read it along with the historical financial statements and related notes and "Item 5. Operating and Financial
Review and Prospects" included elsewhere in this annual report. Our audited consolidated financial statements are prepared and
presented in accordance with Generally Accepted Accounting Principles in the United States of America, or U.S. GAAP.
For Fiscal
For Fiscal
For Fiscal
Year Ended
Year Ended
Year Ended
June 30,
June 30,
June 30,
2023
2022
2021
US$
US$
US$
(audited)
(audited)
(audited)
Statement of operation data:
Revenues
$
17,584,454
$
27,095,197
$
24,320,121
Gross profit
3,661,288
10,139,065
9,155,213
Operating expenses
13,225,261
10,065,009
7,297,420
Income (loss) from operations
(9,563,973
)
74,056
1,857,793
Other income
877,050
164,208
82,695
Income taxes (benefit) expense
(1,227,449
)
(2,777,868
)
641,460
Net income (loss)
$
(7,459,474
)
$
3,016,132
$
1,299,028
Earnings (loss) per share, basic and diluted
$
(0.18
)
$
0.10
$
0.05
Weighted average Ordinary Shares outstanding (basic)
39,668,780
33,711,659
27,499,367
Balance
sheet data:
As of June 30,
2023
2022
2021
2020
2019
Current assets
$
14,003,843
$
23,354,676
$
14,266,131
$
11,627,458
$
25,922,624
Total assets
97,871,328
100,796,722
93,845,408
63,551,261
69,023,927
Current liabilities
9,317,966
6,485,021
21,262,335
10,769,734
8,072,423
Total liabilities
21,526,023
12,320,746
28,943,003
12,043,333
8,072,423
Total equity
$
76,345,305
$
88,475,976
$
64,902,405
$
51,507,928
$
60,951,504
Exchange
Rate Information
Our
financial information is presented in U.S. dollars. The financial position and results of the operations of HK Dogness, HK Jiasheng,
Dongguan Dogness, Dongguan Jiasheng, Meijia and Intelligence Guangzhou are determined using the Chinese Renminbi ("RMB"),
the local currency, as the functional currency. Dogness Japan uses Japanese Yen as the functional currency (the shares held in Dogness
Japan were sold on November 28, 2020 during the fiscal year ended June 30, 2021), while Dogness Overseas and Dogness Group use U.S Dollar
as their functional currency.
The
results of operations and the consolidated statements of cash flows denominated in foreign currencies are translated at the average rate
of exchange during the reporting period. Assets and liabilities denominated in foreign currencies at the balance sheet date are translated
at the applicable rates of exchange in effect at that date. The equity denominated in the functional currency is translated at the historical
rate of exchange at the time of capital contribution. Because cash flows are translated based on the average translation rate, amounts
related to assets and liabilities reported on the consolidated statements of cash flows will not necessarily agree with changes in the
corresponding balances on the consolidated balance sheets. Translation adjustments arising from the use of different exchange rates from
period to period are included as a separate component of accumulated other comprehensive income included in consolidated statements of
changes in equity. Gains and losses from foreign currency transactions are included in the consolidated statement of income and comprehensive
income.
7
The
relevant exchange rates are listed below:
June
    30, 2023
June
    30, 2022
June
    30, 2021
Year-end
    spot rate
US$1=RMB7.2513
US$1=RMB6.6981
US$1=RMB
    6.4566
US$1=JPY
    111.1
Average
    rate
US$1=RMB6.9536
US$1=RMB6.4554
US$1=RMB
    6.6221
US$1=JPY
    106.6
We
make no representation that any RMB or U.S. dollar amounts could have been, or could be, converted into U.S. dollars or RMB, as the case
may be, at any particular rate, or at all. The PRC government imposes control over its foreign currency reserves in part through direct
regulation of the conversion of RMB into foreign exchange and through restrictions on foreign trade. We do not currently engage in currency
hedging transactions.
The
following table sets forth information concerning exchange rates between the RMB and the U.S. dollar for the periods indicated.
Midpoint of Buy and Sell Prices for U.S. Dollar per RMB
Period
Period-End
Average
High
Low
2015
6.4917
6.2288
6.4917
6.0933
2016
6.9448
6.6441
7.0672
6.4494
2017
6.5074
6.7578
6.9535
6.4686
2018
6.8776
6.6163
7.1786
6.6822
2019
6.9618
6.9081
7.1786
6.6822
2020
6.5250
6.9042
7.1681
6.5208
2021
6.3839
6.4668
6.5716
6.3674
2022
6.8983
6.7328
7.3055
6.3094
2023
    (
through October 10, 2023
)
7.2954
7.0406
7.3430
6.7030
As
of October 10, 2023, the exchange rate is RMB 7.2954 to $1.00.
B.
Capitalization and Indebtedness
Not
applicable for annual reports on Form 20-F.
C.
Reasons for the Offer and Use of Proceeds
Not
applicable for annual reports on Form 20-F.
D.
Risk Factors
Before
you decide to purchase our Class A Common Shares, you should understand the high degree of risk involved. You should consider carefully
the following risks and other information in this report, including our consolidated financial statements and related notes. If any of
the following risks actually occur, our business, financial condition and operating results could be adversely affected. As a result,
the trading price of our Class A Common Shares could decline, perhaps significantly.
Please
also read carefully the section below entitled "Cautionary Note Regarding Forward-Looking Statements."
8
Summary
of Major Risk Factors
●
PRC
    government interference
. The Chinese government may intervene or influence the operation of our Hong Kong and mainland China
    operating entities and exercise significant oversight and discretion over the conduct of their business and may intervene in or influence
    their operations at any time with little advance notice, or may exert more control over offerings conducted overseas and/or foreign
    investment in China-based issuers, which could result in a material change in our operations and/or the value of our Class A Common
    Shares. Any actions by the Chinese government to exert more oversight and control over offerings that are conducted overseas and/or
    foreign investment in China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer
    Securities to investors and cause the value of such securities to significantly decline or be worthless.
See Risk Factors –
    Risks Related to Doing Business in China
– "China's economic, political and social conditions, as well as changes
    in any government policies, laws and regulations may be quick with little advance notice and, could have a material adverse effect
    on our business and the value of our Class A Common Shares
" and "
The Chinese government exerts substantial influence
    over the manner in which we must conduct our business activities and may intervene or influence our operations at any time, which
    could result in a material change in our operations and the value of our Class A Common Shares"
and "
The Chinese
    government exerts oversight and control over overseas offerings and listing conducted by China-based issuers under the Listing Records
    Rules and/or the Confidentiality Provisions, which could significantly limit or completely hinder our ability to offer or continue
    to offer our Class A Common Shares to investors and could cause the value of our Class A Common Shares to significantly decline or
    become worthless
".
●
Uncertain
    PRC legal enforcement
. The mainland China legal system is based on written statutes. Prior court decisions may be cited for reference
    but have limited precedential value. We conduct our business primarily through our subsidiaries established in China. These subsidiaries
    are generally subject to laws and regulations applicable to foreign investment in China. However, since these laws and regulations
    are relatively new and the mainland China legal system continues to rapidly evolve, the interpretations of many laws, regulations
    and rules are not always uniform and enforcement of these laws, regulations and rules involves uncertainties, which may limit legal
    protections available to us.
See Risk Factors – Risks Related to Doing Business in China
– "Uncertainties
    with respect to the mainland China legal system could have a material adverse effect on us
".
●
Shareholder
    enforcement risk
. Since we conduct a significant portion of our operations in mainland China, the majority of our assets are
    located in mainland China, and all of our directors, officers or senior management other than Yunhao Chen, are located in mainland
    China, it may be more difficult for shareholders to enforce liabilities and enforce judgments on those individuals. Our PRC legal
    counsel, Guangdong Jiamao Law Firm, has advised us that mainland China does not have treaties providing for the reciprocal
    recognition and enforcement of judgments of courts with the Cayman Islands and many other countries and regions. Therefore, recognition
    and enforcement in mainland China of judgments of a court in any of these jurisdictions outside mainland China in relation to any
    matter not subject to a binding arbitration provision may be difficult or impossible.
See Risk Factors – Risks Related
    to Doing Business in China – "You may experience difficulties in effecting service of legal process, enforcing foreign
    judgments or bringing original actions in mainland China against us or Hong Kong or other foreign laws, and the ability of U.S. authorities
    to bring actions in mainland China may also be limited".
●
Repatriation
    of offering proceeds to PRC
. In utilizing the proceeds of this offering in the manner described in "Use of Proceeds,"
    as an offshore holding company of our PRC operating subsidiary, we may decide to make loans or additional contributions to our PRC
    subsidiary or the VIE. Certain governmental registrations, submissions or approvals need to be completed or obtained in this regard.
    Failure to complete such registrations, submissions or obtain such approvals, our ability to use the proceeds from our initial public
    offering and to capitalize or otherwise fund our PRC operations may be negatively affected.
See Risk Factors – Risks Related
    to Doing Business in China – "
We must remit the offering proceeds to China before they may be used to benefit our
    business in China, the process of which may be time-consuming, and we cannot assure that we can finish all necessary governmental
    registration processes in a timely manner"
and "
PRC regulation of loans and direct investment by offshore holding
    companies to mainland China entities may delay or prevent us from using the proceeds of this Offering to make loans or additional
    capital contributions to our Mainland China Subsidiary, which could materially and adversely affect our liquidity and our ability
    to fund and expand our business"
.
9
●
Restriction
    on currency conversion.
The PRC government imposes control on the convertibility of the RMB into foreign currencies and, in certain
    cases, the remittance of currency out of mainland China. We receive a majority of our revenues in Renminbi, which currently is not
    a freely convertible currency. Restrictions on currency conversion imposed by the PRC government may limit our ability to use revenues
    generated in Renminbi to fund our expenditures denominated in foreign currencies or our business activities outside mainland China.
See Risk Factors – Risks Related to Doing Business in China – "
Governmental control of currency conversion
    may limit our ability to use our revenues effectively and the ability of our Mainland China Subsidiaries to obtain financing
".
●
Restrictions
    on dividend payment.
As a holding company, we rely principally on dividends and other distributions on equity from our subsidiaries,
    including those based in China, for our cash requirements, including for services of any debt we may incur. Our Mainland China Subsidiaries'
    ability to distribute dividends is based upon their distributable earnings. Current PRC regulations permit our Mainland China Subsidiaries
    to pay dividends to their respective shareholders only out of their accumulated profits, if any, determined in accordance with PRC
    accounting standards and regulations. In addition, if our Mainland China Subsidiaries incur debt on their own behalf in the future,
    the instruments governing the debt may restrict their ability to pay dividends or make other payments to us. Any limitation on the
    ability of our Mainland China Subsidiaries to distribute dividends or other payments to their respective shareholders could materially
    and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends
    or otherwise fund and conduct our business
. See Risk Factors – Risks Related to Doing Business in China – "
We
    may rely on dividends and other distributions on equity paid by our subsidiaries, including those based in the PRC, for our cash
    and financing requirements we may have, and any limitation on the ability of our Mainland China Subsidiaries to make payments to
    us could have a material and adverse effect on our ability to conduct our business
".
●
Possibility
    to be classified as "Resident Enterprise."
Under the Enterprise Income Tax Law, Dogness may be classified as a "Resident
    Enterprise" of China. Such classification will likely result in unfavorable tax consequences to us and our shareholders outside
    of mainland China, including repayment of any underpayments and penalties for underpayment.
See Risk Factors – Risks Related
    to Doing Business in China – "
We may be classified as a "resident enterprise" for mainland China enterprise
    income tax purposes; such classification could result in unfavorable tax consequences to us and our non-mainland China shareholders"
.
Risks
Related to Our Business
We
face risks related to health epidemics that could impact our sales and operating results.
Our
business could be adversely affected by the effects of a widespread outbreak of contagious disease, including the recent outbreak of
respiratory illness caused by a novel coronavirus first identified in Wuhan, Hubei Province, China. Any outbreak of contagious diseases,
and other adverse public health developments, particularly in China, could have a material and adverse effect on the business operations
of us and our Subsidiaries. These could include disruptions or restrictions on our ability to resume the general shipping agency services,
as well as temporary closures of our facilities and ports or the facilities of our customers and third-party service providers. Any disruption
or delay of our customers or third-party service providers would likely impact our operating results and the ability of the Company to
continue as a going concern. In addition, a significant outbreak of contagious diseases in the human population could result in a widespread
health crisis that could adversely affect the economies and financial markets of China and many other countries, resulting in an economic
downturn that could affect demand for our services and significantly impact our operating results.
10
The
coronavirus disease 2019 (COVID-19) has had a significant impact on our operations since January 2020 and could materially adversely
affect our business and financial results for the remaining months of the 2023 calendar year.
Our
ability to manufacture and/or sell our products may be impaired by damage or disruption to our manufacturing, warehousing or distribution
capabilities, or to the capabilities of our suppliers, logistics service providers or distributors as a result of the impact from the
COVID-19. This damage or disruption could result from events or factors that are impossible to predict or are beyond our control, such
as raw material scarcity, pandemics, government shutdowns, disruptions in logistics, supplier capacity constraints, adverse weather conditions,
natural disasters, fire, terrorism or other events.
The
COVID-19 pandemic, which has spread rapidly across the globe, resulted in adverse economic conditions and business disruptions. In reaction
to this outbreak, governments worldwide have imposed varying degrees of preventative and protective actions, such as temporary travel
bans, forced business closures, and stay-at-home orders, all in an effort to reduce the spread of the virus. Since this outbreak, business
activities in China and many other countries including U.S. have been disrupted by a series of emergency quarantine measures taken by
the government. 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 factory and operations beginning in early February until late March 2020, limited support from the employees,
delayed access to raw material supplies and inability to deliver products to customers on a timely basis, our business was negatively
impacted. While the spread of the disease has gradually returned under control in China, COVID-19 could still adversely affect the business
operation our Mainland China Subsidiaries and Hong Kong Subsidiaries and our financial results in the future. As a result, there is a
possibility that the Company's revenues and operating cash flows may be significantly lower than expected for fiscal year 2023.
We
and our Subsidiaries may incur liability for unpaid taxes, including interest and penalties.
In
the normal course of business, we and our Subsidiaries may be subject to challenges from various PRC taxing authorities regarding the
amounts of taxes due. PRC taxing authorities may take the position that we or our Subsidiaries owe more taxes than it has paid. We recorded
tax liabilities of$1.0 million, $1.6 million, and $4.4 million as of June 30, 2023, 2022, and 2021, respectively, for the possible underpayment
of income and business taxes. It is possible that the tax liability of for past taxes may be higher than those amounts, if the PRC authorities
determine that penalties are applicable or that the correct amount has not been paid. Although the Company's management believes
it may be able to negotiate with local PRC taxing authorities a reduction to any amounts that such authorities may believe are due and
a reduction to any interest or penalties thereon, we have no guarantee that we will be able to negotiate such a reduction. To the extent
we are able to negotiate such amounts, national-level taxing authorities may take the position that localities are without power to reduce
such liabilities, and such PRC taxing authorities may attempt to collect unpaid taxes, interest and penalties in amounts greatly exceeding
management's estimates.
11
If
our largest customers reduce their orders with us, such revenues would be very difficult to replace.
Although
we have also sold our products through distributors and trading companies, some of our largest customers are Petco and Pet Value, which
are by far the largest pet specialty chains in North America. Petco has around 1600 stores in the US and Pet Valu has around 600 stores
in Canada. There is not another brick-and-mortar customer that presents the opportunity that these customers present to us. As a result,
if we were to lose these accounts or if these customers purchased less of our products in the future, it would be difficult to replace
those lost revenues.
Our
smart products have only recently entered distribution.
While
we are optimistic that our smart products such as collars, harnesses, feeders and robots will be important products for our company in
the future, we only recently begun to sell them and thus do not know whether they will prove popular with consumers. We have exhibited
these products at expos in multiple countries and have begun to receive orders, but our revenues for all smart products was approximately
$7.4 million, 13.5 million, and $7.8 million, during the years ended June 30, 2023, 2022, and 2021, respectively. As a result, we do
not have an accurate gauge of how well accepted they will be by consumers. If consumers do not appreciate our smart products, we may
not sell enough products to grow our market share in this new industry.
Our
smart products are not as well-known as those of our competitors.
There
are a variety of competitors providing smart collars, smart feeders and smart treaters for dogs and cats that are more well-known than
our products. We are aware of more than a dozen competitors to our smart products, some of which have been on the market for several
years. Because smart collars are still a relatively new industry, we do not believe that there is a single leader. Nevertheless, we face
competition from more well-known products like the Whistle GPS Pet Tracker and Tractive, as well as products from more well-established,
better capitalized companies in the United States such as Garmin, which produces varieties of dog training and tracking devices. Similarly,
companies such as PetSafe, Petzi, Petcube, Arf Pets, and Furbo market food and treat dispensers with functionalities that in some cases
are similar to our products. If we are unable to achieve recognition for our technology or if consumers opt to use products from companies
they recognize more than our company, our smart collar and harness products may not be well accepted.
Our
smart collars and harnesses are currently between generations.
We
debuted our C2 and H2 smart collars and harnesses in 2016. These products were designed to operate over 2G telephone technology. While
this platform was sufficient to meet the needs of the products, 2G speeds lag far behind currently available 4G and now 5G technology.
As a result, our C2 and H2 products have thus far obtained a very limited customer base. For this reason, we have been researching and
developing our next generation of smart collars and harnesses to operate with today's higher internet speeds in mind. We are close
to the roll out of the C6 which relies on 4G network and C5 and C5 mini which rely on NB network. Before we are able to bring these products
to market fully, we anticipate that our sales of smart collars and harnesses, along with subscriptions for ongoing cellular services
for those products, will be nominal. If and when we are able to introduce our next generation of smart collars and harnesses, we are
unable to predict the extent to which consumers will be drawn to such new products.
12
Our
smart collars rely on third-party cellular telephone companies and application developers for functionality.
One
of the features of our smart collars is the ability to communicate between the owner's cell phone and the collar, even when the
two are too far away to communicate directly. We achieve this by having a SIM card in the smart collar so that, so long as the collar
has a cell phone signal, it will communicate with the telephone. We cooperate with cell phone companies in our target markets to provide
cellular service to these SIM cards. If this cooperation were to end or if the cellular service we receive is not reliable or more expensive
than we anticipate, the market for our products could be harmed.
In
addition, the Dogness smartphone App on which our smart collars rely are still under development and test by a company, Dogness Network
Technology Co., Ltd ("Dogness Network"), in which we have a minority interest. Our company owns 10% of Dogness Network. Dogness
Network plans to derive its revenues from subscriptions for services provided through the Dogness smartphone App in the near future,
and we will purchase such products from Dogness Network and resell to our customers. We may benefit only by virtue of our 10% interest
in Dogness Network. If Dogness Network were to stop supporting the application or impair its functionality, our smart collars and harnesses
could become unusable or have decreased value to end users.
To
the extent we were unable to cooperate with such third parties in the future, we would need to locate and cooperate with other service
providers, and we cannot guarantee that we would be able to do so under terms that are satisfactory to us, if at all.
Our
software platform may not interface with applications consumers want to be integrated.
In
the connected home, consumers are increasingly aware of the interconnection among applications and devices, such as speakers that can
turn on lights or adjust the temperature. Some customers purchase products based on how they will interact with other services and products
that the customers already use. If we are unable to anticipate and accommodate these desires, customers may choose other products that
do interact with their preferred services. Although we may incorporate such functionality in future generations of our products, not
all of our current products integrate into Apple's, Google's or Amazon's smart home platforms. Our Dogness CAM feeder,
App feeder, and App mini feeder work with Amazon Alexa.
We
are also dependent on third party application stores that may prevent us from timely updating our current products or uploading new products.
In addition, our products interoperate with servers, mobile devices and software applications predominantly through the use of protocols,
many of which are created and maintained by third parties. We therefore depend on the interoperability of our products with such third-party
services, mobile devices and mobile operating systems, as well as cloud-enabled hardware, software, networking, browsers, database technologies
and protocols that we do not control. Any changes in such technologies that degrade the functionality of our products or give preferential
treatment to competitive services could adversely affect adoption and usage of our platform. Also, we may not be successful in developing
or maintaining relationships with key participants in the mobile industry or in developing products that operate effectively with a range
of operating systems, networks, devices, browsers, protocols and standards. In addition, we may face different fraud, security and regulatory
risks from transactions sent from mobile devices than we do from personal computers. If we are unable to effectively anticipate and manage
these risks, or if it is difficult for our customers to access and use our platform, our business, results of operations and financial
condition may be harmed.
13
Price
increases in raw materials and sourced products could harm the Company's financial results.
Our
primary raw materials are plastic, leather, nylon, polyester, chemical fiber blended fabric, metal, GPPS and HIPS, most of which are
extracted from crude oil. These raw materials are subject to price volatility and inflationary pressures. Our success is dependent, in
part, on our continued ability to reduce our exposure to increases in those costs through a variety of programs, including sales price
adjustments based on adjustments in such raw material costs, while maintaining and improving margins and market share. We also rely on
third-party manufacturers as a source for a minor portion of components for our products. These manufacturers are also subject to price
volatility and labor cost and other inflationary pressures, which may, in turn, result in an increase in the amount we pay for sourced
products. Raw material and sourced product price increases may more than offset our productivity gains and price increases and may adversely
impact our financial results.
Our
plan to vertically integrate our production may not provide the benefits we foresee.
Over
the last several years, we have increasingly produced our products in-house. We have made this strategic decision because of our belief
that it will facilitate our control over the costs of components in our products. The price of components is extremely important where
the per-unit sales price is as low as it is in our industry. Thus, we believe it is important to control costs as much as possible.
That
being said, when we produce components in-house that we previously purchased from a third-party supplier, we may not benefit from the
economies of scale that a dedicated third-party supplier could see. Moreover, we invest in infrastructure for such production, such as
buying machines and leasing additional facility space; in the event new technology is developed to produce components of our products
more cheaply than we can with our existing infrastructure, we could find that our operating results are negatively impacted, compared
with what we would see if we were purchasing from third parties. In such case, our products could be more expensive than those of our
competitors that purchase from third-party suppliers, which could make our products less attractive to customers.
Our
reliance on third party logistics providers may put us at risk of service failures for our customers.
We
rely on third parties to ship our products from China to our customers. We compete based on price, quality and reliability, so a failure
to deliver our products on time to our large customers could harm our reputation. To the extent we are unable to meet their demand for
products or do not deliver products on time, we stand a substantial risk of losing key accounts. Because we rely on third parties for
logistics services, we may be unable to avoid supply chain failures, even if we are able to meet our manufacturing obligations to customers.
14
If
we fail to protect our intellectual property rights, it could harm our business and competitive position.
We
rely on a combination of patent, trademark, domain name and trade secret laws and non-disclosure agreements and other methods to protect
our intellectual property rights. Our Mainland China Subsidiaries own 135 patents and 188 trademarks in China and 66 patents and 47 trademarks
outside China,  all of which have been properly registered with regulatory agencies such as the State Intellectual Property Office
and Trademark Office of China's State Administration for Industry and Commerce ("SAIC"). This intellectual property
has allowed our products to earn market share in the pet products industry.
The
process of seeking patent protection can be lengthy and expensive, our patent applications may fail to result in patents being issued,
and our existing and future patents may be insufficient to provide us with meaningful protection or commercial advantage. Our patents
and patent applications may also be challenged, invalidated or circumvented.
We
also rely on trade secret rights to protect our business through non-disclosure provisions in employment agreements with employees. If
our employees breach their non-disclosure obligations, we may not have adequate remedies in China, and our trade secrets may become known
to our competitors.
In
accordance with Chinese intellectual property laws and regulations, we will have to renew our trademarks once the terms expire. However,
patents are not renewable. Some of our patents, particularly utility mode and design patents, have only 10 years of protection and will
end in the near future. Once these patents expire, our prodCompany: Please update if the numbers have changeducts may lose some market
share if they are copied by our competitors. Then, our business revenue might suffer some loss as well.
Implementation
of PRC intellectual property-related laws has historically been lacking, primarily because of ambiguities in the PRC laws and enforcement
difficulties. Accordingly, intellectual property rights and confidentiality protections in China may not be as effective as in the United
States or other western countries. Furthermore, policing unauthorized use of proprietary technology is difficult and expensive, and we
may need to resort to litigation to enforce or defend patents issued to us or to determine the enforceability, scope and validity of
our proprietary rights or those of others. Such litigation and an adverse determination in any such litigation, if any, could result
in substantial costs and diversion of resources and management attention, which could harm our business and competitive position.
Our
Chinese patents and registered marks may not be protected outside of China due to territorial limitations on enforceability.
In
general, patent and trademark rights have territorial limitations in law and are valid only within the countries in which they are registered.
At
present, Chinese enterprises may register their trademarks overseas through two methods. One is to file an application for trademark
registration in each single country or region in which protection is desired, while the other is to apply via the Madrid system for international
trademark registration. By the second way, under the provisions of the Madrid Agreement concerning the International Registration of
Marks (the "Madrid Agreement") or the Protocol Relating to the Madrid Agreement concerning the International Registration
of Marks (the "Madrid Protocol"), applicants may designate their marks in one or more member countries via the Madrid system
for international registration.
As
of the date of the filing, we have registered 188 trademarks  in China. We have also registered our key trademarks in Japan, Australia,
Korea, Hong Kong, Taiwan and the United States.
15
Similar
with trademarks, Chinese enterprises may also register their patents overseas through two methods. One is to file an application for
patent registration in each single country or region, and the other is to file international application with the China Intellectual
Property Office or the International Bureau of World Intellectual Property Organization under the Patent Cooperation Treaty. However,
such international application may relate to invention or utility model patents, but does not include industrial design patents.
Currently,
most of our patents and trademarks are registered in China. If we do not register them in other jurisdictions, they may not be protected
outside of China. As a result, our business and competitive position could be harmed.
We
may be exposed to intellectual property infringement and other claims by third parties which, if successful, could disrupt our business
and have a material adverse effect on our financial condition and results of operations.
Our
success depends, in large part, on our ability to use and develop our technology and know-how without infringing third party intellectual
property rights. If we sell our branded products internationally, and as litigation becomes more common in China, we face a higher risk
of being the subject of claims for intellectual property infringement, invalidity or indemnification relating to other parties'
proprietary rights. Our current or potential competitors, many of which have substantial resources and have made substantial investments
in competing technologies, may have or may obtain patents that will prevent, limit or interfere with our ability to make, use or sell
our branded products in either China or other countries, including the United States and other countries in Asia. The validity and scope
of claims relating to patents in our industry involve complex scientific, legal and factual questions and analysis and, as a result,
may be highly uncertain. In addition, the defense of intellectual property suits, including patent infringement suits, and related legal
and administrative proceedings can be both costly and time consuming and may significantly divert the efforts and resources of our technical
and management personnel. Furthermore, an adverse determination in any such litigation or proceedings to which we may become a party
could cause us to:
●
pay
    damage awards;
●
seek
    licenses from third parties;
●
pay
    ongoing royalties;
●
redesign
    our branded products; or
●
be
    restricted by injunctions,
each
of which could effectively prevent us from pursuing some or all of our business and result in our customers or potential customers deferring
or limiting their purchase or use of our products, which could have a material adverse effect on our financial condition and results
of operations.
Outstanding
bank loans may reduce our available funds.
As
of June 30, 2023, we had approximately $5.4 million in outstanding bank loans, with expected repayment of approximately $3.8 million
in one year, $0.7 million in two years and $0.9 million in three to seven years  . The loans are guaranteed by the fixed assets
of the Company's subsidiaries and are also personally guaranteed by our Chief Executive Officer and certain of his family members.
While we believe we have sufficient capital resources to repay these bank loans with support from Mr. Silong Chen, our Chief Executive
Officer, there can be no guarantee that we will be able to pay all amounts when due or to refinance the amounts on terms that are acceptable
to us or at all. If we are unable to make our payments when due or to refinance such amounts, our property could be foreclosed and our
business could be negatively affected.
16
While
we do not believe they will impact our liquidity, the terms of the debt agreements impose significant operating and financial restrictions
on us. These restrictions could also have a negative impact on our business, financial condition and results of operations by significantly
limiting or prohibiting us from engaging in certain transactions, including but not limited to: incurring or guaranteeing additional
indebtedness; transferring or selling assets currently held by us; and transferring ownership interests in certain of our subsidiaries.
The failure to comply with any of these covenants could cause a default under our other debt agreements. Any of these defaults, if not
waived, could result in the acceleration of all of our debt, in which case the debt would become immediately due and payable. If this
occurs, we may not be able to repay our debt or borrow sufficient funds to refinance it on favorable terms, if any.
If
the village cooperative from which we rent our factory in Dongguan fails to provide ownership certificates or construction approvals
on demand, our ability to use our facilities may be impaired.
Our
Mainland China Subsidiaries lease our production facility from Dongguan Dongcheng District Tongsha Huanggongkeng Co-op ("Huanggongkeng").
We understand that, as is not uncommon in our area, Huanggongkeng did not obtain prior government approval before constructing the facilities
and thus may be unable to provide evidence of government approval. If the local authority were to request proof of such approval, operations
at our facility could be interrupted until Huanggongkeng was able to provide evidence of such approvals. If Huanggongkeng were unable
to rectify this issue, we could find our operations halted indefinitely.
If
the value of our property decreases, we may not be able to refinance our current debt.
All
of our current debt is secured by either mortgages on real and other business property or guarantees by some of our shareholders. If
the value of our real property decreases, we may find that banks are unwilling to loan money to us secured by our business property.
A drop in property value could also prevent us from being able to refinance that loan when it becomes due on acceptable terms or at all.
We
may require additional financing in the future and our operations could be curtailed if we are unable to obtain required additional financing
when needed.
We
may need to obtain additional debt or equity financing to fund future capital expenditures and initiatives. Additional debt financing
may include conditions that would restrict our freedom to operate our business, such as conditions that:
●
limit our ability to pay dividends or require us to seek consent for the payment of dividends;
●
increase our vulnerability to general adverse economic and industry conditions;
●
require us to dedicate a portion of our cash flow from operations to payments on our debt, thereby reducing the availability of our cash
flow to fund capital expenditures, working capital and other general corporate purposes; and
●
limit our flexibility in planning for, or reacting to, changes in our business and our industry.
17
We
cannot guarantee that we will be able to obtain any additional financing on terms that are acceptable to us, or at all.
The
loss of any of our key customers could reduce our revenues and our profitability.
Our
key customers are principally retail pet specialty stores and mass merchandisers. For the year ended June 30, 2023, sales to our four
largest customers amounted in the aggregate to approximately 15.4%, 11.6%, 8.8% and 5.3%   of our total revenue. For the year
ended June 30, 2022, sales to our four largest customers accounted for 23.4%, 6.7%, 6.7% and 5.7% of our total revenue. For the year
ended June 30, 2021, sales to our three largest customers amounted in the aggregate to approximately 32.0%, 9.1% and 6.9% of our total
revenue. There can be no assurance that we will maintain or improve the relationships with these customers, or that we will be able to
continue to supply these customers at current levels or at all. Any failure to pay by these customers could have a material negative
effect on our company's business. In addition, having a relatively small number of customers may cause our quarterly results to
be inconsistent, depending upon when these customers pay for outstanding invoices. During the years ended June 30, 2023, 2022 and 2021,
we had two,   one and one customer that accounted for 10% or more of our revenues.
Our
bank accounts are not fully insured or protected against loss.
We
maintain our cash with various banks and trust companies located in mainland China. Our cash accounts in mainland China are not insured
or otherwise protected. Should any bank or trust company holding our cash deposits become insolvent, or if we are otherwise unable to
withdraw funds, we would lose the cash on deposit with that particular bank or trust company.
We
are substantially dependent upon our senior management and key research and development personnel.
We
are highly dependent on our senior management to manage our business and operations and our key research and development personnel for
the development of new products and the enhancement of our existing products and technologies. In particular, we rely substantially on
our Chief Executive Officer, Mr. Silong Chen.
While
we provide the legally required personal insurance for the benefit of our employees, we do not maintain key person life insurance on
any of our senior management or key personnel. The loss of any one of them would have a material adverse effect on our business and operations.
Competition for senior management and our other key personnel is intense, and the pool of suitable candidates is limited. We may be unable
to quickly locate a suitable replacement for any senior management or key personnel that we lose. In addition, if any member of our senior
management or key personnel joins a competitor or forms a competing company, they may compete with us for customers, business partners
and other key professionals and staff members of our company. Although each of our senior management and key personnel has signed a confidentiality
and non-competition agreement in connection with his employment with us, we cannot assure you that we will be able to successfully enforce
these provisions in the event of a dispute between us and any member of our senior management or key personnel.
In
our efforts to develop new products, we compete for qualified personnel with technology companies and research institutions. Although
we have our own research and development team, we also rely heavily on our cooperation with another software development company, which
has been helping us develop our high-tech products. This relationship has become an important part of our company's business development.
If this relationship becomes unstable or is terminated in the future, we may be unable to meet our business and financial goals.
18
Failure
to manage our growth could strain our management, operational and other resources, which could materially and adversely affect our business
and prospects.
Our
growth strategy includes increasing market penetration of our existing products, developing new products and increasing the number and
size of customers we serve. Pursuing these strategies has resulted in, and will continue to result in, substantial demands on management
resources. In particular, the management of our growth will require, among other things:
●
continued
    enhancement of our research and development capabilities;
●
stringent
    cost controls and sufficient liquidity;
●
strengthening
    of financial and management controls;
●
increased
    marketing, sales and support activities; and
●
hiring
    and training of new personnel.
If
we are not able to manage our growth successfully, our business and prospects would be materially and adversely affected.
Because
we rely on Hong Kong entities to fulfill orders from many of our customers, we may be exposed to claims of value-added tax underreporting.
Many
of our international customers order our products by placing an order with our Hong Kong Subsidiaries. Our Hong Kong Subsidiaries then
procure the products from our Mainland China Subsidiaries. When these products are sold from our Mainland China Subsidiaries to our Hong
Kong Subsidiaries, the price paid is set at what we believe to be a fair value. Further, we have informed the applicable tax bureaus
of the pricing of products. Nevertheless, the tax bureau in the future may claim that we have engaged in transfer pricing to avoid payment
of value-added tax ("VAT") because the price our Hong Kong Subsidiary charges to the customer may be higher than the price
our Mainland China Subsidiaries charge to our Hong Kong Subsidiaries. Under PRC law, the VAT is refundable on export, so we believe there
is limited risk in the event that we were called upon to pay VAT on such transfers from China to Hong Kong, but a failure to report proper
VAT payable could expose us to penalties and interest for failing to pay it on time.
We
may be subject to penalties under relevant PRC laws and regulations due to failure to make full social security and housing fund contributions
for some of our employees.
In
the past, contributions by some of our Mainland China Subsidiaries for some of their employees to the social security and housing funds
may not have been in compliance with relevant PRC regulations. Pursuant to the Regulation on the Administration of Housing Accumulation
Funds, as amended in 2002, the relevant housing fund authority may order an enterprise to pay outstanding contributions within a prescribed
time limit. Pursuant to the PRC Social Insurance Law promulgated in 2010, the social security authority may order an enterprise to pay
the outstanding contributions within a prescribed time limit, and may impose penalties if there is a failure to do so. To the extent
the relevant authorities determine we have underpaid, some of our Mainland China Subsidiaries may be required to pay outstanding contributions
and penalties to the extent they did not make full contributions to the social security housing funds.
19
Risks
Related to Our Corporate Structure and Operation
Our
dual class structure concentrate a majority of voting power in our Chief Executive Officer, who is the only owner of our Class B Common
Shares.
Our
Class B Common Shares have ten votes per share, and our Class A Common Shares have one vote per share. Our directors, executive
officers, and their affiliates, beneficially hold in the aggregate approximately 73.80% of the voting power of our capital stock
as of June 30, 2023. Because of the ten-to-one voting ratio between our Class B and Class A Common Shares, the holder of our Class B
Common Shares collectively control a majority of the combined voting power of our Common Shares and therefore is able to control all
matters submitted to our shareholders for approval. The sole owner of such Class B Common Shares is our Chief Executive Officer, Mr.
Silong Chen, who owns 9,069,000 Class B Common Shares through Fine victory holding company Limited. This concentrated control may
limit or preclude your ability to influence corporate matters for the foreseeable future, including the election of directors,
amendments of our organizational documents, and any merger, consolidation, sale of all or substantially all of our assets, or other
major corporate transaction requiring shareholder approval. In addition, this may prevent or discourage unsolicited acquisition
proposals or offers for our capital stock that you may feel are in your best interest as one of our shareholders.
Future
transfers by holders of Class B Common Shares will generally result in those shares converting to Class A Common Shares, subject to limited
exceptions, such as certain transfers effected for estate planning purposes. The conversion of Class B Common Shares to Class A Common
Shares will have the effect, over time, of increasing the relative voting power of those holders of Class B Common Shares who retain
their shares in the long term.
The
obligation to disclose information publicly may put us at a disadvantage to competitors that are private companies.
As
a publicly listed company in the United States, we are required to file periodic reports with the Securities and Exchange Commission
upon the occurrence of matters that are material to our company and shareholders. In some cases, we will need to disclose material agreements
or results of financial operations that we would not be required to disclose if we were a private company. Our competitors may have access
to this information, which would otherwise be confidential. This may give them advantages in competing with our company. Similarly, as
a U.S.-listed public company, we will be governed by U.S. laws that our non-publicly traded competitors are not required to follow. To
the extent compliance with U.S. laws increases our expenses or decreases our competitiveness against such companies, our public listing
could affect our results of operations.
We
are a "foreign private issuer," and our disclosure obligations differ from those of U.S. domestic reporting companies. As
a result, we may not provide you the same information as U.S. domestic reporting companies or we may provide information at different
times, which may make it more difficult for you to evaluate our performance and prospects.
We
are a foreign private issuer and, as a result, we are not subject to the same requirements as U.S. domestic issuers. Under the Exchange
Act, we will be subject to reporting obligations that, to some extent, are more lenient and less frequent than those of U.S. domestic
reporting companies. For example, we are not required to issue quarterly reports or proxy statements. We are not required to disclose
detailed individual executive compensation information. Furthermore, our directors and executive officers will not be required to report
equity holdings under Section 16 of the Exchange Act and will not be subject to the insider short-swing profit disclosure and recovery
regime.
20
As
a foreign private issuer, we are exempt from the requirements of Regulation FD (Fair Disclosure) which, generally, are meant to ensure
that select groups of investors are not privy to specific information about an issuer before other investors. However, we are still subject
to the anti-fraud and anti-manipulation rules of the SEC, such as Rule 10b-5 under the Exchange Act. Since many of the disclosure obligations
imposed on us as a foreign private issuer differ from those imposed on U.S. domestic reporting companies, you should not expect to receive
the same information about us and at the same time as the information provided by U.S. domestic reporting companies.
As
a foreign private issuer, we are permitted to rely on exemptions from certain Nasdaq corporate governance standards applicable to U.S.
issuers, including the requirement that a majority of an issuer's directors consist of independent directors. If we opt to rely
on such exemptions in the future, such decision might afford less protection to holders of our Class A Common Shares.
Section
5605(b)(1) of the Nasdaq Listing Rules requires listed companies to have, among other things, a majority of its board members to be independent,
and Section 5605(d) and 5605(e) require listed companies to have independent director oversight of executive compensation and nomination
of directors. As a foreign private issuer, however, we are permitted to follow home country practice in lieu of the above requirements.
Our Board of Directors could make such a decision to depart from such requirements by ordinary resolution.
The
corporate governance practice in our home country, the British Virgin Islands, does not require a majority of our board to consist of
independent directors or the implementation of a nominating and corporate governance committee. Since a majority of our board of directors
would not consist of independent directors if we relied on the foreign private issuer exemption, fewer board members would be exercising
independent judgment and the level of board oversight on the management of our company might decrease as a result. In addition, we could
opt to follow British Virgin Islands law instead of the Nasdaq requirements that mandate that we obtain shareholder approval for certain
dilutive events, such as an issuance that will result in a change of control, certain transactions other than a public offering involving
issuances of 20% or greater interests in the company and certain acquisitions of the shares or assets of another company. For a description
of the material corporate governance differences between the Nasdaq requirements and British Virgin Islands law, see "Description
of Share Capital — Differences in Corporate Law".
An
insufficient amount of insurance could expose us to significant costs and business disruption.
While
we have purchased insurance, including export transportation, product liability and account receivable insurance, to cover certain assets
and property of our business, the amounts and scope of coverage could leave our business inadequately protected from loss. For example,
our subsidiaries do not have coverage of business interruption insurance. If we were to incur substantial losses or liabilities due to
fire, explosions, floods, other natural disasters or accidents or business interruption, our results of operations could be materially
and adversely affected.
21
Our
failure to obtain prior approval of the China Securities Regulatory Commission ("CSRC") for the listing and trading of our
Class A Common Shares on a foreign stock exchange could delay this offering or could have a material adverse effect upon our business,
operating results, reputation and trading price of our Class A Common Shares.
On
August 8, 2006, six Chinese regulatory agencies, including the MOFCOM, jointly issued the M&A Rules, which became effective on September
8, 2006 and amended on June 22, 2009. The M&A Rules contains provisions that require that an offshore SPV formed for listing purposes
and controlled directly or indirectly by Chinese companies or individuals shall obtain the approval of the CSRC prior to the listing
and trading of such SPV's securities on an overseas stock exchange. On September 21, 2006, the CSRC published procedures specifying
documents and materials required to be submitted to it by an SPV seeking CSRC approval of overseas listings. However, the application
of the M&A Rule remains unclear with no consensus currently existing among leading Chinese law firms regarding the scope and applicability
of the CSRC approval requirement. We have not chosen to voluntarily request approval under the M&A Rules. Based on the understanding
of the current PRC law, rules and regulations, we believe that the CSRC's approval may not be required for the listing and trading
of our common shares on Nasdaq in the context of this offering, given that Dogness was not established by a merger with or an acquisition
of any mainland China domestic companies as defined under the M&A Rules.
If
the CSRC requires that we obtain its approval prior to the completion of this offering under the M&A Rules, the offering will be
delayed until we obtain CSRC approval, which may take several months. There is also the possibility that we may not be able to obtain
such approval. If prior CSRC approval was required, we may face regulatory actions or other sanctions from the CSRC or other Chinese
regulatory authorities. These authorities may impose fines and penalties upon our operations in China, limit our operating privileges
in China, delay or restrict the repatriation of the proceeds from this offering into China, or take other actions that could have a material
adverse effect upon our business, financial condition, results of operations, reputation and prospects, as well as the trading price
of our Class A Common Shares. The CSRC or other Chinese regulatory agencies may also take actions requiring us, or making it advisable
for us, to terminate this offering prior to closing.
Risks
Related to Ownership of Our Class A Common Shares
If
we are unable to implement and maintain effective internal control over financial reporting in the future, investors may lose confidence
in the accuracy and completeness of our financial reports and the market price of our Class A Common Shares may decline.
Prior
to our initial public offering in 2017, we were a private company with limited accounting personnel and other resources with which to
address our internal controls and procedures. Our independent registered public accounting firm has not conducted an audit of our internal
control over financial reporting. However, in preparing our consolidated financial statements in connection with this annual report,
we and our independent registered public accounting firm identified material weaknesses in our internal control over financial reporting,
as defined in the standards established by the Public Company Accounting Oversight Board of the United States, or PCAOB, and other control
deficiencies. One material weakness identified relates to (i) a lack of full-time accounting and financial reporting personnel with appropriate
knowledge of U.S. GAAP and SEC reporting and compliance requirements; (ii) a lack of an effective review process by management, which
led to material audit adjustments for the year ended June 30, 2020 and (iii) lack of risk assessment in accordance with the requirement
of COSO 2013 framework. Following the identification of the material weaknesses and control deficiencies, we have taken and plan to continue
to take remedial measures, including (i) hiring external financial consultants with experience in U.S. GAAP and SEC reporting obligations
(ii) hiring more qualified accounting personnel with relevant U.S. GAAP and SEC reporting experience and qualifications to strengthen
the financial reporting function and to set up a financial and system control framework; (iii) implementing regular and continuous U.S.
GAAP accounting and financial reporting training programs for our accounting and financial reporting personnel; (iv) setting up an internal
audit function as well as engaging an external consulting firm to assist us with assessment of Sarbanes-Oxley compliance requirements
and improvement of overall internal control;. However, the implementation of these measures may not fully address the material weaknesses
in our internal control over financial reporting. Our failure to correct the material weaknesses or our failure to discover and address
any other material weaknesses or control deficiencies could result in inaccuracies in our financial statements and could also impair
our ability to comply with applicable financial reporting requirements and related regulatory filings on a timely basis. Moreover, ineffective
internal control over financial reporting significantly hinders our ability to prevent fraud.
22
As
a public company, we will be required to maintain internal control over financial reporting and to report any material weaknesses in
such internal control. In addition, we are required to furnish a report by management on the effectiveness of our internal control over
financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act. As of the date hereof, management has concluded that such controls
are ineffective.
As
of June 30, 2023. we are not an "accelerated filer" or a "large accelerated filer" under the definitions of the
Exchange Act rules and therefore our independent registered public accounting firm is not required to attest to the effectiveness of
our internal control over financial reporting. Our independent registered public accounting firm will be required to attest to that in
the event we become an "accelerated filer" or a "large accelerated filer" under the definitions of the Exchange
Act rules.
If
we identify material weaknesses in our internal control over financial reporting, if we are unable to comply with the requirements of
Section 404 in a timely manner or assert that our internal control over financial reporting is effective, or if our independent registered
public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting when
required, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our Class A
Common Shares could be negatively affected, and we could become subject to investigations by the stock exchange on which our securities
are listed, the Securities and Exchange Commission, or the SEC, or other regulatory authorities, which could require additional financial
and management resources.
Recent
joint statement by the SEC and PCAOB, proposed rule changes submitted by Nasdaq, and an act passed by the US Senate all call for additional
and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially
the non-U.S. auditors who are not inspected by the PCAOB. These developments could add uncertainties to our offering.
In
May 2013, the PCAOB announced that it had entered into a Memorandum of Understanding on Enforcement Cooperation with the CSRC, and the
PRC Ministry of Finance, which establishes a cooperative framework between the parties for the production and exchange of audit documents
relevant to investigations undertaken by the PCAOB, the CSRC or the PRC Ministry of Finance in the United States and the PRC, respectively.
The PCAOB continues to be in discussions with the CSRC, and the PRC Ministry of Finance to permit joint inspections in the PRC of audit
firms that are registered with PCAOB and audit Chinese companies that trade on U.S. exchanges.
On
December 7, 2018, the SEC and the PCAOB issued a joint statement highlighting continued challenges faced by the U.S. regulators in their
oversight of financial statement audits of U.S.-listed companies with significant operations in China. The joint statement reflects a
heightened interest in an issue that has vexed U.S. regulators in recent years.
On
April 21, 2020, SEC Chairman Jay Clayton and PCAOB Chairman William D. Duhnke III, along with other senior SEC staff, released a joint
statement highlighting the risks associated with investing in companies based in or have substantial operations in emerging markets including
China. The joint statement emphasized the risks associated with lack of access for the PCAOB to inspect auditors and audit work papers
in China and higher risks of fraud in emerging markets.
On
May 20, 2020, the U.S. Senate passed the Holding Foreign Companies Accountable Act ("HFCA Act") requiring a foreign company
to certify it is not owned or controlled by a foreign government if the PCAOB is unable to audit specified reports because the company
uses a foreign auditor not subject to PCAOB inspection. If the PCAOB is unable to inspect the company's auditors for three consecutive
years, the issuer's securities are prohibited to trade on a national exchange. On December 2, 2020, the U.S. House of Representatives
approved the HFCA Act. On December 18, 2020, the HFCA Act was signed into law.
23
On
June 4, 2020, the U.S. President issued a memorandum ordering the President's Working Group on Financial Markets, or the PWG, to
submit a report to the President within 60 days of the memorandum that includes recommendations for actions that can be taken by the
executive branch and by the SEC or PCAOB on Chinese companies listed on U.S. stock exchanges and their audit firms, in an effort to protect
investors in the U.S.
On
August 6, 2020, the PWG released a report recommending that the SEC take steps to implement the five recommendations outlined in the
report. In particular, to address companies from jurisdictions that do not provide the PCAOB with sufficient access to fulfill its statutory
mandate, or NCJs, the PWG recommends enhanced listing standards on U.S. stock exchanges. This would require, as a condition to initial
and continued exchange listing, PCAOB access to work papers of the principal audit firm for the audit of the listed company. Companies
unable to satisfy this standard as a result of governmental restrictions on access to audit work papers and practices in NCJs may satisfy
this standard by providing a co-audit from an audit firm with comparable resources and experience where the PCAOB determines it has sufficient
access to audit work papers and practices to conduct an appropriate inspection of the co-audit firm. There is currently no legal process
under which such a co-audit may be performed in China. The report permits the new listing standards to provide for a transition period
until January 1, 2022 for listed companies, but would apply immediately to new listings once the necessary rulemakings and/or standard-setting
are effective. The measures in the PWG Report are presumably subject to the standard SEC rulemaking process before becoming effective.
On August 10, 2020, the SEC announced that SEC Chairman had directed the SEC staff to prepare proposals in response to the PWG Report,
and that the SEC was soliciting public comments and information with respect to these proposals. After we are listed on the Nasdaq Capital
Market, if we fail to meet the new listing standards before the deadline specified thereunder due to factors beyond our control, we could
face possible de-listing from the NASDAQ Capital Market, deregistration from the SEC and/or other risks, which may materially and adversely
affect, or effectively terminate, our Class A Common Shares trading in the United States.
On
March 24, 2021, the SEC announced that it had adopted interim final amendments to implement congressionally mandated submission and disclosure
requirements of the Act. The interim final amendments will apply to registrants that the SEC identifies as having filed an annual report
on Forms 10-K, 20-F, 40-F or N-CSR with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction
and that the PCAOB has determined it is unable to inspect or investigate completely because of a position taken by an authority in that
jurisdiction. The SEC will implement a process for identifying such a registrant and any such identified registrant will be required
to submit documentation to the SEC establishing that it is not owned or controlled by a governmental entity in that foreign jurisdiction,
and will also require disclosure in the registrant's annual report regarding the audit arrangements of, and governmental influence
on, such a registrant.
Furthermore,
the HFCA Act, which requires that the PCAOB be permitted to inspect the issuer's public accounting firm within three years, may
result in the delisting of our Company in the future if the PCAOB is unable to inspect our accounting firm at such future time.
In
addition, on June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act ("AHFCAA"),
which, if signed into law, would amend the HFCA Act and require the SEC to prohibit an issuer's securities from trading on any
U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three consecutive years.
24
On
November 5, 2021, the SEC approved the PCAOB's Rule 6100, Board Determinations Under the Holding Foreign Companies Accountable
Act. Rule 6100 provides a framework for the PCAOB to use when determining, as contemplated under the HFCA Act, whether it is unable to
inspect or investigate completely registered public accounting firms located in a foreign jurisdiction because of a position taken by
one or more authorities in that jurisdiction. On December 16, 2021, the PCAOB issued a Determination Report which found that the PCAOB
was unable to inspect or investigate completely registered public accounting firms headquartered in: (1) mainland China, and (2) Hong
Kong.
On
August 26, 2022, the CSRC, the Ministry of Finance of the PRC (the "MOF"), and the PCAOB signed a Statement of Protocol (the
"Protocol"), governing inspections and investigations of audit firms based in China and Hong Kong. On December 15, 2022,
the PCAOB determined that it was able to secure complete access to inspect and investigate registered public accounting firms headquartered
in mainland China and Hong Kong and vacated its previous Determinations to the contrary. However, should PRC authorities obstruct or
otherwise fail to facilitate the PCAOB's access in the future, the PCAOB may consider the need to issue a new determination. On
December 29, 2022, the Accelerating Holding Foreign Companies Accountable Act was signed into law as part of the "Consolidated
Appropriations Act 2023" (the "Consolidated Appropriations Act"), reducing the number of consecutive non-inspection
years required for triggering the prohibitions under the HFCA Act from three years to two.
Our
auditor, the independent registered public accounting firm that issues the audit report included elsewhere in this prospectus, as an
auditor of companies that are traded publicly in the United States and a firm registered with the PCAOB, is subject to laws in the United
States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards.
Our auditor, Audit Alliance LLP, is located in Singapore, and is subject to inspection by the PCAOB on a regular basis. In the event
that, in the future, either there is any regulatory change or step taken by PRC regulators that does not permit Audit Alliance LLP to
provide audit documentations located in mainland China or Hong Kong to the PCAOB for inspection or investigation, you may be deprived
of the benefits of such inspection which could result in limitation or restriction to our access to the U.S. capital markets and trading
of our securities, including "over-the-counter" trading, may be prohibited, under the HFCA Act. The recent developments would
add uncertainties to our offering and we cannot assure you whether the national securities exchange we apply to for listing or regulatory
authorities would apply additional and more stringent criteria to us after considering the effectiveness of our auditor's audit
procedures and quality control procedures, adequacy of personnel and training, or sufficiency of resources, geographic reach, or experience
as it relates to our audit.
Our
management team has limited experience in managing a U.S. public company and complying with laws applicable to such company, the failure
of which may adversely affect our business, financial conditions and results of operations.
Our
current management team has limited experience in managing a U.S. publicly traded company, interacting with public company investors
and complying with the increasingly complex laws pertaining to U.S. public companies. Prior to the completion of our initial public offering,
we mainly operated our businesses as a private company in mainland China. As a result of our IPO, our company became subject to significant
regulatory oversight and reporting obligations under the federal securities laws and the scrutiny of securities analysts and investors,
and our management currently has limited experience in complying with such laws, regulations and obligations. These obligations and constituents
will require significant attention from our senior management and could divert their attention away from the day-to-day management of
our business, which could adversely affect our business, financial conditions and results of operations.
25
The
requirements of being a public company may strain our resources and divert management's attention.
As
a public company, we are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), the Sarbanes-Oxley Act, the Dodd-Frank Act, the listing requirements of the securities exchange on which we list, and other
applicable securities rules and regulations. Despite recent reforms made possible by the JOBS Act, compliance with these rules and regulations
will nonetheless increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and
increase demand on our systems and resources, particularly now we are no longer an "emerging growth company." The Exchange
Act requires, among other things, that we file annual and current reports with respect to our business and operating results. In addition,
as long as we are listed on the Nasdaq Global Market, we are also required to file semi-annual financial statements.
We
expect these rules and regulations to increase our legal, accounting and financial compliance costs and to make certain corporate activities
more time-consuming and costly. In addition, we will incur additional costs associated with our public company reporting requirements.
While it is impossible to determine the amounts of such expenses in advance, we expect that we will incur expenses of between $500,000
and $1 million per year that we did not experience prior to commencement of our initial public offering.
As
a result of disclosure of information in filings required of a public company, our business and financial condition will become more
visible, which we believe may result in threatened or actual litigation, including by competitors and other third parties. If such claims
are successful, our business and operating results could be harmed, and even if the claims do not result in litigation or are resolved
in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and adversely
affect our business, brand and reputation and results of operations.
We
also expect that being a public company and these rules and regulations will make it more expensive for us to obtain director and officer
liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These
factors could also make it more difficult for us to attract and retain qualified members of our board of directors, particularly to serve
on our audit committee and compensation committee, and qualified executive officers.
The
market price of our Class A Common Shares may be volatile or may decline regardless of our operating performance.
The
trading prices for our Class A Common Shares have fluctuated since we first listed our Class A Common Shares. Since our Class A Common
Shares became listed on the Nasdaq on December 20, 2017, the trading price of our Class A Common Shares has ranged from $0.43
to $8.98 per common share, and the last reported trading price on October 10, 2023 was $0.43 per common share. If you purchase
our Class A Common Shares, you may not be able to resell those shares at or above your purchase price. The market price of our Class
A Common Shares may fluctuate significantly in response to numerous factors, many of which are beyond our control, including:
●
actual or anticipated fluctuations in our revenue and other operating results;
●
the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections;
●
actions of securities analysts who initiate or maintain coverage of us, changes in financial estimates by any securities analysts who
follow our company, or our failure to meet these estimates or the expectations of investors;
●
announcements by us or our competitors of significant products or features, technical innovations, acquisitions, strategic partnerships,
joint ventures, or capital commitments;
26
●
price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole;
●
lawsuits threatened or filed against us; and
●
other events or factors, including those resulting from war or incidents of terrorism, or responses to these events.
In
addition, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market
prices of equity securities of many companies. Stock prices of many companies have fluctuated in a manner unrelated or disproportionate
to the operating performance of those companies. In the past, stockholders have filed securities class action litigation following periods
of market volatility. If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources
and the attention of management from our business, and adversely affect our business.
We
do not intend to pay dividends for the foreseeable future.
We
currently intend to retain any future earnings to finance the operation and expansion of our business, and we do not expect to declare
or pay any dividends in the foreseeable future. As a result, you may only receive a return on your investment in our Class A Common Shares
if the market price of our Class A Common Shares increases.
We
are subject to liability risks stemming from our foreign status, which could make it more difficult for investors to sue or enforce judgments
against our company.
Most
of our operations and assets are located in the PRC. In addition, all of  our executive officers and directors are non-residents
of the U.S., and much of the assets of such persons are located outside the U.S. As a result, it could be difficult for investors to
effect service of process in the U.S., or to enforce a judgment obtained in the U.S. against us or any of these persons.
In
addition, British Virgin Islands companies may not have standing to initiate a shareholder derivative action in a federal court of the
United States. The circumstances in which any such action may be brought, and the procedures and defenses that may be available in respect
to any such action, may result in the rights of shareholders of a British Virgin Islands company being more limited than those of shareholders
of a company organized in the United States. Accordingly, shareholders may have fewer alternatives available to them if they believe
that corporate wrongdoing has occurred.
27
Any
final and conclusive monetary judgment obtained against a BVI company in the courts of a federal court of the United States (the "
Foreign
Court
") for a definite sum, may be treated by the courts of the British Virgin Islands as a cause of action in itself so that
no retrial of the issues would be necessary provided that in respect of the judgment of the Foreign Court: (i) the Foreign Court issuing
the judgment had jurisdiction in the matter and a BVI company either submitted to such jurisdiction or was resident or carrying on business
within such jurisdiction and was duly served with process; (ii) the judgment given by the Foreign Court was not in respect of penalties,
taxes, fines or similar fiscal or revenue obligations of the BVI company; (iii) in obtaining judgment there was no fraud on the part
of the person in whose favour judgment was given or on the part of the Foreign Court; (iv) recognition or enforcement of the judgment
in the British Virgin Islands would not be contrary to public policy and (v) the proceedings pursuant to which judgment was obtained
were not contrary to natural justice.
Lastly,
under the law of the British Virgin Islands, there is little statutory law for the protection of minority shareholders. The principal
protection under statutory law is that shareholders may bring an action to enforce the constituent documents of the corporation, our
Memorandum and Articles of Association. Shareholders are entitled to have the affairs of the company conducted in accordance with the
general law and the Articles and Memorandum.
There
are common law rights for the protection of shareholders that may be invoked, largely dependent on English company law, since the common
law of the British Virgin Islands for business companies is limited. Under the general rule pursuant to English company law known as
the rule in
Foss v. Harbottle
, a court will generally refuse to interfere with the management of a company at the insistence of
a minority of its shareholders who express dissatisfaction with the conduct of the company's affairs by the majority or the board
of directors. However, every shareholder is entitled to have the affairs of the company conducted properly according to law and the constituent
documents of the corporation. As such, if those who control the company have persistently disregarded the requirements of company law
or the provisions of the company's Memorandum and Articles of Association, then the courts will grant relief. Generally, the areas
in which the courts will intervene are the following: (1) an act complained of which is outside the scope of the authorized business
or is illegal or not capable of ratification by the majority; (2) acts that constitute fraud on the minority where the wrongdoers control
the company; (3) acts that infringe on the personal rights of the shareholders, such as the right to vote; and (4) where the company
has not complied with provisions requiring approval of a special or extraordinary majority of shareholders, which are more limited than
the rights afforded minority shareholders under the laws of many states in the United States.
Our
board of directors may decline to register transfers of Class A Common Shares in certain circumstances.
Our
board of directors may, in its sole discretion, decline to register any transfer of any Class A Common Share which is not fully paid
up or on which we have a lien. Our directors may also decline to register any transfer of any share unless (i) the instrument of transfer
is lodged with us, accompanied by the certificate for the shares to which it relates and such other evidence as our board of directors
may reasonably require to show the right of the transferor to make the transfer; (ii) the instrument of transfer is in respect of only
one class of shares; (iii) the instrument of transfer is properly stamped, if required; (iv) in the case of a transfer to joint holders,
the number of joint holders to whom the share is to be transferred does not exceed four; (v) the shares conceded are free of any lien
in favor of us; or (vi) a fee of such maximum sum as Nasdaq may determine to be payable, or such lesser sum as our board of directors
may from time to time require, is paid to us in respect thereof.
If
our directors refuse to register a transfer they shall send to each of the transferor and the transferee notice of such refusal. The
registration of transfers may, on 14 days' notice being given by advertisement in such one or more newspapers or by electronic
means, be suspended and the register closed at such times and for such periods as our board of directors may from time to time determine,
provided, however, that the registration of transfers shall not be suspended nor the register closed for more than 30 days in any year.
28
You
may be unable to present proposals before general meetings not called by shareholders.
British
Virgin Islands law provides shareholders with only limited rights to requisition a general meeting and does not provide shareholders
with any right to put any proposal before a general meeting. However, these rights may be provided in a company's articles of association.
Our Articles of Association allow our shareholders holding shares representing in aggregate not less than 30% of our voting rights in
issue, to requisition a meeting of our shareholders, in which case our directors are obliged to call such meeting and to put the resolutions
so requisitioned to a vote at such meeting.
Although
our Articles of Association do not provide our shareholders with any right to put any proposals before a general meetings not called
by such shareholders, any shareholder may submit a proposal to our Board of Directors for consideration of inclusion in a proxy statement.
Advance notice of at least seven (7) calendar days is required for the convening of our shareholders' meeting . A quorum required
for a meeting of shareholders consists of at least one shareholder present in person or by proxy, representing not less than one-half
of the total issued voting power of each class of shares entitled to vote as a class. In the event we do not have quorum at the time
set for the meeting, we are required to adjourn the meeting until the following week, at which time quorum will be satisfied if shares
representing at least one-third of the total issued voting power of our company are present in person or by proxy.
Risks
Related to Doing Business in China
Adverse
changes in political, economic and other policies of the Chinese government could have a material adverse effect on the overall economic
growth of China, which could materially and adversely affect the growth of our business and our competitive position.
The
majority of our business operations are conducted in China. Accordingly, our business, financial condition, results of operations and
prospects are affected significantly by economic, political and legal developments in China. We are subject to legal and operational
risks associated with being based in and having the majority of the company's operations in mainland China and Hong Kong. China's
economy differs from the economies of most developed countries in many respects, including with respect to the amount of government involvement,
level of development, growth rate, control of foreign exchange, and allocation of resources. The PRC government exercises significant
control over China's economic growth through strategical allocation of resources, controlling the payment of foreign currency-denominated
obligations, setting monetary policy, and providing preferential treatment to particular industries or companies.
The
Chinese government may intervene or influence the operation of our Hong Kong and mainland China operating entities and exercise significant
oversight and discretion over the conduct of their business and may intervene in or influence their operations at any time with little
advance notice, or may exert more control over offerings conducted overseas and/or foreign investment in China-based issuers, which could
result in a material change in our operations and/or the value of our Class A Common Shares.
While
the Chinese economy has experienced significant growth in the past decades, growth has been uneven, both geographically and among various
sectors of the economy. The growth of the Chinese economy may not continue at a rate experienced in the past, and the impact of COVID-19
on the Chinese economy may continue. Any prolonged slowdown in the Chinese economy may reduce the demand for our services and materially
and adversely affect our business and results of operations. Furthermore, any adverse change in the economic conditions in China, in
policies of the PRC government or in laws and regulations in China could have a material adverse effect on the overall economic growth
of China and market demand for our outsourcing services. Such developments could adversely affect our businesses, lead to reduction in
demand for our services and adversely affect our competitive position.
29
Uncertainties
with respect to the mainland China legal system could have a material adverse effect on us.
The
mainland China legal system is based on written statutes. Prior court decisions may be cited for reference but have limited precedential
value. We conduct our business primarily through our subsidiaries established in China.
These
subsidiaries are generally subject to laws and regulations applicable to foreign investment in China. However, since these laws and regulations
are relatively new and the mainland China legal system continues to rapidly evolve, the interpretations of many laws, regulations and
rules are not always uniform and enforcement of these laws, regulations and rules involves uncertainties, which may limit legal protections
available to us. Recently, the General Office of the Central Committee of the Communist Party of China and the General Office of the
State Council jointly issued the "Opinions on Severely Cracking Down on Illegal Securities Activities According to Law,"
or the Opinions, which was made available to the public on July 6, 2021. The Opinions emphasized the need to strengthen the administration
over illegal securities activities, and the need to strengthen the supervision over overseas listings by Chinese companies. Effective
measures, such as promoting the construction of relevant regulatory systems will be taken to deal with the risks and incidents of China-concept
overseas listed companies, and cybersecurity and data privacy protection requirements, etc. The Opinions and any related implementing
rules to be enacted may subject us to compliance requirement in the future. In addition, some regulatory requirements issued by certain
mainland China government authorities may not be consistently applied by other government authorities (including local government authorities),
thus making strict compliance with all regulatory requirements impractical, or in some circumstances impossible. For example, we may
have to resort to administrative and court proceedings to enforce the legal protection that we enjoy either by law or contract. However,
since mainland China administrative and court authorities have discretion in interpreting and implementing statutory and contractual
terms, it may be more difficult to predict the outcome of administrative and court proceedings and the level of legal protection we enjoy
than in more developed legal systems. These uncertainties may impede our ability to enforce the contracts we have entered into with our
business partners, customers and suppliers. In addition, such uncertainties, including any inability to enforce our contracts, together
with any development or interpretation of mainland China law that is adverse to us, could materially and adversely affect our business
and operations. Furthermore, intellectual property rights and confidentiality protections in China may not be as effective as in the
United States or other more developed countries. We cannot predict the effect of future developments in the mainland China legal system,
including the promulgation of new laws, changes to existing laws or the interpretation or enforcement thereof, or the preemption of local
regulations by national laws. These uncertainties could limit the legal protections available to us and other foreign investors, including
you. In addition, any litigation in China may be protracted and result in substantial costs and diversion of our resources and management
attention.
China's
economic, political and social conditions, as well as changes in any government policies, laws and regulations may be quick with little
advance notice and, could have a material adverse effect on our business and the value of our Class A Common Shares.
Our
business, financial condition, results of operations and prospects are subject, to a significant extent, to economic, political and legal
developments in China. For example, as a result of recent proposed changes in the cybersecurity regulations in China that would require
certain Chinese technology firms to undergo a cybersecurity review before being allowed to list on foreign exchanges, this may have a
material adverse effect on our business and the value of our Class A Ordinary Share.
30
China's
economy differs from the economies of most developed countries in many respects, including the amount of government involvement, level
of development, growth rate, control of foreign exchange and allocation of resources. While the PRC economy has experienced significant
growth in the past two to three decades, growth has been uneven, both geographically and among various sectors of the economy. Demand
for target services and products depends, in large part, on economic conditions in China. Any slowdown in China's economic growth
may cause our potential customers to delay or cancel their plans to purchase our services and products, which in turn could reduce our
net revenues.
Although
China's economy has been transitioning from a planned economy to a more market oriented economy since the late 1970s, the PRC government
continues to play a significant role in regulating industry development by imposing industrial policies. The PRC government also exercises
significant control over China's economic growth through allocating resources, controlling the incurrence and payment of foreign
currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies.
Changes in any of these policies, laws and regulations may be quick with little advance notice and could adversely affect the economy
in China and could have a material adverse effect on our business and the value of our Class A Common Shares.
The
PRC government has implemented various measures to encourage foreign investment and sustainable economic growth and to guide the allocation
of financial and other resources. However, we cannot assure you that the PRC government will not repeal or alter these measures or introduce
new measures that will have a negative effect on us, or more specifically, we cannot assure you that the PRC government will not initiate
possible governmental actions or scrutiny to us, which could substantially affect our operation and the value of our Common Shares may
depreciate quickly. China's social and political conditions may change and become unstable. Any sudden changes to China's
political system or the occurrence of widespread social unrest could have a material adverse effect on our business and results of operations.
The
Chinese government exerts substantial influence over the manner in which we must conduct our business activities and may intervene or
influence our operations at any time, which could result in a material change in our operations and the value of our Class A Common Shares.
The
Chinese government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through
regulation and state ownership. Our ability to operate in China may be harmed by changes in its laws and regulations, including those
relating to securities regulation, data protection, cybersecurity and mergers and acquisitions and other matters. The central or local
governments of these jurisdictions may impose new, stricter regulations or interpretations of existing regulations that would require
additional expenditures and efforts on our part to ensure our compliance with such regulations or interpretations.
Government
actions in the future could significantly affect economic conditions in China or particular regions thereof, and could require us to
materially change our operating activities or divest ourselves of any interests we hold in Chinese assets. Our business may be subject
to various government and regulatory interference in the provinces in which we operate. We may incur increased costs necessary to comply
with existing and newly adopted laws and regulations or penalties for any failure to comply. Our operations could be adversely affected,
directly or indirectly, by existing or future laws and regulations relating to our business or industry.
31
Given
recent statements by the Chinese government indicating an intent to exert more oversight and control over offerings that are conducted
overseas and/or foreign investment in China-based issuers, any such action could significantly limit or completely hinder our ability
to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or become worthless.
Among
other things, China's M&A Rules and the Anti-Monopoly Law established additional procedures and requirements that could make
merger and acquisition activities by foreign investors more time-consuming and complex. Such regulation requires, among other things,
that State Administration for Market Regulation (SAMR) be notified in advance of any change-of-control transaction in which a foreign
investor acquires control of a mainland China domestic enterprise or a foreign company with substantial mainland China operations, if
certain thresholds are triggered. Moreover, the Anti-Monopoly Law requires that transactions which involve the national security, the
examination on the national security shall also be conducted according to the relevant provisions of the State. In addition, PRC Measures
for the Security Review of Foreign Investment which became effective in January 2021 require acquisitions by foreign investors of mainland
China companies engaged in military-related or certain other industries that are crucial to national security be subject to security
review before consummation of any such acquisition. We may pursue potential strategic acquisitions in China that are complementary to
our business and operations. Complying with the requirements of these regulations to complete such transactions could be time-consuming,
and any required approval processes, including obtaining approval or clearance from the MOFCOM, may delay or inhibit our ability to complete
such transactions, which could affect our ability to expand our business or maintain our market share.
Recently,
the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued
the Opinions on Severely Cracking Down on Illegal Securities Activities According to Law, or the Opinions, which was made available to
the public on July 6, 2021. The Opinions emphasized the need to strengthen the administration over illegal securities activities, and
the need to strengthen the supervision over overseas listings by Chinese companies. Effective measures, such as promoting the construction
of relevant regulatory systems, will be taken to deal with the risks and incidents of China-concept overseas listed companies. As of
the date of this prospectus, we have not received any inquiry, notice, warning, or sanctions from PRC government authorities in connection
with the Opinions.
On
June 10, 2021, the Standing Committee of the National People's Congress of China, or the SCNPC, promulgated the PRC Data Security
Law, which took effect in September 2021. The PRC Data Security Law imposes data security and privacy obligations on entities and individuals
carrying out data activities, and introduces a data classification and hierarchical protection system based on the importance of data
in economic and social development, and the degree of harm it will cause to national security, public interests, or legitimate rights
and interests of individuals or organizations when such data is tampered with, destroyed, leaked, illegally acquired or used. The PRC
Data Security Law also provides for a national security review procedure for data activities that may affect national security and imposes
export restrictions on certain data an information.
In
early July 2021, regulatory authorities in China launched cybersecurity investigations with regard to several China-based companies that
are listed in the United States. The Chinese cybersecurity regulator announced on July 2 that it had begun an investigation of Didi Global
Inc. (NYSE: DIDI) and two days later ordered that the company's app be removed from smartphone app stores. On July 5, 2021, the
Chinese cybersecurity regulator launched the same investigation on two other Internet platforms, China's Full Truck Alliance of
Full Truck Alliance Co. Ltd. (NYSE: YMM) and Boss of KANZHUN LIMITED (Nasdaq: BZ). On July 24, 2021, the General Office of the Communist
Party of China Central Committee and the General Office of the State Council jointly released the Guidelines for Further Easing the Burden
of Excessive Homework and Off-campus Tutoring for Students at the Stage of Compulsory Education, pursuant to which foreign investment
in such firms via mergers and acquisitions, franchise development, and variable interest entities are banned from this sector.
32
On
November 14, 2021, the CAC released the Regulations on the Network Data Security Management (Draft for Comments), or the Data Security
Management Regulations Draft, to solicit public opinion and comments. Pursuant to the Data Security Management Regulations Draft, data
processor holding more than one million users/users' individual information shall be subject to cybersecurity review before listing
abroad. Data processing activities refers to activities such as the collection, retention, use, processing, transmission, provision,
disclosure, or deletion of data. According to the latest amended Cybersecurity Review Measures, which was promulgated on December 28,
2021, and will become effective on February 15, 2022 and replace the Cybersecurity Review Measures promulgated on April 13, 2020, an
online platform operator holding more than one million users/users' individual information shall be subject to cybersecurity review
before listing abroad. Since the Cybersecurity Review Measures is new, the implementation and interpretation thereof is not yet clear.
As of the date of this prospectus, we have not been informed by any PRC governmental authority of any requirement that we file for approval
for this offering.
On
August 17, 2021, the State Council promulgated the Regulations on the Protection of the Security of Critical Information Infrastructure,
or the Regulations, which took effect on September 1, 2021. The Regulations supplement and specify the provisions on the security of
critical information infrastructure as stated in the Cybersecurity Review Measures. The Regulations provide, among others, that protection
department of certain industry or sector shall notify the operator of the critical information infrastructure in time after the identification
of certain critical information infrastructure.
On
August 20, 2021, the SCNPC promulgated the Personal Information Protection Law of the PRC, or the Personal Information Protection Law,
which took effect in November 2021. As the first systematic and comprehensive law specifically for the protection of personal information
in the PRC, the Personal Information Protection Law provides, among others, that (i) an individual's consent shall be obtained
to use sensitive personal information, such as biometric characteristics and individual location tracking, (ii) personal information
operators using sensitive personal information shall notify individuals of the necessity of such use and impact on the individual's
rights, and (iii) where personal information operators reject an individual's request to exercise his or her rights, the individual
may file a lawsuit with a People's Court. Given that the above mentioned newly promulgated laws, regulations and policies were
recently promulgated or issued, and have not yet taken effect (as applicable), their interpretation, application and enforcement are
subject to substantial uncertainties. See "Risk Factor
— We may be liable for improper use or appropriation of personal
information provided by our customers
" and "Risk Factors
— Our failure to obtain prior approval of the China
Securities Regulatory Commission ("CSRC") for the listing and trading of our Class A Common Shares on a foreign stock exchange
could delay this offering or could have a material adverse effect upon our business, operating results, reputation and trading price
of our Class A Common Shares.
"
33
The
Chinese government exerts oversight and control over overseas offerings and listing conducted by China-based issuers under the Listing
Records Rules and/or the Confidentiality Provisions, which could significantly limit or completely hinder our ability to offer or continue
to offer our Class A Common Shares to investors and could cause the value of our Class A Common Shares to significantly decline or become
worthless.
On
February 17, 2023, with the approval of the State Council, the CSRC issued the Listing Records Rules, including the Trial Measures,
for the administration of overseas listing filing system, which has been implemented since March 31, 2023. Under the Listing Records
Rules, a company established in mainland China seeking securities offering and listing, by both direct or indirect means, in an
overseas market are required to undertake filing procedures with the CSRC for its overseas offering and listing activities. Further,
the Trial Measures set forth a list of circumstance under which overseas offering and listing by PRC domestic companies is prohibit,
including: (i) where such securities offering and listing is explicitly prohibited by the PRC laws; (ii) where the intended
securities offering and listing may endanger national security as reviewed and determined by competent PRC authorities under the
State Council in accordance with PRC laws; (iii) where the company established in mainland China , or its controlling shareholders
and the actual controller, have committed crimes such as corruption, bribery, embezzlement, misappropriation of property or
undermining the order of the socialist market economy during the latest three (3) years; (iv) where the company established in
mainland China seeking securities offering and listing is suspected of committing crimes or major violations of laws and
regulations, and is under investigation according to law, and no conclusion has yet been made thereof; and (v) where there are
material ownership disputes over equity held by the controlling shareholder of company established in mainland China or by other
shareholders that are controlled by the controlling shareholder and/or actual controller. In accordance with the Trial Measures, the
listing and trading of our Class A Common Shares on Nasdaq is deemed as an indirect overseas offering and listing by companies
established in China, and thus, we are subject to the Listing Records Rules and the relevant filing procedures as required. Further,
we believe, as of the date of this annual report, none of the circumstances prohibiting the overseas offering and listing by
companies established in China as listed above applies to us, and we can offer and continue to offer our Class A Common Shares on
Nasdaq. In accordance with the Notice on the Arrangement for the Filing of Overseas Offering and Listing by Domestic Companies
issued by the CSRC along with the Listing Records Rules on the same day, we are deemed as an "Existing Issuer" because
we had been listed overseas before March 31, 2023. Under such Notice, we are not required to undertake the initial filing procedure
immediately. However, we shall carry out filing procedures as required by the Trial Measures in a timely manner for subsequent
events, including any further follow-up offerings on Nasdaq, dual and/or secondary offering and listing on different overseas
markets, and occurrence of material events including change of control, investigations or sanctions imposed by overseas securities
regulatory agencies or other relevant competent authorities, change of listing status or transfer of listing segment, and voluntary
or mandatory delisting. If we or our Mainland China Subsidiaries in future fail to undertake filing procedures as stipulated in the
Trial Measures, or offer and list securities in an overseas market in violation of the Trial Measures, the CSRC may order
rectification, issue warnings to us and/or our Mainland China Subsidiaries, and impose a fine of between RMB 1,000,000 yuan and RMB
10,000,000 yuan. The CSRC may also inform its regulatory counterparts in the overseas jurisdictions, such as the SEC, via
cross-border securities regulatory cooperation mechanisms.
Further,
on February 24, 2023, the CSRC, together with Ministry of Finance, National Administration of State Secrets Protection, and National
Archives Administration of China, released the Provisions on Strengthening the Confidentiality and Archives Administration Related to
the Overseas Securities Offering and Listing by Domestic Enterprises (the "Confidentiality Provisions"), which came into
effect on March 31, 2023 with the Trial Measures. Under the Confidentiality Provisions, companies established in China seeking overseas
offering and listing, by both direct and indirect means, are required to institute a sound confidentiality and archives system. If such
companies established in China intend to, either directly or through its overseas listed entity, publicly disclose or provide to relevant
individuals or entities including securities companies, securities service providers and overseas regulators, any documents and materials
that contain state secrets or working secrets of government agencies, they shall obtain approval from competent authorities and complete
the relevant filing procedure with the competent secrecy administrative department prior to their disclosure or provision of such documents
and materials. Further, if they provide or publicly disclose documents and materials which may adversely affect national security or
public interests, they shall strictly follow the corresponding procedures in accordance with relevant laws and regulations. Any failure
or perceived failure by us or our subsidiaries to comply with the above confidentiality and archives administration requirements under
the Confidentiality Provisions and other relevant PRC laws and regulations may cause relevant entities to be held legally liable by competent
authorities, and referred to the judicial organ to be investigated for criminal liability if suspected of committing a crime.
Any
failure of us or our Mainland China Subsidiaries to fully comply with the Listing Records Rules may significantly limit or completely
hinder our ability to offer or continue to offer our Class A Common Shares on Nasdaq, cause significant disruption to our business operations,
severely damage our reputation, materially and adversely affect our financial condition and results of operations and cause our Class
A Common Shares to significantly decline in value or become worthless.
34
The
holding company may be subject to approval or other requirement from PRC authorities, and, if required, we cannot assure you that we
will be able to obtain such approval or satisfy such requirement. If we failed to obtain such approval or satisfy such requirement, we
may not be able to continue listing on U.S. exchange, continue to offer securities to investors, or materially affect the interest of
the investors and the value of our Class A Common Shares may decrease or become worthless.
As
of the date of this annual report, we or our Subsidiaries have not received any requirement to obtain permission or approval from CSRC
or Cyberspace Administration of China. However, recently, the General Office of the Central Committee of the Communist Party of China
and the General Office of the State Council jointly issued the "Opinions on Severely Cracking Down on Illegal Securities Activities
According to Law," or the Opinions, which was made available to the public on July 6, 2021. The Opinions emphasized the need to
strengthen the administration over illegal securities activities, and the need to strengthen the supervision over overseas listings by
Chinese companies. Subsequent laws and regulation have been published and implemented, including Listing Records Rules and Confidentiality
Provisions. Effective measures, such as promoting the construction of relevant regulatory systems will be taken to deal with the risks
and incidents of China-concept overseas listed companies, and cybersecurity and data privacy protection requirements and similar matters.
The Opinions and any related implementing rules to be enacted may subject us to compliance requirement in the future.
Given
the current regulatory environment in the PRC, we are still subject to the uncertainty of interpretation and enforcement of the rules
and regulations in the PRC, which can change quickly with little advance notice, and any future actions of the PRC authorities. It is
uncertain when and whether the Company will be required to obtain permission from the PRC government to list on U.S. exchanges (including
retroactively), and even if such permission is obtained, whether it will be denied or rescinded. As a result, our operations could be
adversely affected, directly or indirectly, by existing or future laws and regulations relating to our business or industry.
PRC
laws and regulations governing our current business operations are sometimes vague and uncertain and any changes in such laws and regulations
may impair our ability to operate profitably.
There
are substantial uncertainties regarding the interpretation and application of PRC laws and regulations including, but not limited to,
the laws and regulations governing our business and the enforcement and performance of our arrangements with customers in certain circumstances.
The laws and regulations are sometimes vague and may be subject to future changes, and their official interpretation and enforcement
may involve substantial uncertainty. The effectiveness and interpretation of newly enacted laws or regulations, including amendments
to existing laws and regulations, may be delayed, and our business may be affected if we rely on laws and regulations which are subsequently
adopted or interpreted in a manner different from our understanding of these laws and regulations. New laws and regulations that affect
existing and proposed future businesses may also be applied retroactively. We cannot predict what effect the interpretation of existing
or new PRC laws or regulations may have on our business.
35
The
legal system in mainland China is a civil law system based on written statutes. Unlike the common law system, prior court decisions under
the civil law system may be cited for reference but have limited precedential value. Since these laws and regulations are relatively
new and the legal system in mainland China continues to rapidly evolve, the interpretations of many laws, regulations and rules are not
always uniform and the enforcement of these laws, regulations and rules involves uncertainties.
In
1979, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters in general. The
overall effect of legislation over the past three decades has significantly enhanced the protections afforded to various forms of foreign
investments in China. However, China has not developed a fully integrated legal system, and recently enacted laws and regulations may
not sufficiently cover all aspects of economic activities in China. In particular, the interpretation and enforcement of these laws and
regulations involve uncertainties. Since PRC administrative and court authorities have significant discretion in interpreting and implementing
statutory provisions and contractual terms, it may be difficult to evaluate the outcome of administrative and court proceedings and the
level of legal protection we enjoy. These uncertainties may affect our judgment on the relevance of legal requirements and our ability
to enforce our contractual rights or tort claims. In addition, the regulatory uncertainties may be exploited through unmerited or frivolous
legal actions or threats in attempts to extract payments or benefits from us.
Furthermore,
the legal system in mainland China is based in part on government policies and internal rules, some of which are not published on a timely
basis or at all and may have retroactive effect. As a result, we may not be aware of our violation of any of these policies and rules
until sometime after the violation. In addition, any administrative and court proceedings in China may be protracted, resulting in substantial
costs and diversion of resources and management attention.
From
time to time, we may have to resort to administrative and court proceedings to enforce our legal rights. However, since PRC administrative
and court authorities have significant discretion in interpreting and implementing statutory and contractual terms, it may be more difficult
to evaluate the outcome of administrative and court proceedings and the level of legal protection we enjoy than in more developed legal
systems. Furthermore, the legal system in mainland China is based in part on government policies and internal rules (some of which are
not published in a timely manner or at all) that may have retroactive effect. As a result, we may not be aware of our violation of these
policies and rules until sometime after the violation. Such uncertainties, including uncertainty over the scope and effect of our contractual,
property (including intellectual property) and procedural rights, and any failure to respond to changes in the regulatory environment
in China could materially and adversely affect our business and impede our ability to continue our operations.
Recently,
the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued
the "Opinions on Severely Cracking Down on Illegal Securities Activities According to Law," or the Opinions, which was made
available to the public on July 6, 2021. The Opinions emphasized the need to strengthen the administration over illegal securities activities,
and the need to strengthen the supervision over overseas listings by Chinese companies. Subsequent laws and regulation have been published
and implemented, including Listing Records Rules and Confidentiality Provisions. Effective measures, such as promoting the construction
of relevant regulatory systems will be taken to deal with the risks and incidents of China-concept overseas listed companies, and cybersecurity
and data privacy protection requirements and similar matters. The Opinions and any related implementing rules to be enacted may subject
us to compliance requirement in the future.
36
Regulation
and censorship of information distribution over the Internet in China may adversely affect our business, and we may be liable for information
displayed on, retrieved from or linked to our website.
China
has enacted laws and regulations governing Internet access and the distribution of products, services, news, information, audio-video
programs and other content through the Internet. The PRC government has prohibited the distribution of information through the Internet
that it deems to be in violation of PRC laws and regulations. If any of the content on our online platform is deemed to violate any content
restrictions by the PRC government, we would not be able to continue to display such content and could become subject to penalties, including
confiscation of income, fines, suspension of business and revocation of required licenses, which could materially and adversely affect
our business, financial condition and results of operations. We may also be subject to potential liability for any unlawful actions of
our customers or customers of our website or for content we distribute that is deemed inappropriate. It may be difficult to determine
the type of content that may result in liability to us, and if we are found to be liable, we may be prevented from operating our website
in China.
China
Securities Regulatory Commission and other Chinese government agencies may exert more oversight and control over offerings that are conducted
overseas and foreign investment in China-based issuers, especially those in the technology filed. Additional compliance procedures may
be required, and, if required, we cannot predict whether we will be able to obtain such approval. If we are required to obtain PRC governmental
permissions to commence any sale of the securities, we will not commence the offering until we obtain such permissions. As a result,
we face uncertainty about future actions by the PRC government that could significantly affect our ability to offer or continue to offer
securities to investors and cause the value of our securities to significantly decline or be worthless.
On
July 6, 2021, the General Office of the Communist Party of China Central Committee and the General Office of the State Council jointly
issued a document to crack down on illegal activities in the securities market and promote the high-quality development of the capital
market, which, among other things, requires the relevant governmental authorities to strengthen cross-border oversight of law-enforcement
and judicial cooperation, to enhance supervision over China-based companies listed overseas, and to establish and improve the system
of extraterritorial application of the PRC securities laws. Subsequent laws and regulation have been published and implemented, including
Listing Records Rules and related documents and notices, under which certain filing procedures are required to be conducted for foreign
listing. We are deemed as an "Existing Issuer" therefore are not required to undertake the initial filing procedure immediately.
However, we shall carry out filing procedures as required by the Trial Measures in a timely manner for subsequent events.
Since
the document as well as the subsequent laws and regulations published are relatively new, uncertainties still exist in relation to how
soon legislative or administrative regulation making bodies will respond and what existing or new laws or regulations or detailed implementations
and interpretations will be modified or promulgated, if any, and the potential impact such modified or new laws and regulations will
have on our future business, results of operations, and the value of our securities.
Further,
Chinese government continues to exert more oversight and control over Chinese technology firms. On July 2, 2021, Chinese cybersecurity
regulator announced, that it had begun an investigation of Didi Global Inc. (NYSE: DIDI) and two days later ordered that the company's
application be removed from smartphone application stores. On July 5, 2021, the Chinese cybersecurity regulator launched the same investigation
on two other Internet platforms, China's Full Truck Alliance of Full Truck Alliance Co. Ltd. (NYSE: YMM) and Boss of KANZHUN LIMITED
(Nasdaq: BZ).
37
Therefore,
China Securities Regulatory Commission and other Chinese government agencies may exert more oversight and control over offerings that
are conducted overseas and foreign investment in China-based issuers, especially those in the technology filed. As of the date of this
annual report, we have not received any requirement to obtain approval of CSRC to continue listing on U.S. exchanges. Further, however,
given the current regulatory environment in the PRC, we are still subject to the uncertainty of interpretation and enforcement of the
rules and regulations in the PRC, which can change quickly with little advance notice, and any future actions of the PRC authorities,
additional compliance procedures may be required in connection with any offering of our securities and our business operations. If such
compliance procedures were required in the future in connection with any offering of our securities and our business operations, we cannot
predict whether we will be able to obtain such approval. If we are unable to obtain such permission we may be forced to abandon the offering.
As a result, we face uncertainty about future actions by the PRC government that could significantly affect our ability to offer or continue
to offer securities to investors and cause the value of our Class A Common Shares to significantly decline or be worthless.
We
may be subject to PRC laws relating to the use, sharing, retention, security and transfer of confidential and private information, such
as personal information and other data. These laws continue to develop, and the PRC government may adopt other rules and restrictions
in the future. Non-compliance could result in penalties or other significant legal liabilities.
The
Cybersecurity Law, which was adopted by the National People's Congress on November 7, 2016 and came into force on June 1, 2017,
and the Cybersecurity Review Measures, or the "Review Measures," which were promulgated on April 13, 2020, amended on December
28, 2021 and will become effective on February 15, 2022, provide that personal information and important data collected and generated
by a critical information infrastructure operator in the course of its operations in China must be stored in China, and if a critical
information infrastructure operator purchases internet products and services that affect or may affect national security, it should be
subject to cybersecurity review by the CAC. In addition, a cybersecurity review is required where critical information infrastructure
operators, or the "CIIOs," purchase network-related products and services, which products and services affect or may affect
national security. Due to the lack of further interpretations, the exact scope of what constitute a "CIIO" remains unclear.
Further, the PRC government authorities may have wide discretion in the interpretation and enforcement of these laws. In addition, Review
Measures stipulates that an online platform operator holding more than one million users/users' individual information shall be
subject to cybersecurity review before listing abroad. Cybersecurity Review Measures does not provide a definition of "online platform
operator", therefore, we cannot assure you that we will not be deemed as an "online platform operator". As of the date
of this prospectus, we have not received any notice from any authorities identifying us as a CIIO or requiring us to undertake a cybersecurity
review by the CAC. Further, as of the date of this prospectus, we have not been subject to any penalties, fines, suspensions, investigations
from any competent authorities for violation of the regulations or policies that have been issued by the CAC. On June 10, 2021, the Standing
Committee of the National People's Congress promulgated the Data Security Law which took effect on September 1, 2021. The Data
Security Law requires that data shall not be collected by theft or other illegal means, and it also provides that a data classification
and hierarchical protection system shall be established. The data classification and hierarchical protection system protects data according
to its importance in economic and social development, and the damages it may cause to national security, public interests, or the legitimate
rights and interests of individuals and organizations if the data is falsified, damaged, disclosed, illegally obtained or illegally used,
which protection system is expected to be built by the state for data security in the near future. On November 14, 2021, CAC published
the Regulations on the Network Data Security Management (Draft for Comments), or the Data Security Management Regulations Draft to solicit
public opinion and comments. Under the Data Security Management Regulations Draft, which provides that an overseas initial public offering
to be conducted by a data processor processing the personal information of more than one million individuals shall apply for a cybersecurity
review. Data processor means an individual or organization that independently makes decisions on the purpose and manner of processing
in data processing activities, and data processing activities refers to activities such as the collection, retention, use, processing,
transmission, provision, disclosure, or deletion of data. We may be deemed as a data processor under the Data Security Management Regulations
Draft. However, the Data Security Management Regulations Draft has not been formally adopted. It is uncertain when the final regulation
will be issued and take effect, how it will be enacted, interpreted or implemented, and whether it will affect us. There remains uncertainty
as to how the Review Measures and the Data Security Management Regulations Draft will be interpreted or implemented and whether the PRC
regulatory agencies, including the CAC, may adopt new laws, regulations, rules, or detailed implementation and interpretation related
to the Review Measures and the Data Security Regulations Draft. If any such new laws, regulations, rules, or implementation and interpretation
come into effect, we expect to take all reasonable measures and actions to comply. We cannot assure you that PRC regulatory agencies,
including the CAC, would take the same view as we do, and there is no assurance that we can fully or timely comply with such laws should
they be deemed applicable to our operations. Any cybersecurity review could also result in negative publicity with respect to our Company
and diversion of our managerial and financial resources. There is no certainty as to how such review or prescribed actions would impact
our operations and we cannot guarantee that any clearance can be obtained or any actions that may be required for our listing on the
Nasdaq capital market and the offering as well can be taken in a timely manner, or at all.
38
In
addition, according to the Personal Information Protection Law, where the purpose of the activity is to provide a product or service
to that natural person located within China, such activity shall comply with the Personal Information Protection Law. Further, the Data
Security Law provides that where any data handling activity carried out outside of the territory of China harms the national security,
public interests, or the legitimate rights and interests of citizens or organizations of China, legal liability shall be investigated
in accordance with such law. However, the Personal Information Protection Law and the Data Security Law are relatively new, there remains
uncertainty as to how the laws will be interpreted or implemented and whether the PRC regulatory agencies, including the CAC, may adopt
new laws, regulations, rules, or detailed implementation and interpretation related to the two laws.
The
regulatory requirements with respect to cybersecurity and data privacy are constantly evolving and can be subject to varying interpretations,
and significant changes, resulting in uncertainties about the scope of our responsibilities in that regard. Failure to comply with the
cybersecurity and data privacy requirements in a timely manner, or at all, may subject us to government enforcement actions and investigations,
fines, penalties, suspension, or disruption of our operations, among other things.
We
may be liable for improper use or appropriation of personal information provided by our customers.
Our
business can potentially involve collecting and retaining certain internal and customer data. We also maintain information about various
aspects of our operations as well as regarding our employees. The integrity and protection of our customer, employee and company data
is critical to our business. Our customers and employees expect that we will adequately protect their personal information. We are required
by applicable laws to keep strictly confidential the personal information that we collect, and to take adequate security measures to
safeguard such information.
39
The
PRC Criminal Law, as amended by its Amendment 7 (effective on February 28, 2009) and Amendment 9 (effective on November 1, 2015), prohibits
institutions, companies, and their employees from selling or otherwise illegally disclosing a citizen's personal information obtained
in performing duties or providing services or obtaining such information through theft or other illegal ways. On November 7, 2016, the
SCNPC issued the Cyber Security Law of the PRC, or Cyber Security Law, which became effective on June 1, 2017. Pursuant to the Cyber
Security Law, network operators must not, without users' consent, collect their personal information, and may only collect users'
personal information necessary to provide their services. Providers are also obliged to provide security maintenance for their products
and services and shall comply with provisions regarding the protection of personal information as stipulated under the relevant laws
and regulations.
The
Civil Code of the PRC (issued by the PRC National People's Congress on May 28, 2020 and effective from January 1, 2021) provides
legal basis for privacy and personal information infringement claims under the Chinese civil laws. PRC regulators, including the CAC,
the Ministry of Industry and Information Technology, or MIIT, and the Ministry of Public Security, have been increasingly focused on
regulation in data security and data protection.
The
PRC regulatory requirements regarding cybersecurity are evolving. For instance, various regulatory bodies in China, including the CAC,
the Ministry of Public Security and the State Administration for Market Regulation, or the SAMR (formerly known as State Administration
for Industry and Commerce, or the SAIC), have enforced data privacy and protection laws and regulations with varying and evolving standards
and interpretations. In April 2020, the Chinese government promulgated Cybersecurity Review Measures, which came into effect on June
1, 2020, was amended on December 28, 2021, and will become effective on February 15, 2022. According to the Cybersecurity Review Measures,
(i) operators of critical information infrastructure must pass a cybersecurity review when purchasing network products and services which
do or may affect national security; (ii) online platform operators who are engaged in data processing are also subject to the regulatory
scope; (iii) the CSRC is included as one of the regulatory authorities for purposes of jointly establishing the state cybersecurity review
working mechanism; (iv) online platform operators holding more than one million users/users' individual information and seeking
a listing outside China shall file for cybersecurity review; (v) the risks of core data, material data or large amounts of personal information
being stolen, leaked, destroyed, damaged, illegally used or illegally transmitted to overseas parties and the risks of critical information
infrastructure, core data, material data or large amounts of personal information being influenced, controlled or used maliciously shall
be collectively taken into consideration during the cybersecurity review process.
Certain
internet platforms in China have been reportedly subject to heightened regulatory scrutiny in relation to cybersecurity matters. As of
the date of this prospectus, we have not been informed by any PRC governmental authority of any requirement that we file for a cybersecurity
review. However, if we are deemed to be a critical information infrastructure operator or a company that is engaged in data processing
and holds personal information of more than one million users, we could be subject to PRC cybersecurity review.
40
As
of the date hereof, we are of the view that we are in compliance with the applicable PRC laws and regulations governing the data privacy
and personal information in all material respects, including the data privacy and personal information requirements of the Cyberspace
Administration of China, and we have not received any complaints from any third party, or been investigated or punished by any PRC competent
authority in relation to data privacy and personal information protection. However, as there remains significant uncertainty in the interpretation
and enforcement of relevant PRC cybersecurity laws and regulations, we could be subject to cybersecurity review, and if so, we may not
be able to pass such review in relation to this offering. In addition, we could become subject to enhanced cybersecurity review or investigations
launched by PRC regulators in the future. Any failure or delay in the completion of the cybersecurity review procedures or any other
non-compliance with the related laws and regulations may result in fines or other penalties, including suspension of business, website
closure, removal of our app from the relevant app stores, and revocation of prerequisite licenses, as well as reputational damage or
legal proceedings or actions against us, which may have material adverse effect on our business, financial condition or results of operations.
On
June 10, 2021, the SCNPC promulgated the PRC Data Security Law, which took effect in September 2021. The PRC Data Security Law imposes
data security and privacy obligations on entities and individuals carrying out data activities, and introduces a data classification
and hierarchical protection system based on the importance of data in economic and social development, and the degree of harm it will
cause to national security, public interests, or legitimate rights and interests of individuals or organizations when such data is tampered
with, destroyed, leaked, illegally acquired or used. The PRC Data Security Law also provides for a national security review procedure
for data activities that may affect national security and imposes export restrictions on certain data an information.
As
uncertainties remain regarding the interpretation and implementation of these laws and regulations, we cannot assure you that we will
comply with such regulations in all respects and we may be ordered to rectify or terminate any actions that are deemed illegal by regulatory
authorities. We may also become subject to fines and/or other sanctions which may have material adverse effect on our business, operations
and financial condition.
While
we take various measures to comply with all applicable data privacy and protection laws and regulations, our current security measures
and those of our third-party service providers may not always be adequate for the protection of our customer, employee or company data.
We may be a target for computer hackers, foreign governments or cyber terrorists in the future.
Unauthorized
access to our proprietary internal and customer data may be obtained through break-ins, sabotage, breach of our secure network by an
unauthorized party, computer viruses, computer denial-of-service attacks, employee theft or misuse, breach of the security of the networks
of our third-party service providers, or other misconduct. Because the techniques used by computer programmers who may attempt to penetrate
and sabotage our proprietary internal and customer data change frequently and may not be recognized until launched against a target,
we may be unable to anticipate these techniques.
Unauthorized
access to our proprietary internal and customer data may also be obtained through inadequate use of security controls. Any of such incidents
may harm our reputation and adversely affect our business and results of operations. In addition, we may be subject to negative publicity
about our security and privacy policies, systems, or measurements. Any failure to prevent or mitigate security breaches, cyber-attacks
or other unauthorized access to our systems or disclosure of our customers' data, including their personal information, could result
in loss or misuse of such data, interruptions to our service system, diminished customer experience, loss of customer confidence and
trust, impairment of our technology infrastructure, and harm our reputation and business, resulting in significant legal and financial
exposure and potential lawsuits.
41
We
must remit the offering proceeds to China before they may be used to benefit our business in China, the process of which may be time-consuming,
and we cannot assure that we can finish all necessary governmental registration processes in a timely manner.
The
proceeds of any offering of our securities may be sent back to mainland China, and the process for sending such proceeds back to mainland
China may be time-consuming after the closing of the offering. We may be unable to use these proceeds to grow our business until our
Mainland China Subsidiaries receive such proceeds in mainland China. Any transfer of funds by us to our Mainland China Subsidiaries,
either as a shareholder loan or as an increase in registered capital, are subject to approval by or registration or filing with relevant
governmental authorities in China. Any foreign loans procured by our Mainland China Subsidiaries is required to be registered with China's
State Administration of Foreign Exchange ("SAFE") or its local branches or satisfy relevant requirements, and our Mainland
China Subsidiaries may not procure loans which exceed the difference between their respective total project investment amount and registered
capital or 2 times (which may be varied year by year due to the change of PRC's national macro-control policy) of the net worth
of our Mainland China Subsidiary. According to the relevant PRC regulations on foreign-invested enterprises in China, capital contributions
to our Mainland China Subsidiaries are subject to the approval of or filing with State Administration for Market Regulation in its local
branches, the Ministry of Commerce in its local branches and registration with a local bank authorized by SAFE.
To
remit the proceeds of the offering, we must take the steps legally required under the PRC laws, for example, we will open a special foreign
exchange account for capital account transactions, remit the offering proceeds into such special foreign exchange account and apply for
settlement of the foreign exchange. The timing of the process is difficult to estimate because the efficiencies of different SAFE branches
can vary materially.
In
light of the various requirements imposed by PRC regulations on loans to, and direct investment in, entities in mainland China by offshore
holding companies, we cannot assure you that we will be able to complete the necessary government registrations or obtain the necessary
government approvals on a timely basis, if at all, with respect to future loans by us to our Mainland China Subsidiary or with respect
to future capital contributions by us to our Mainland China Subsidiary. If we fail to complete such registrations or obtain such approvals,
our ability to use the proceeds from any offering of our securities and to capitalize or otherwise fund our operations in mainland China
may be negatively affected, which could materially and adversely affect our liquidity, our ability to fund and expand our business and
our Common Shares.
U.S.
regulators' ability to conduct investigations or enforce rules in China is limited.
The
majority of our operations conducted outside of the U.S. As a result, it may not be possible for the U.S. regulators to conduct investigations
or inspections, or to effect service of process within the U.S. or elsewhere outside China on us, our subsidiaries, officers, directors
and shareholders, and others, including with respect to matters arising under U.S. federal or state securities laws. China does not have
treaties providing for reciprocal recognition and enforcement of judgments of courts with the U.S. and many other countries. As a result,
recognition and enforcement in China of these judgments in relation to any matter, including U.S. securities laws and the laws of the
Cayman Islands, may be difficult or impossible.
42
You
may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing original actions in mainland
China against us or Hong Kong or other foreign laws, and the ability of U.S. authorities to bring actions in mainland China may also
be limited.
We
are an exempted company with limited liability incorporated under the laws of the British Virgin Island, we conduct a significant portion
of our operations in mainland China and the majority of our assets are located in mainland China. In addition, all of our directors,
officers or senior management other than Yunhao Chen, are located in mainland China. As a result, it may be more difficult for our Shareholders
to enforce liabilities and enforce judgments on those individuals. Our PRC legal counsel, Guangdong Jiamao Law Firm, has advised
us that mainland China does not have treaties providing for the reciprocal recognition and enforcement of judgments of courts with the
Cayman Islands and many other countries and regions. Therefore, recognition and enforcement in mainland China of judgments of a court
in any of these jurisdictions outside mainland China in relation to any matter not subject to a binding arbitration provision may be
difficult or impossible.
On
July 14, 2006, Hong Kong and the mainland China entered into the Arrangement on Reciprocal Recognition and Enforcement of Judgments in
Civil and Commercial Matters by the Courts of the PRC and of the Hong Kong Special Administrative Region Pursuant to Choice of Court
Agreements Between Parties Concerned, or the 2006 Arrangement, pursuant to which a party with a final court judgment rendered by a Hong
Kong court requiring payment of money in a civil and commercial case pursuant to a choice of court agreement in writing may apply for
recognition and enforcement of the judgment in mainland China . Similarly, a party with a final judgment rendered by a court in mainland
China requiring payment of money in a civil and commercial case pursuant to a choice of court agreement in writing may apply for recognition
and enforcement of the judgment in Hong Kong. A choice of court agreement in writing is defined as any agreement in writing entered into
between parties after the effective date of the 2006 Arrangement in which a Hong Kong court or a court in mainland China is expressly
designated as the court having sole jurisdiction for the dispute. Therefore, it is not possible to enforce a judgment rendered by a Hong
Kong court in mainland China if the parties in dispute have not agreed to enter into a choice of court agreement in writing. The 2006
Arrangement became effective on August 1, 2008.
Subsequently
on January 18, 2019, Hong Kong and mainland China entered into the Arrangement on Reciprocal Recognition and Enforcement of Judgments
in Civil and Commercial Matters between the Courts of the Mainland and of the Hong Kong Special Administrative Region, or the Arrangement,
pursuant to which, among other things, the scope of application was widened to cover both monetary and non-monetary judgments in most
civil and commercial matters, including effective judgments on civil compensation in criminal cases. In addition, the requirement of
a choice of court agreement in writing has been removed. It is no longer necessary for parties to agree to enter into a choice of court
agreement in writing, as long as it can be shown that there is a connection between the dispute and the requesting place, such as place
of the defendant's residence, place of the defendant's business or place of performance of the contract or tort. The 2019
Arrangement shall apply to judgments in civil and commercial matters made on or after its effective date by the courts of both sides.
The 2006 Arrangement shall be terminated on the same day when the 2019 Arrangement comes into effect. If a "written choice of court
agreement" has been signed by parties according to the 2006 Arrangement prior to the effective date of the 2019 Arrangement, the
2006 Arrangement shall still apply. Although the 2019 Arrangement has been signed, its effective date has yet to be announced. Therefore,
there are still uncertainties about the outcomes and effectiveness of enforcement or recognition of judgments under the 2019 Arrangement.
43
Furthermore,
shareholder claims that are common in the U.S., including securities law class actions and fraud claims, generally are difficult to pursue
as a matter of law or practicality in China. For example, in China, there are significant legal and other obstacles to obtaining information
needed for shareholder investigations or litigation outside China or otherwise with respect to foreign entities. Although the local authorities
in China may establish a regulatory cooperation mechanism with the securities regulatory authorities of another country or region to
implement cross-border supervision and administration, such regulatory cooperation with the securities regulatory authorities in the
U.S. have not been efficient in the absence of mutual and practical cooperation mechanism. According to Article 177 of the PRC Securities
Law which became effective in March 2020, no overseas securities regulator is allowed to directly conduct investigation or evidence collection
activities within the territory of mainland China. Accordingly, without the consent of the competent PRC securities regulators and relevant
authorities, no organization or individual may provide the documents and materials relating to securities business activities to overseas
parties.
We
face uncertainty regarding the PRC tax reporting obligations and consequences for certain indirect transfers of the stock of our operating
company.
Pursuant
to the Notice on Strengthening Administration of Enterprise Income Tax for Share Transfers by Non-PRC Resident Enterprises issued by
the PRC State Administration of Taxation ("SAT") on December 10, 2009, or Circular 698, where a foreign investor transfers
the equity interests of a mainland China resident enterprise indirectly by way of the sale of equity interests of an overseas holding
company, or an Indirect Transfer, and such overseas holding company is located in a tax jurisdiction that: (i) has an effective tax rate
less than 12.5% or (ii) does not tax foreign income of its residents, the foreign investor should report such Indirect Transfer to the
competent tax authority of mainland China PRC resident enterprise.
On
February 3, 2015, the SAT issued the Announcement of the State Administration of Taxation on Several Issues Concerning the Enterprise
Income Tax on Indirect Property Transfer by Non-Resident Enterprises, or SAT Bulletin 7. SAT Bulletin 7 supersedes the rules with respect
to the Indirect Transfer under SAT Circular 698. SAT Bulletin 7 has introduced a new tax regime that is significantly different from
the previous one under SAT Circular 698. SAT Bulletin 7 extends the mainland China's tax jurisdiction to not only Indirect Transfers
set forth under SAT Circular 698 but also transactions involving transfer of other taxable assets through offshore transfer of a foreign
intermediate holding company. In addition, SAT Bulletin 7 provides clearer criteria than SAT Circular 698 for assessment of reasonable
commercial purposes and has introduced safe harbors for internal group restructurings and the purchase and sale of equity through a public
securities market. SAT Bulletin 7 also brings challenges to both foreign transferor and transferee (or other person who is obligated
to pay for the transfer) of taxable assets. Where a non-resident enterprise transfers taxable assets indirectly by disposing of the equity
interests of an overseas holding company, which is an Indirect Transfer, the non-resident enterprise, being the transferor, or the transferee,
or the mainland China entity that directly owns the taxable assets, may report such Indirect Transfer to the relevant tax authority.
Using a "substance over form" principle, the PRC tax authority may disregard the existence of the overseas holding company
if it lacks a reasonable commercial purpose and was established for the purpose of reducing, avoiding or deferring mainland China tax.
As a result, gains derived from such Indirect Transfer may be subject to mainland China enterprise income tax, and the transferee or
other person who is obligated to pay for the transfer is obligated to withhold the applicable taxes, currently at a rate of 10% for the
transfer of equity interests in a mainland China resident enterprise. Both the transferor and the transferee may be subject to penalties
under PRC tax laws if the transferee fails to withhold the taxes and the transferor fails to pay the taxes.
44
On
October 17, 2017, the SAT issued the Announcement of the State Administration of Taxation on Matters Concerning Withholding of Income
Tax of Non-resident Enterprises at Source, or SAT Bulletin 37, which, among others, repealed the SAT Circular 698 on December 1, 2017.
SAT Bulletin 37 further details and clarifies the tax withholding methods in respect of income of non-resident enterprises under SAT
Circular 698. And certain rules stipulated in SAT Bulletin 7 are replaced by SAT Bulletin 37. Where the non-resident enterprise fails
to declare the tax payable pursuant to Article 39 of the PRC Enterprise Income Tax Law, the tax authority may order it to pay the tax
due within required time limits, and the non-resident enterprise shall declare and pay the tax payable within such time limits specified
by the tax authority; however, if the non-resident enterprise voluntarily declares and pays the tax payable before the tax authority
orders it to do so within required time limits, it shall be deemed that such enterprise has paid the tax in time.
We
face uncertainties as to the reporting and other implications of certain past and future transactions where taxable assets in mainland
China are involved, such as offshore restructuring. Our company may be subject to filing obligations or taxed if our company is transferor
in such transactions, and may be subject to withholding obligations if our company is transferee in such transactions, under SAT Bulletin
7 and SAT Bulletin 37. For transfer of shares in our company by investors who are not resident enterprises in mainland China, our Mainland
China Subsidiary may be requested to assist in the filing under SAT Bulletin 7 and SAT Bulletin 37. As a result, we may be required to
expend valuable resources to comply with SAT Bulletin 7 and SAT Bulletin 37 or to request the relevant transferors from whom we purchase
taxable assets to comply with these circulars, or to establish that our company should not be taxed under these circulars, which may
have a material adverse effect on our financial condition and results of operations.
PRC
regulations relating to the establishment of offshore special purpose companies by mainland China residents may subject our mainland
China resident shareholders to personal liability and limit our ability to acquire mainland China companies or to inject capital into
our Mainland China Subsidiary, limit our Mainland China Subsidiary ability to distribute profits to us, or otherwise materially and adversely
affect us.
In
July 2014, SAFE has promulgated the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents' Offshore
Investment and Financing and Roundtrip Investment Through Special Purpose Vehicles, or SAFE Circular 37, to replace the Notice on Relevant
Issues Concerning Foreign Exchange Administration for Domestic Residents' Financing and Roundtrip Investment Through Offshore Special
Purpose Vehicles, or SAFE Circular 75, which ceased to be effective upon the promulgation of SAFE Circular 37. SAFE Circular 37 requires
mainland China residents (including mainland China individuals and mainland China corporate entities as well as foreign individuals that
are deemed as mainland China residents for foreign exchange administration purpose) to register with SAFE or its local branches in connection
with their direct or indirect offshore investment activities. SAFE Circular 37 further requires amendment to the SAFE registrations in
the event of any changes with respect to the basic information of the offshore special purpose vehicle, such as change of a mainland
China individual shareholder, name and operation term, or any significant changes with respect to the offshore special purpose vehicle,
such as increase or decrease of capital contribution, share transfer or exchange, or mergers or divisions. SAFE Circular 37 is applicable
to our shareholders who are mainland China residents and may be applicable to any offshore acquisitions that we make in the future.
45
If
any mainland China shareholder who makes direct or indirect investments in offshore special purpose vehicles, or SPV, fails to make the
required registration or to update the previously filed registration, the subsidiaries of such SPV in China may be prohibited from distributing
its profits or the proceeds from any capital reduction, share transfer or liquidation to the SPV, and the SPV may also be prohibited
from making additional capital contribution into its subsidiary in China. On February 28, 2015, the SAFE promulgated a Notice on Further
Simplifying and Improving Foreign Exchange Administration Policy on Direct Investment, or SAFE Notice 13, which became effective on June
1, 2015. Under SAFE Notice 13, applications for foreign exchange registration of inbound foreign direct investment and outbound overseas
direct investment, including those required under the SAFE Circular 37, will be filed with qualified banks instead of the SAFE. The qualified
banks will directly examine the applications and accept registrations under the supervision of the SAFE.
Of
our current shareholders, five pre-IPO shareholders are individual Chinese residents to whom Notice 37 applies. The remaining pre-IPO
shareholders are enterprises and Hong Kong residents, to whom Notice 37 does not apply; provided, however, that to the extent the shareholders
of such enterprises are themselves Chinese residents, Notice 37 would apply to such individuals. As of the date hereof, none of the shareholders
who are Chinese residents who hold such shares directly or through a Hong Kong enterprise has submitted registration under Notice 37.
Although such individuals have promised to complete registration at the time they pay the company's capital contribution prior
to completion of this offering, there can be no assurance such registration will be completed in a timely manner.  We have requested
mainland China residents whom we know hold direct or indirect interests in our company to make the necessary applications, filings and
amendments as required under Notice 37 and other related rules. However, we cannot assure you that the registration will be duly and
timely completed with the local SAFE branch or qualified banks. In addition, we may not be informed of the identities of all of the mainland
China residents holding direct or indirect interests in our company. As a result, we cannot assure you that all of our shareholders or
beneficial owners who are mainland China residents or entities have complied with, and will in the future make or obtain any applicable
registrations or approvals required by, SAFE regulations. Failure by such shareholders or beneficial owners to comply with SAFE regulations,
or failure by us to amend the foreign exchange registrations of our Mainland China Subsidiary, could subject us to fines or legal sanctions,
restrict our overseas or cross-border investment activities, limit our subsidiaries' ability to make distributions or pay dividends
or affect our ownership structure, which could adversely affect our business and prospects.
Furthermore,
as the interpretation and implementation of these foreign exchange regulations has been constantly evolving, it is unclear how these
regulations, and any future regulation concerning offshore or cross-border transactions, will be interpreted, amended and implemented
by the relevant governmental authorities. For example, we may be subject to a more stringent review and approval process with respect
to our foreign exchange activities, such as remittance of dividends and foreign-currency-denominated borrowings, which may adversely
affect our financial condition and results of operations. In addition, if we decide to acquire a company established in mainland China,
we cannot assure you that we or the owners of such company, as the case may be, will be able to obtain the necessary approvals or complete
the necessary filings and registrations required by the foreign exchange regulations. This may restrict our ability to implement our
acquisition strategy and could adversely affect our business and prospects.
We
may rely on dividends and other distributions on equity paid by our subsidiaries, including those based in the PRC, for our cash and
financing requirements we may have, and any limitation on the ability of our Mainland China Subsidiaries to make payments to us could
have a material and adverse effect on our ability to conduct our business.
As
a holding company, we rely principally on dividends and other distributions on equity from our subsidiaries, including those based in
China, for our cash requirements, including for services of any debt we may incur.
46
Our
Mainland China Subsidiaries' ability to distribute dividends is based upon their distributable earnings. Current PRC regulations
permit our Mainland China Subsidiaries to pay dividends to their respective shareholders only out of their accumulated profits, if any,
determined in accordance with PRC accounting standards and regulations. In addition, each of our Mainland China Subsidiaries, as a Foreign
Invested Enterprise, or FIE, is required to draw 10% of its after-tax profits each year, if any, to fund a common reserve, and it may
stop drawing its after-tax profits if the aggregate balance of the common reserve has already accounted for over fifty percent (50%)
of its registered capital. These reserves are not distributable as cash dividends. In addition, if our Mainland China Subsidiaries incur
debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other
payments to us. Any limitation on the ability of our Mainland China Subsidiaries to distribute dividends or other payments to their respective
shareholders could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our
business, pay dividends or otherwise fund and conduct our business. Currently, we have installed cash management policies or procedures
in place that dictate how funds are transferred, under an umbrella of corporate policies and financial reporting policies. Even though
our policies do not specifically address the limitations, as discussed above, on the amount of funds the Company can transfer out of
China, if we decide to transfer cash out of China in the future, all relevant transfers will be conducted in compliance with such limitations.
As of the date of this annual report, none of the Mainland China Subsidiaries has made any dividends or distributions to Dogness.
PRC
regulation of loans and direct investment by offshore holding companies to mainland China entities may delay or prevent us from using
the proceeds of this Offering to make loans or additional capital contributions to our Mainland China Subsidiary, which could materially
and adversely affect our liquidity and our ability to fund and expand our business.
We
are an offshore holding company conducting our operations in China through our subsidiaries established in China and Hong Kong. We may
make loans to our Mainland China Subsidiaries subject to the approval from governmental authorities and limitation of amount, or we may
make additional capital contributions to our wholly foreign-owned subsidiaries in China.
Any
loans to our wholly foreign-owned subsidiaries in China, which are treated as foreign-invested enterprises under PRC law, are subject
to PRC regulations and foreign exchange loan registrations. For example, loans by us to our wholly foreign-owned subsidiaries in China
to finance their activities must be registered with the local counterpart of SAFE. In addition, a foreign invested enterprise shall use
its capital pursuant to the principle of authenticity and self-use within its business scope. The capital of a foreign invested enterprise
shall not be used for the following purposes: (i) directly or indirectly used for payment beyond the business scope of the enterprises
or the payment prohibited by relevant laws and regulations; (ii) directly or indirectly used for investment in securities or investments
other than banks' principal-secured products unless otherwise provided by relevant laws and regulations; (iii) the granting of
loans to non-affiliated enterprises, except where it is expressly permitted in the business license; and (iv) paying the expenses related
to the purchase of real estate that is not for self-use (except for the foreign-invested real estate enterprises).
47
SAFE
promulgated the Notice of the State Administration of Foreign Exchange on Reforming the Administration of Foreign Exchange Settlement
of Capital of Foreign-invested Enterprises, or SAFE Circular 19, effective June 2015, in replacement of the Circular on the Relevant
Operating Issues Concerning the Improvement of the Administration of the Payment and Settlement of Foreign Currency Capital of Foreign-Invested
Enterprises, the Notice from the State Administration of Foreign Exchange on Relevant Issues Concerning Strengthening the Administration
of Foreign Exchange Businesses, and the Circular on Further Clarification and Regulation of the Issues Concerning the Administration
of Certain Capital Account Foreign Exchange Businesses. According to SAFE Circular 19, the flow and use of the RMB capital converted
from foreign currency-denominated registered capital of a foreign-invested company is regulated such that RMB capital may not be used
for the issuance of RMB entrusted loans, the repayment of inter-enterprise loans or the repayment of banks loans that have been transferred
to a third party. Although SAFE Circular 19 allows RMB capital converted from foreign currency-denominated registered capital of a foreign-invested
enterprise to be used for equity investments within China, it also reiterates the principle that RMB converted from the foreign currency-denominated
capital of a foreign-invested company may not be directly or indirectly used for purposes beyond its business scope. SAFE promulgated
the Notice of the State Administration of Foreign Exchange on Reforming and Standardizing the Foreign Exchange Settlement Management
Policy of Capital Account, or SAFE Circular 16, effective on June 9, 2016, which reiterates some of the rules set forth in SAFE Circular
19, but changes the prohibition against using RMB capital converted from foreign currency-denominated registered capital of a foreign-invested
company to issue RMB entrusted loans to a prohibition against using such capital to issue loans to non-associated enterprises. Violations
of SAFE Circular 19 and SAFE Circular 16 could result in administrative penalties. SAFE Circular 19 and SAFE Circular 16 may significantly
limit our ability to transfer any foreign currency we hold, including the net proceeds from this offering, to our Mainland China Subsidiaries,
which may adversely affect our liquidity and our ability to fund and expand our business in China. On October 23, 2019, the SAFE promulgated
the Notice of the State Administration of Foreign Exchange on Further Promoting the Convenience of Cross-border Trade and Investment,
or the SAFE Circular 28, which, among other things, allows all foreign-invested companies to use Renminbi converted from foreign currency-denominated
capital for equity investments in China, as long as the equity investment is genuine, does not violate applicable laws, and complies
with the negative list on foreign investment. However, since the SAFE Circular 28 is newly promulgated, it is unclear how SAFE and competent
banks will carry this out in practice.
In
light of the various requirements imposed by PRC regulations on loans to and direct investment in mainland China entities by offshore
holding companies, we cannot assure you that we will be able to complete the necessary government registrations or obtain the necessary
government approvals on a timely basis, if at all, with respect to future loans to our Mainland China Subsidiaries or future capital
contributions by us to our wholly foreign-owned subsidiaries in China. As a result, uncertainties exist as to our ability to provide
prompt financial support to our Mainland China Subsidiaries when needed. If we fail to complete such registrations or obtain such approvals,
our ability to use the proceeds we expect to receive from any offering of our securities and to capitalize or otherwise fund our mainland
China operations may be negatively affected, which could materially and adversely affect our liquidity and our ability to fund and expand
our business.
Governmental
control of currency conversion may limit our ability to use our revenues effectively and the ability of our Mainland China Subsidiaries
to obtain financing.
The
PRC government imposes control on the convertibility of the RMB into foreign currencies and, in certain cases, the remittance of currency
out of China. We receive a majority of our revenues in Renminbi, which currently is not a freely convertible currency. Restrictions on
currency conversion imposed by the PRC government may limit our ability to use revenues generated in Renminbi to fund our expenditures
denominated in foreign currencies or our business activities outside China. Under China's existing foreign exchange regulations,
Renminbi may be freely converted into foreign currency for payments relating to current account transactions, which include among other
things dividend payments and payments for the import of goods and services, by complying with certain procedural requirements. Our Mainland
China Subsidiaries are able to pay dividends in foreign currencies to us without prior approval from SAFE, by complying with certain
procedural requirements. Our Mainland China Subsidiaries may also retain foreign currency in their respective current account bank accounts
for use in payment of international current account transactions. However, we cannot assure you that the PRC government will not at its
discretion take measures in the future to restrict access to foreign currencies for current account transactions.
48
Conversion
of Renminbi into foreign currencies, and of foreign currencies into Renminbi, for payments relating to capital account transactions,
which principally includes investments and loans, generally requires the approval of SAFE and other relevant PRC governmental authorities.
Restrictions on the convertibility of the Renminbi for capital account transactions could affect the ability of our Mainland China Subsidiaries
to make investments overseas or to obtain foreign currency through debt or equity financing, including by means of loans or capital contributions
from us. We cannot assure you that the registration process will not delay or prevent our conversion of Renminbi for use outside of China.
We
may be classified as a "resident enterprise" for mainland China enterprise income tax purposes; such classification could
result in unfavorable tax consequences to us and our non-mainland China shareholders.
The
Enterprise Income Tax Law provides that enterprises established outside of mainland China whose "de facto management bodies"
are located within mainland China are considered mainland China tax resident enterprises and will generally be subject to the uniform
25% enterprise income tax rate on their global income. In 2009, the SAT issued the Circular of the State Administration of Taxation on
Issues Concerning the Identification of Chinese-Controlled Overseas Registered Enterprises as Resident Enterprises in Accordance with
the Actual Standards of Organizational Management, known as SAT Circular 82, which was partially amended by Announcement on Issues concerning
the Determination of Resident Enterprises Based on the Standards of Actual Management Institutions issued by SAT on January 29, 2014,
and further partially amended by Decision on Issuing the Lists of Invalid and Abolished Tax Departmental Rules and Taxation Normative
Documents issued by SAT on December 29, 2017. SAT Circular 82, as amended, provides certain specific criteria for determining whether
the "de facto management body" of a Chinese-controlled offshore-incorporated enterprise is located in China, which include
all of the following conditions: (i) the location where senior management members responsible for an enterprise's daily operations
discharge their duties; (ii) the location where financial and human resource decisions are made or approved by organizations or persons;
(iii) the location where the major assets and corporate documents are kept; and (iv) the location where more than half (inclusive) of
all directors with voting rights or senior management have their habitual residence. SAT Circular 82 further clarifies that the identification
of the "de facto management body" must follow the substance over form principle. In addition, SAT issued SAT Bulletin 45
on July 27, 2011, effective from September 1, 2011 and partially amended on April 17, 2015, June 28, 2016, and June 15, 2018, respectively,
providing more guidance on the implementation of SAT Circular 82. SAT Bulletin 45 clarifies matters including resident status determination,
post-determination administration and competent tax authorities. Although both SAT Circular 82 and SAT Bulletin 45 only apply to offshore
enterprises controlled by mainland China enterprises or mainland China enterprise groups, not those controlled by mainland China individuals
or foreign individuals, the determining criteria set forth in SAT Circular 82 and SAT Bulletin 45 may reflect SAT's general position
on how the "de facto management body" test should be applied in determining the tax resident status of offshore enterprises,
regardless of whether they are controlled by mainland China enterprises or mainland China enterprise groups or by mainland China or foreign
individuals.
49
Currently,
there are no detailed rules or precedents governing the procedures and specific criteria for determining de facto management bodies which
are applicable to our company or our overseas subsidiaries. We do not believe that Dogness meets all of the conditions required for mainland
China resident enterprise. The Company is a company incorporated outside mainland China. As a holding company, its key assets are its
ownership interests in its subsidiaries, and its key assets are located, and its records (including the resolutions of its board of directors
and the resolutions of its shareholders) are maintained, outside mainland China. For the same reasons, we believe our other entities
outside of mainland China are not mainland China resident enterprises either. However, the tax resident status of an enterprise is subject
to determination by the PRC tax authorities and uncertainties remain with respect to the interpretation of the term "de facto management
body." There can be no assurance that the PRC government will ultimately take a view that is consistent with ours.
However,
if the PRC tax authorities determine that Dogness is a mainland China resident enterprise for enterprise income tax purposes, we may
be required to withhold a 10% withholding tax from dividends we pay to our shareholders that are non-resident enterprises. Such 10% tax
rate could be reduced by applicable tax treaties or similar arrangements between China and the jurisdiction of our shareholders. For
example, for shareholders eligible for the benefits of the tax treaty between China and Hong Kong, the tax rate is reduced to 5% for
dividends if relevant conditions are met. In addition, non-resident enterprise shareholders may be subject to a 10% PRC tax on gains
realized on the sale or other disposition of Common Shares, if such income is treated as sourced from within mainland China. It is unclear
whether our non-mainland China individual shareholders would be subject to any PRC tax on dividends or gains obtained by such non-mainland
China individual shareholders in the event we are determined to be a mainland China resident enterprise. If any PRC tax were to apply
to such dividends or gains, it would generally apply at a rate of 20% unless a reduced rate is available under an applicable tax treaty.
However, it is also unclear whether non-mainland China shareholders of the Company would be able to claim the benefits of any tax treaties
between their country of tax residence and mainland China in the event that the Company is treated as a mainland China resident enterprise.
Provided
that our British Virgin Islands holding company, Dogness, is not deemed to be a mainland China resident enterprise, our shareholders
who are not mainland China residents will not be subject to PRC income tax on dividends distributed by us or gains realized from the
sale or other disposition of our shares. However, under Circular 7, where a non-resident enterprise conducts an "indirect transfer"
by transferring taxable assets, including, in particular, equity interests in a mainland China resident enterprise, indirectly by disposing
of the equity interests of an overseas holding company, the non-resident enterprise, being the transferor, or the transferee or the mainland
China entity which directly owned such taxable assets may report to the relevant tax authority such indirect transfer. Using a "substance
over form" principle, the PRC tax authority may disregard the existence of the overseas holding company if it lacks a reasonable
commercial purpose and was established for the purpose of reducing, avoiding or deferring PRC tax. As a result, gains derived from such
indirect transfer may be subject to mainland China enterprise income tax, and the transferee would be obligated to withhold the applicable
taxes, currently at a rate of 10% for the transfer of equity interests in a mainland China resident enterprise. We and our non-mainland
China resident investors may be at risk of being required to file a return and being taxed under Circular 7, and we may be required to
expend valuable resources to comply with Bulletin 37, or to establish that we should not be taxed under Circular 7 and Bulletin 37.
In
addition to the uncertainty in how the new resident enterprise classification could apply, it is also possible that the rules may change
in the future, possibly with retroactive effect. If we are required under the Enterprise Income Tax law to withhold mainland China income
tax on our dividends payable to our foreign shareholders, or if you are required to pay mainland China income tax on the transfer of
our shares under the circumstances mentioned above, the value of your investment in our shares may be materially and adversely affected.
These rates may be reduced by an applicable tax treaty, but it is unclear whether, if we are considered a mainland China resident enterprise,
holders of our shares would be able to claim the benefit of income tax treaties or agreements entered into between China and other countries
or areas. Any such tax may reduce the returns on your investment in our shares.
50
Any
failure to comply with PRC regulations regarding the registration requirements for employee stock incentive plans may subject the PRC
plan participants or us to fines and other legal or administrative sanctions.
In
February 2012, SAFE promulgated the Notices on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating
in Stock Incentive Plans of Overseas Publicly-Listed Companies, replacing earlier rules promulgated in March 2007. Pursuant to these
rules, mainland China citizens and non-mainland China citizens who reside in China for a continuous period of not less than one year
who participate in any stock incentive plan of an overseas publicly listed company, subject to a few exceptions, are required to register
with SAFE through a domestic qualified agent, which could be the Mainland China Subsidiary of such overseas-listed company, and complete
certain other procedures. In addition, an overseas-entrusted institution must be retained to handle matters in connection with the exercise
or sale of stock options and the purchase or sale of shares and interests. We and our executive officers and other employees who are
mainland China citizens or who have resided in mainland China for a continuous period of not less than one year and who are granted options
or other awards under our equity incentive plan will be subject to these regulations when our company becomes an overseas listed company
upon the completion of this offering. Failure to complete the SAFE registrations may subject them to fines and legal sanctions and may
also limit our ability to contribute additional capital into our Mainland China Subsidiary and limit our Mainland China Subsidiary'
ability to distribute dividends to us. We also face regulatory uncertainties that could restrict our ability to adopt additional incentive
plans for our directors, executive officers and employees under PRC law. ."
In
addition, SAT has issued certain circulars concerning employee share options and restricted shares. Under these circulars, our employees
working in China who exercise share options or are granted restricted shares will be subject to mainland China individual income tax.
Our Mainland China Subsidiaries have obligations to file documents related to employee share options or restricted shares with relevant
tax authorities and to withhold individual income taxes of those employees who exercise their share options. If our employees fail to
pay or we fail to withhold their income taxes according to relevant laws and regulations, we may face sanctions imposed by the tax authorities
or other PRC government authorities.
Failure
to make adequate contributions to various mandatory social security plans as required by PRC regulations may subject us to penalties.
Under
the PRC Social Insurance Law and the Administrative Measures on Housing fund, We are required to participate in various government sponsored
employee benefit plans, including certain social insurance, housing funds and other welfare-oriented payment obligations, and contribute
to the plans in amounts equal to certain percentages of salaries, including bonuses and allowances, of our employees up to a maximum
amount specified by the local government from time to time at locations where we operate our businesses. The requirement of employee
benefit plans has not been implemented consistently by the local governments in China given the different levels of economic development
in different locations. If the local governments deem our contribution to be not sufficient, we may be subject to late contribution fees
or fines in relation to any underpaid employee benefits, our financial condition and results of operations may be adversely affected.
51
Currently,
certain of our affiliated entities are making contributions to the plans based on the basic salary of our employees which may not be
adequate in strict compliance with the relevant regulations. As of the date of this annual report, the accumulated impact in this regard
was immaterial to our financial condition and results of operations. We have not received any order or notice from the local authorities
nor any claims or complaints from our current and former employees regarding our current practice in this regard.  As the interpretation
of implementation of labor-related laws and regulations are still involving, we cannot assure you that our practice in this regard will
not be violate any labor-related laws and regulations regarding including those relating to the obligations to make social insurance
payments and contribute to the housing funds and other welfare-oriented payments. If we deemed to have violated relevant labor laws and
regulations, we could be required to provide additional compensation to our employees and subject to penalties, and our business, financial
condition and results of operations will be adversely affected.
Enforcement
of stricter labor laws and regulations may increase our labor costs as a result.
China's
overall economy and the average wage have increased in recent years and are expected to continue to grow. The average wage level for
our employees has also increased in recent years. We expect that our labor costs, including wages and employee benefits, will continue
to increase. Unless we are able to pass on these increased labor costs to our customers who pay for our services, our profitability and
results of operations may be materially and adversely affected. The PRC Labor Contract Law and its implementing rules impose requirements
concerning contracts entered into between an employer and its employees and establishes time limits for probationary periods and for
how long an employee can be placed in a fixed-term labor contract. We cannot assure you that our employment policies and practices do
not, or will not, violate the Labor Contract Law or its implementing rules and that we will not be subject to related penalties, fines
or legal fees. If we are subject to large penalties or fees related to the Labor Contract Law or its implementing rules, our business,
financial condition and results of operations may be materially and adversely affected. In addition, according to the Labor Contract
Law and its implementing rules, if we intend to enforce the non-compete provision with an employee in a labor contract or non-competition
agreement, we have to compensate the employee on a monthly basis during the term of the restriction period after the termination or ending
of the labor contract, which may cause extra expenses to us. Furthermore, the Labor Contract Law and its implementation rules require
certain terminations to be based upon seniority rather than merit, which significantly affects the cost of reducing workforce for employers.
In the event we decide to significantly change or decrease our workforce in mainland China, the Labor Contract Law could adversely affect
our ability to enact such changes in a manner that is most advantageous to our circumstances or in a timely and cost effective manner,
thus our results of operations could be adversely affected.
If
the chops of our Mainland China Subsidiaries are not kept safely, are stolen or are used by unauthorized persons or for unauthorized
purposes, the corporate governance of these entities could be severely and adversely compromised.
In
China, a company chop or seal serves as the legal representation of the company towards third parties even when unaccompanied by a signature.
Each legally registered company in China is required to maintain a company chop, which must be registered with the local Public Security
Bureau. In addition to this mandatory company chop, companies may have several other chops which can be used for specific purposes. The
chops of our Mainland China Subsidiaries are generally held securely by personnel designated or approved by us in accordance with our
internal control procedures. To the extent those chops are not kept safely, are stolen or are used by unauthorized persons or for unauthorized
purposes, the corporate governance of these entities could be severely and adversely compromised and those corporate entities may be
bound to abide by the terms of any documents so chopped, even if they were chopped by an individual who lacked the requisite power and
authority to do so. In addition, if the chops are misused by unauthorized persons, we could experience disruption to our normal business
operations. We may have to take corporate or legal action, which could involve significant time and resources to resolve while distracting
management from our operations.
52
Item
4. Information on the Company
A.
History and Development of the Company
Dogness
(International) Corporation ("Dogness") was incorporated as a British Virgin Islands company limited by shares under the
BVI Business Companies Act(As Revised), on July 11, 2016. Dogness has an indefinite term. Dogness was established to operate principally
as a holding company. Dogness and its subsidiaries (collectively the "Company") are principally engaged in the design and
manufacture of pet products, including leashes and smart products, and lanyards in the China. Most products are exported to the U.S.
and Europe and sold to pet stores, including major pet store chains. The share capital of Dogness was US$200,000, divided into 100,000,000
Common Shares of par value US$0.002 each. In connection with the incorporation of Dogness, 15,000,000 Common Shares were issued to Silong
Chen, Dogness' founder and Chief Executive Officer.
Mr.
Silong Chen, the founding shareholder of the Company, sold 5,931,000 of his Common Shares to a total of nine (9) unrelated private investors
for aggregated proceeds of  $18,843,000, at a weighted average price of  $3.18 per share. After the sale, Mr. Silong Chen,
the founding shareholder of the Company owned 60.46% equity interest of the Company.
After
such Common Shares were sold, the shareholders unanimously agreed to establish two classes of Common Shares: (a) 90,931,000 authorized
Class A Common shares, of which 16,844,631 Class A Common Shares are issued and outstanding, (b) 9,069,000 authorized Class B Common
Shares, all of which are issued and outstanding. Mr. Chen, through Fine victory holding company Limited, is the only holder of Class
B Common Shares.
Dogness
(Hongkong) Pet's Products Co., Limited ("HK Dogness") was incorporated in Hong Kong on March 10, 2009 as a private
company limited by shares. In a private company limited by shares — which is the most common way to establish a limited
company in Hong Kong — the liability of members is limited by the articles of association to the amount unpaid on
the shares held by such members. By comparison, in a company limited by guarantee, no share capital is required and member liability
is limited by the articles of association to the amount that the members respectively undertake to contribute in the event the company
is wound up; this type of limited company is more common for non-profit organizations.
HK
Dogness was established to operate principally as a trading company. The share capital of HK Dogness is HK$10,000, divided into 10,000
shares of HK$1.00 each. In connection with the formation of HK Dogness, all 10,000 shares were issued to Silong Chen, Dogness'
founder and Chief Executive Officer. On August 15, 2016, Silong Chen transferred his shares in HK Dogness to a third party who held on
Mr. Chen's behalf in preparation for the subsequent transfer to Dogness; however, Silong Chen continued to control such shares.
After such interim transfer, the shares in HK Dogness were transferred to Dogness on January 9, 2017.
53
Jiasheng
Enterprise (Hongkong) Co., Limited ("HK Jiasheng") was incorporated in Hong Kong on July 12, 2007 as a private company limited
by shares. HK Jiasheng was established to operate principally as a trading company. The share capital of HK Jiasheng is HK$10,000, divided
into 10,000 shares of HK$1.00 each. In connection with the formation of HK Jiasheng, all 10,000 shares were issued to Silong Chen, Dogness'
founder and Chief Executive Officer.
Dogness
Intelligent Technology (Dongguan) Co., Ltd. ("Dongguan Dogness") was incorporated in China on October 26, 2016. Dongguan
Dogness was established to operate principally as a holding company. Dongguan Dogness has RMB 10 million in registered capital. In connection
with the formation of Dongguan Dogness, Silong Chen, Dogness' founder and Chief Executive Officer, became the sole shareholder
of Dongguan Dogness.
Dongguan
Jiasheng Enterprise Co., Ltd. ("Dongguan Jiasheng") was incorporated in China on May 15, 2009. Dongguan Jiasheng was established
to develop and manufacture pet leash and lanyard products. Dongguan Jiasheng has RMB 10,000,000 in registered capital. In connection
with the formation of Dongguan Jiasheng, Silong Chen, Dogness' founder and Chief Executive Officer, became the sole shareholder
of Dongguan Dogness.
The
reorganization of the legal structure was completed on January 9, 2017. The reorganization involved the incorporation of Dogness, a BVI
holding company, and Dongguan Dogness, a mainland China holding company; and the transfer of HK Dogness, HK Jiasheng, and 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 mainland China. On January 9, 2017,
the Controlling Shareholder transferred his 100% equity interests in HK Dogness and HK Jiasheng to Dogness. After the reorganization,
Dogness owns 100% equity interests of subsidiaries listed above.
In
January 2018, the Company formed a Delaware limited liability company, Dogness Group LLC ("Dogness Group"), with its operation
focusing primarily on 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, which owns all of the interests in Dogness Group. All of the equity of Dogness Overseas
is owned by Dogness (International) Corporation.
54
On
March 16, 2018, the Dongguan Dogness 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 $11.1 million (or RMB 71.0 million). After the acquisition, Mejia became Dongguan Dogness'
wholly-owned subsidiary. The acquisition of Meijia enabled the Company to build its own facility instead of leasing manufacturing facilities
and to expand its production capacity sustainably to meet increased customer demand. Meijia plant has reached its fully production capacity
as of June 30, 2021.
On
July 6, 2018, a new entity called Dogness Intelligence Technology Co., Ltd. ("Intelligence Guangzhou"), was incorporated
under PRC laws in Guangzhou City, Guangdong Province, China with a total registered capital of RMB 80 million (approximately $11.0 million).
One of the Company's subsidiaries, Dongguan Jiasheng, owns 58% of Intelligence, As of the date of this report, Dongguan Jiasheng
has not yet made the payment of the registered capital. Intelligence Guangzhou will be the research and manufacturing facility for the
Company's fast growing intelligent pet products. On August 10, 2022, the Board approved to sell the Company's 58% ownership
interest in Dogness Intelligence Technology Co., Ltd. to a third party for a price of $0.
Dogness
Pet Culture (Dongguan) Co., Ltd. ("Dogness Culture") was incorporated on December 14, 2018 with registered capital of RMB
10 million (approximately $1.5 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 one of the original shareholders of Dogness Culture,
who is related to Mr. Silong Chen, the Chief Executive Officer, to acquire 51.2% ownership interest of Dogness Culture for a nominal
fee. Dongguan Dogness thereafter contributed cash consideration of RMB 5.12 million (approximately $0.79 million) on April 16, 2020 along
with other shareholders' capital contributions of RMB 4.88 million (approximately $0.67 million). Dogness Culture is focusing on
developing and expanding pet food market in China in the near future. On July 19, 2023, the Board approved the liquidation, dissolution,
and termination of Dogness culture following the signing of a termination agreement among Dogness's Culture's shareholders
on May 8, 2023. As of the date of this annual report, Dogness Culture is in the process of being liquidated.
On
February 5, 2019, in order to expand into the Japanese market and expedite the development of new smart pet products, Dogness Japan Co.
Ltd. ("Dogness Japan") was incorporated in Japan. The Company invested $142,000 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.
At
the completion of these transactions, (i) Dogness holds 100% of the equity of each of Dogness Overseas, HK Jiasheng and HK Dogness; (ii)
Dogness Overseas owns 100% of the equity of Dogness Group; (iii) HK Dogness holds 100% of the equity of Dongguan Dogness; (iv) Dongguan
Dogness holds 100% of the equity of Dongguan Jiasheng, Meijia and 51.2% of the equity of Dogness Culture; and (v) Dongguan Jiasheng owns
58% of the equity of Intelligence and. By virtue of these ownership relationships, Dogness is the parent, directly or indirectly, of
each of Meijia, HK Jiasheng, HK Dogness, Dongguan Dogness, Dogness Group, and Dongguan Jiasheng, and such entities' financial results
are consolidated with those of Dogness; provided that only 58% of the equity of Intelligence Guangzhou is so consolidated.
55
B.
Business Overview
Overview
Technology
can bring pets and their caregivers closer together. At Dogness we combine our research and development expertise with customer feedback
to make products that improve pets' lives. We create and manufacture fun, useful and high-quality products for everyone to experience.
We believe that high technology pet products must be accessible and reliable to capture pet lovers' imagination and to enhance
their pets' lives.
Dogness
has been making the highest quality collars, harnesses, and traditional and retractable leashes since 2003, featuring stylish design
and rugged engineering. Beginning with smart collars and harnesses in 2016, based on the belief that internet-connected products could
improve the lives of pets and their caregivers, Dogness developed a suite of smart products, moving past these first products into smart
feeders, fountains, treat dispensers and robots to interact with pets.
Dogness
focuses on connected pet care, to link pets and pet caregivers and ultimately to integrate the "Smart Pet Ecosystem" into
a single cohesive platform that integrates smart technology into pets' lives. The Smart Pet Ecosystem has four major areas: smart
pet technology, pet care, leashes and collars, and pet health and wellness.
Smart
Pet Technology
Through
a single platform, the Dogness mobile app, the Company's smart products allow pet owners to remotely see, hear, speak, feed, play,
and interact with their pets in different ways. We accomplish all of this with a tool the owner likely already has, a smart phone. The
Dogness app is available for both Android and iOS and communicates with the smart product anywhere the phone and smart product both have
Wi-Fi or cellular service. If your dog will listen to you from across the room, you can tell her to roll over from around the world.
Dogness
Smart Wearables:
Our smart wearable collars and harnesses feature integrated electronics, which allows us to pair high quality collars
with a lightweight smart component and LED lights. We have focused on the important details for dog owners, allowing owners to locate
their pets, direct their pets' movements, communicate with their dogs, provide tailored instantaneous feedback to problem barking
and keep track of exercise and other biodata.
Dogness
Smart iPet Robot
: Pet owners will be able to see their pets through a camera, hear their pets through a built-in microphone, interact
with their pets by feeding them treats, and play with their pets through an interactive laser pointer. Pet owners have full control over
the 360-degree mobility of the robot through the Dogness app and can securely take and save pictures and videos of their dogs.
Dogness
Mini Treat Robot
: Space-conscious pet owners can see their pets through a stationary tilting camera that securely records photo and
video, hear their pets through a built-in microphone, interact with their pets by feeding them treats, and play with them through an
interactive laser pointer.
Dogness
Smart CAM Feeder
: Pet owners can now ensure that their pets are well-fed and on-schedule. Able to hold around 6.5 pounds of dry food,
the smart feeder helps pet owners ensure the health of their pets, even when away from home. Pet owners can see their pets' eating
habits night and day through a built-in camera with night vision and call their pets to the feeder through a voice recording that can
be programmed to be played at meal times.
56
Dogness
Wide-view CAM Feeder
: In addition to the original Smart CAM Feeder, this 2022 version of CAM feeder holds around 4 pounds of dry
food. The camera is updated and wide-angled so that the pet owner can see not only their pets and the room, but the bowl and the food
in it.
Dogness
Cube App Feeder and Programmable Feeder
: This 2022 version of the App Feeder and Programmable Feeder holds about 4 pounds of dry
food. The food container is semi-transparent which enables the pet owners to check on the food level without opening the container.
Dogness
Smart Fountain
: The smart fountain ensures that pets stay hydrated with a source of clean filtered water from a patented filtering
technology. Additional features include an oxygenating, free-falling, recirculating water stream for optimal freshness, the ability to
increase or decrease the flow of water, a replaceable carbon water filter and a nano filter to maintain water freshness, a submersible
pump for quiet operation, dishwasher-safe material, and an easily assembled and disassembled design.
Dogness
App Fountain
: This brand new App fountain is newly developed with App controlling the water level, UV sterilization, lights and
Dogness
Wireless Sensor Fountain
: This brand new wireless fountain is USB rechargeable and operates with sensors. It does not use the long
cable that's common on traditional fountains and makes the fountain portable.
Dogness
Smart Fountain Mini and Smart Fountain Plus
: In addition to our Smart Fountain, we have developed the Smart Fountain Mini (1L capacity)
and Smart Fountain Plus (3.2L capacity) for additional options for pet owners. The Smart Fountain Mini enables our products to be used
in smaller spaces, while the Smart Fountain Plus ensures an even larger reservoir for pets. Both fountains maintain a constant flow of
water, so pets can drink water that is as fresh as from the faucet. The Smart Fountains have a three-stage filtering system, which ensures
the water flowing out is filtered, fresh and clean.
Dogness
Smart CAM Treater
: Allows pet owners to see their pets night and day through a 160-degree full HD camera with night vision, hear
their pets through a built-in microphone, interact with their pets by speaking to them through a built-in speaker, and play with their
pets by tossing them treats.
Dogness
App Feeder and App Feeder Mini
: Pet owners can ensure that their pets are well-fed and on-schedule. Able to hold around 6.5 pounds
of dry food, the App feeder enables pet owners to set up their pet's feeding schedule from the App via their mobile phone, even
when away from home. App Feeder Mini holds around 2.0 pounds of dry food and is suitable for cats and small dogs.
Dogness
Smart Vacuumed Pet Food Storage Containers
: Dogness proprietary vacuum food storage container was designed to use an intelligent,
constant pressure vacuum locking method, which significantly upgrades and modernizes conventional food storage, by completely isolating
mildew and moisture in the air, keeping pet food fresh and crispy for longer, and bringing a higher quality to pets' healthy lives.
Dogness
C6 GPS Tracker "Discover"
: Pet owners can have peace of mind knowing where their pets are anytime when they open the
GPS Tracker App on their mobile phones. The Trackers are 4G compatible and allow the owners to keep track of the location of their pets.
They can also set up virtual fences and the GPS Tracker App will alert the pet parents if their pets are beyond the fences. The Trackers
also monitor and provide the pets' activity level statistics.
57
Dogness
C5 and C5 mini Trackers
: These smaller versions of the trackers have similar features of C6 but uses NB instead of 4G. It features
longer battery time with smaller size and weight.
Pet
Care
Our
pet care products currently focus on high quality pet shampoos. We launched these shampoo products in August 2018.
We
have two lines of shampoos, which are focused on and tailored to Chinese online and offline consumption. Our One on One Service line
is focused on consumer purchasers and consists of dog and cat shampoo products that feature natural plant and amino acid composition.
In addition to universal-purpose products, we have also developed seven breed-tailored shampoo products for golden retrievers, poodles,
huskies, bulldogs, border collies and corgis. Our Professional Bathing & Spa line is focused on professional purchasers, like dog
and cat groomers. These products consist of bathing products, hair conditioners and essential oil products.
Leashes
and Collars
Traditional
Product Lines
: We produce collars, harnesses and leashes in seven main series (Classic, Elegance, Luxury, LED, Holiday, Special Function,
and Cat series). Given the choices available to customers, we currently manufacture between 500 and 600 traditional products and can
add additional options to meet customer preferences. Our traditional product lines use leather, nylon, Teflon-coated fabrics and other
materials to suit consumer preferences. Not only do we produce these products; we also design fabric patterns and invent improved components
such as a comfort curved buckle for collars and locking closing mechanism for leashes.
Retractable
Leashes
: In addition to our newest smart products, we have devoted significant effort to designing and manufacturing some of the
finest retractable leashes available. Retractable leashes balance freedom for the dog with control for the owner. If used well, a retractable
leash promotes good communication between the two, as the dog has exactly as much room to roam as the owner permits, and this amount
can be adjusted to suit the environment and circumstances. Dogness also offers an updated retractable leash to enhance the pet walking
experience. The new leash allows pet owners to attach Dogness accessories to their retractable leashes, which currently include an LED
light for better visibility in low light settings; a convenience box to store items such as doggie bags, treats, or keys; and a Bluetooth
speaker to listen to music or answer calls.
Other
Products
: In addition to collars, leashes and harnesses, we also produce lanyards for use by humans and ornaments that attach to
collars. As to the lanyards, we produce such lanyards using our fabric weaving machines. Because we have our production in-house, we
can design lanyards that match a customer's need, in terms of color, size, quantity and pattern. Our hanging ornament series uses
high-quality electroplating techniques to create fashionable accents for pet collars. We make a variety of patterns in bright and vibrant
colors, as well as custom bells for cat collars.
58
Upcoming
New Products
Dogness
expects to launch additional products, including convenient indoor pet toilets, air purifiers, and other products.
Pet
Health and Wellness
One
of our new research areas is pet-focused health and wellness products. One of our subsidiaries is currently serving as a distributor
of a few premium pet food brands from overseas. While we do not currently offer our own branded products for sale in this category, we
are currently developing supplements and nutrition products in consultation with veterinarians and pharmacists and anticipate introducing
these products in the future.
Operations
Dogness
has marketing and sales networks all over the world and has businesses in Dallas, Dongguan, Hong Kong and Zhangzhou. Senior management,
R&D and production, marketing, customer service and finance operate from Dogness' headquarters in Dongguan, Guangdong Province,
which also serves as the manufacturing base for smart products and dog leashes. Dogness Group LLC in Dallas, Texas, USA serves as the
sales and service center for all international markets. The company's factory in Zhangzhou, Fujian serves as a material production
base, responsible for sample dyeing, ribbon dyeing and electroplating. One of Dogness' competitive advantages comes from integrating
the whole industrial chain, including retraction ropes, textiles, printing and dyeing, mold development, and hardware and plastics. In
addition, Dogness' subsidiary in the United States has R&D and design centers for pet smart products, forming a complete supply
chain system with manufacturing bases in China. We benefit from vertically integrated manufacturing operations, which allow us to design,
machine and assemble the vast majority of our products in house, so we can easily incorporate improvements in design.
Market
Background
Our
company's primary market is mainland China, with approximately 36.0%,  46.3%, and 56.3% of our products being sold in China
in fiscal 2023, 2022, and 2021, respectively.
In
terms of export sales, our company's primary market is the United States, with approximately 35.4%,  29.6%, and 24.7% of our
products being sold in America in fiscal 2023, 2022, and 2021, respectively. The United States has one of the highest pet ownership rates
in the world. According to the 2023-2024 APPA National Pet Owners Survey, 66% of U.S. households own a pet, which equates to 86.9 million
households.
1
Pet
owners in the United States have increasingly seen their pets as extended members of the family. Accordingly, spending on pets has increased
steadily over the last decade. According to the APPA, in 2022, $136.8 billion was spent on pets in the U.S.
1
American Pet Products Association, Pet Industry Market Size, Trends & Ownership Statistics.
https://www.americanpetproducts.org/press_industrytrends.asp
2
American Pet Products Association, Pet Industry Market Size, Trends & Ownership Statistics.
https://www.americanpetproducts.org/press_industrytrends.asp
59
We
sell the majority of our products through specialty pet store chain retailers and mass market retailers. Although there are more than
13,000 pet stores in the United States, the vast majority of pet stores are small operations, but a significant proportion of sales come
from the top few specialty retail chains, Petco and Pet Valu. Mass retailers like Target and Wal-Mart also play a key role in pet supply
sales, including in particular staples like pet food. These retailers have courted pet owners with the offer of one-stop-shopping, as
compared with making a special trip to a pet store.
Finally,
pet owners have increasingly turned to internet sites to purchase pet supplies. In addition to selling our products to many of the largest
specialty and mass retailers in the U.S., we are exploring opportunities to drive online sales as well.
Competitive
Strengths
We
believe we have the following competitive strengths. Some of our competitors may have these or other competitive strengths.
●
Advanced technology
. We have developed and made use of 201 patents  in producing premium pet products.
●
Strong research and development
. We have leveraged our cooperation with and/or investments in Dogness Network Technology Co.,
Ltd ("Dogness Network"), Nanjing Rootaya Intelligence Technology Co., Ltd. ("Nanjing Rootaya"), Linsun Smart
Technology Co., Ltd ("Linsun") and our own in-house research and development efforts to design high tech pet products for
our customers. Dogness Network, in which we have a 10% ownership interest, develops the smartphone apps that power our connected products,
including our feeders, treaters, robots and others. Nanjing Rootayahas designed some of our pet toys and innovative water and food bowl.
Linsun, in which we have a 13% ownership interest, helped create our smart feeders and treaters. Our subsidiary Dongguan Jiasheng is
responsible for the technology underlying our other smart products and innovation and improvement in traditional products.
60
●
Vertically integrated production
. We are increasingly manufacturing as much of our products internally and reducing reliance
on third party vendors. This allows us to control costs and ensure quality.
●
Economies of scale
. We are pleased to provide products to a variety of customers and to fill large orders for a number of
those customers. These large orders allow us to increase our efficiency, reduce costs and deliver high quality products quickly and to
our customers' exacting demands.
●
Strong reputation in pet products industry
. Our customer list is filled with sophisticated, multinational purchasers of pet
Research
and Development
Our
R&D team has 15 d edicated employees who are focused on product development and design. Quality control has 8 employees and
is an important aspect of the teams' work and ensuring quality at every stage of the process has been a key driver in maintaining
and developing brand value for our Company.
Beginning
in 2016, we have been researching and testing new, more ecologically friendly materials, which we hope to use in place of PVC in certain
plastic applications.
As
a result of these efforts, we became certified as a National High-Tech Enterprise by the State Intellectual Property Office in March
2015, and we renewed this certification in 2021. This certification entitles us to favorable tax rates of 15%, rather than the unified
rate of 25% we would pay if we were not certified.
Our
research and development expenses were $931,078 i  n fiscal 2023, $917,227 in fiscal 2022, and $540,613 in fiscal 2021, representing
5.3%, 3.4 %, and 2.2%, of our total revenues for 2023, 2022, and 2021, respectively. We expect our R&D expenses to increase, as we
continue to conduct research and development activities, especially seeking to increase the use of environmentally-friendly materials,
and develop more new products to meet customer demands.
Intellectual
Property
We
use a combination of trade secret, copyright, trademark, patent and other rights to protect our intellectual property and our brand.
As of September 25, 2023, we have completed registration of 135 patents with the China State Intellectual Property Office. In addition,
we have registered 19 patents in Germany, 27 in Japan, 20 in the United States, 9 in Canada, 3 in Australia, and 8 in the European Union.
As of the date of this report, we have successfully obtained 201 patents (including 135 in China), which includes 28 invention patents,
68 utility patents, and 125 appearance patents.
We
have completed registration of 188 trademarks , with the Trademark Office of the State Administration for Industry & Commerce
of the PRC. In addition, we have registered our key trademark for Dogness in Japan, Australia, Korea, Hong Kong, Taiwan and the United
States. We have registered all of our patents and trademarks under Dongguan Jiasheng, Dongguan Dogness, Dogness Group, and HK Dogness.
Our trademarks will expire at various dates through November 12, 2030.
61
Our
key brands and logos are below:
Our
website is located at
www.dogness.com
.
REGULATIONS
We
are subject to a variety of PRC and foreign laws, rules and regulations across a number of aspects of our business. This section summarizes
the principal PRC laws, rules and regulations relevant to our business and operations. Areas in which we are subject to laws, rules and
regulations outside of the PRC include intellectual property, competition, taxation, anti-money laundering and anti-corruption. While
there have been relatively few changes in applicable laws and regulations in recent years, law enforcement and regulatory agencies such
as SAFE have been tightening up their implementation. Some of the practices that were not following governmental procedure or requirements,
which many companies and individual persons had taken before but not been investigated or punished, are now under the close watch of
agencies and even been punished.
Laws
and Regulations in China Regarding Manufacturing, Producing, and Processing
Laws
regulating pet products manufacturing, producing, and processing cover a broad range of subjects, particularly in the area of occupational
safety and health. We must comply with all levels of laws and regulations relating to matters such as safe working conditions, manufacturing
practices, environmental protection and discharging hazard control. Specifically, the major laws that apply to our Mainland China Subsidiaries
are as follows:
●
Company Law (amended in 2018), governing, among other matters, company registration, existence and business operation;
●
Civil Code of the People's Republic of China (2021), governing business practices with all other market participants;
●
Labor Contract Law (amended in 2012), governing the relationship between company as an employer and its employees;
●
Product Quality Law (amended in 2018), governing the relationship between company as a products provider and consumers in the market.
We
believe we are in compliance with these laws and related regulations in all material respects. So far, our business does not belong to
special type of industry that requires operation license from government so that we do not need to get special license or approval for
our business operation. However, unanticipated changes in existing regulatory requirements or adoption of new requirements may force
us to incur more cost to maintain the licenses and failure to do so could materially adversely affect our business, financial condition
and results of operations.
62
Regulation
on Product Liability
China's
Product Quality Law was published in 1993 and amended in 2000, 2009, and 2018. Under this law, producers and vendors of defective products
may incur liability for losses and injuries caused by such products. There are only three conditions by which producers or vendors can
have immunity from the defective product liability: 1) the defective products never be put into the market; 2) the defects do not exist
when the products are put into the market; 3) the exam techniques and skills are not able to find out the defects when the products be
put into the market. So far, our products quality is in conformity with the national requirements and we have passed the regulatory agency's
examination and also successfully obtained the certificate of ISO 9001:2015 system.
In
addition to Product Quality Law, there are also other Chinese laws that apply to the product liability. Under the Civil Code of the People's
Republic of China which became effective on January 1, 2021, manufacturers or retailers of defective products that cause property damage
or physical injury to any person will be subject to civil liability. The Law on the Protection of the Rights and Interests of Consumers
(as amended in 2009), which was enacted to protect the legitimate rights and interests of end-users and consumers and to strengthen the
supervision and control of the quality of products. Although we are highly confident with our product quality, some defective product
may not be detected in time by us and accidently put into the market. If so, our defective products cause any personal injuries or damage
to assets, our customers have the right to claim compensation from us.
Under
this law, a customer who suffers injury from a defective product can claim damages from either the manufacturer or vendor of the
defective device. Under the Civil Code of the People's Republic of China, where a personal injury is caused by a tort, the
tortfeasor shall compensate the victim for the reasonable costs and expenses for treatment and rehabilitation, as well as death
compensation and funeral costs and expenses if it causes the death of the victim. There is no cap on monetary damages the plaintiffs
may seek under this Law.
Regulation
on Foreign Exchange Control
The
principal regulations governing foreign currency exchange in China are the PRC Foreign Exchange Administration Regulations, or the Foreign
Exchange Administration Regulations, most recently amended on August 5, 2008. Under the Foreign Exchange Administration Regulations,
Renminbi is generally freely convertible for payments of current account items, such as trade and service-related foreign exchange transactions,
interest and dividend payments, but not freely convertible for capital account items, such as direct investment, loan or investment in
securities outside China, unless prior approval of State Administration of Foreign Exchange, or the SAFE, or its local office has been
obtained.
63
The
Circular on Reforming the Management Approach regarding the Foreign Exchange Capital Settlement of Foreign-invested Enterprise, or SAFE
Circular 19, which was promulgated by the SAFE on March 30, 2015 and was most recently amended on December 30, 2019, allows foreign-invested
enterprises, or FIEs, to settle their foreign exchange capital at their discretion. The Renminbi converted from the foreign exchange
capital will be kept in a designated account and if a FIE needs to make further payment from such account, it still needs to provide
supporting documents and proceed with the review process with the banks. Furthermore, SAFE Circular 19 stipulates that the use of capital
by FIEs shall follow the principles of authenticity and self-use within the business scope of enterprises. The capital of a FIE and capital
in Renminbi obtained by the FIEs from foreign exchange settlement shall not be used for the following purposes: (i) directly or indirectly
used for payments beyond the business scope of the enterprises or payments as prohibited by relevant laws and regulations; (ii) directly
or indirectly used for investment in securities unless otherwise provided by the relevant laws and regulations; (iii) directly or indirectly
used for granting entrust loans in Renminbi (unless permitted by the scope of business), repaying inter-enterprise borrowings (including
advances by the third-party) or repaying the bank loans in Renminbi that have been sub-lent to third parties; or (iv) directly or indirectly
used for expenses related to the purchase of real estate not for self-use (except for the foreign-invested real estate enterprises).
The
Circular on Reforming and Regulating Policies on the Control over Foreign Exchange Settlement of Capital Accounts, or SAFE Circular 16,
which was promulgated by the SAFE and became effective on June 9, 2016, provides an integrated standard for conversion of foreign exchange
under capital account items (including but not limited to foreign currency capital and foreign debts) on a self-discretionary basis which
applies to all enterprises registered in China. SAFE Circular 16 reiterates the principle that Renminbi converted from foreign currency-denominated
capital of a company may not be directly or indirectly used for purposes beyond its business scope or prohibited by PRC Laws, while such
converted Renminbi shall not be provided as loans to its non-affiliated entities.
The
Circular on Further Promoting Cross-border Trade and Investment Facilitation, which was promulgated on October 23, 2019 by the SAFE and
became effective on the same date, further cancels restrictions on the domestic equity investment by non-investment-oriented foreign-funded
enterprises with their capital funds and provides that non-investment-oriented foreign-funded enterprises are allowed to make domestic
equity investment with their capital funds in accordance with the law on the premise that the existing special administrative measures
(negative list) for foreign investment access are not violated and the projects invested thereby in China are true and compliant.
On
December 30, 2019, the MOFCOM and the SAMR, jointly promulgated the Measures for Information Reporting on Foreign Investment, which became
effective on January 1, 2020. Pursuant to these measures, where a foreign investor carries out investment activities in China directly
or indirectly, the foreign investor or the foreign-invested enterprise shall submit the investment information to the competent commerce
department.
Pursuant
to the Circular on Further Simplifying and Improving the Foreign Currency Management Policy on Direct Investment, or the SAFE Circular
No. 13, became effective on June 1, 2015 and was amended on December 31, 2019, and other laws and regulations relating to foreign exchange,
when setting up a new foreign invested enterprise, the foreign invested enterprise shall register with the bank located at its registered
place after obtaining the business license, and if there is any change in capital or other changes relating to the basic information
of the foreign-invested enterprise, including without limitation any increase in its registered capital or total investment, the foreign
invested enterprise must register such changes with the bank located at its registered place after obtaining the approval from or completing
the filing with competent authorities. Pursuant to the relevant foreign exchange laws and regulations, the above-mentioned foreign exchange
registration with the banks will typically take less than four weeks upon the acceptance of the registration application.
64
Regulation
on Foreign Exchange Registration of Offshore Investment by mainland China Residents
In
October of 2005, SAFE promulgated a Notification known as "Notification 75", in which SAFE requires mainland China residents
to register their direct establishment or indirect control of an offshore entity (referred to in Notice 37 as "special purpose
vehicle."), where such offshore entity are established for the purpose of overseas financing, provided that mainland China residents
contribute their legally owned assets or equity into such entity. In July of 2014, this Notification was replaced by Notification 37,
"Notification on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents' Offshore Investment and Financing
and Returning Investment through Special Purpose Vehicles", which expanded SAFE oversight scope to include overseas investment
registration as well. Meanwhile, Notification 37 also covers more areas such as mainland China residents paying capital contribution
with overseas assets or equity. Furthermore, Notification 37 requires amendment to the registration where any significant changes with
respect to the special purpose vehicle capitalization or structure of the mainland China resident itself (such as capital increase,
capital reduction, share transfer or exchange, merger or spin off). Our shareholders including natural persons or legal persons/institutes
have been in compliance with such registration.
Regulation
on Dividend Distributions
Our
Mainland China Subsidiaries, Dongguan Dogness and Dongguan Jiasheng, are wholly foreign-owned enterprises under the PRC law. The principal
regulations governing the distribution of dividends paid by wholly foreign-owned enterprises include: Corporate Law (1993) as amended
in 2005, 2013, and 2018; The Wholly Foreign-Owned Enterprise Law (1986), as amended in 2000; The Wholly Foreign-Owned Enterprise Law
Implementation Regulations (1990), as amended in 2001 and 2014; and the Enterprise Income Tax Law (2007) and its Implementation Regulations
(2007).
Under
these regulations, wholly foreign-owned and joint venture enterprises in China may pay dividends only out of their accumulated profits,
if any, as determined in accordance with PRC accounting standards and regulations. In addition, an enterprise in China is required to
set aside at least 10% of its after-tax profit based on PRC accounting standards each year to its general reserves until its cumulative
total reserve funds reaches 50% of its registered capital. Our Company's reserve fund has not yet reached this level. The board
of directors of a wholly foreign-owned enterprise has the discretion to allocate a portion of its after-tax profits to its employee welfare
and bonus funds. These reserve funds, however, may not be distributed as cash dividends.
On
March 16, 2007, the National People's Congress enacted the Enterprise Income Tax Law, and on December 6, 2007, the State Council
issued the Implementation Regulations on the Enterprise Income Tax Law, both of which became effective on January 1, 2008. Under this
law and its implementation regulations, dividends payable by a foreign-invested enterprise in mainland China to its foreign investor
who is a non-resident enterprise will be subject to a 10% (5% for Hong Kong residents) withholding tax, unless any such foreign investor's
jurisdiction of incorporation has a tax treaty with mainland China that provides for a lower withholding tax rate.
65
M&A
Rules and Regulation on Overseas Listings
On
August 8, 2006, six PRC governmental agencies jointly promulgated the Regulations on Mergers and Acquisitions of Domestic Enterprises
by Foreign Investors, or the M&A Rules, which became effective on September 8, 2006 and amended on June 22, 2009. The M&A Rules,
among other things, requires that if an overseas company established or controlled by mainland China companies or individuals, or mainland
China Citizens, intends to acquire equity interests or assets of any other mainland China company affiliated with the mainland China
Citizens, such acquisition must be submitted to the MOFCOM for approval. The M&A Rules also require offshore special purpose vehicles
formed to pursue overseas listing of equity interests in mainland China companies and controlled directly or indirectly by mainland China
companies or individuals to obtain the approval of the Chinese Securities Regulatory Commission, or the CSRC, prior to the listing and
trading of such special purpose vehicle's securities on any stock exchange overseas.
The
Anti-Monopoly Law promulgated by the SCNPC on August 30, 2007 and effective on August 1, 2008 requires that transactions which are deemed
concentrations and involve parties with specified turnover thresholds must be cleared by MOFCOM before they can be completed. In addition,
on February 3, 2011, the General Office of the State Council promulgated a Notice on Establishing the Security Review System for Mergers
and Acquisitions of Domestic Enterprises by Foreign Investors, or Circular 6, which officially established a security review system for
mergers and acquisitions of domestic enterprises by foreign investors. Further, on August 25, 2011, MOFCOM promulgated the Regulations
on Implementation of Security Review System for the Merger and Acquisition of Domestic Enterprises by Foreign Investors, or the MOFCOM
Security Review Regulations, which became effective on September 1, 2011, to implement Circular 6. Under Circular 6, a security review
is required for mergers and acquisitions by foreign investors having "national defense and security" concerns and mergers
and acquisitions by which foreign investors may acquire the "de facto control" of domestic enterprises with "national
security" concerns. Under the MOFCOM Security Review Regulations, MOFCOM will focus on the substance and actual impact of the transaction
when deciding whether a specific merger or acquisition is subject to security review. If MOFCOM decides that a specific merger or acquisition
is subject to security review, it will submit it to the Inter-Ministerial Panel, an authority established under the Circular 6 led by
the NDRC, and MOFCOM under the leadership of the State Council, to carry out the security review. The regulations prohibit foreign investors
from bypassing the security review by structuring transactions through trusts, indirect investments, leases, loans, control through contractual
arrangements or offshore transactions. On February 7, 2021, the Anti-Monopoly Committee of the State Council promulgated the Anti-monopoly
Guidelines for the Platform Economy Sector, or the Anti-monopoly Guideline, aiming to improve anti-monopoly administration on online
platforms. The Anti-monopoly Guideline, operating as the compliance guidance under the existing PRC anti-monopoly regulatory regime for
platform economy operators, specifically prohibits certain acts of the platform economy operators that may have the effect of eliminating
or limiting market competition, such as concentration of undertakings.
66
Foreign
Investment Law
On
March 15, 2019, the National People's Congress, or the NPC, formally adopted the Foreign Investment Law, which became effective
on January 1, 2020 and replaced the trio of laws regulating foreign investment in China, namely, the Sino-foreign Equity Joint Venture
Enterprise Law, the Sino-foreign Cooperative Joint Venture Enterprise Law and the Wholly Foreign-invested Enterprise Law, together with
their implementation rules and ancillary regulations. Meanwhile, the Regulations for the Implementation of the Foreign Investment Law
was promulgated by the State Council on December 26, 2019 and came into effect as of January 1, 2020, which clarified and elaborated
the relevant provisions of the Foreign Investment Law. The organization form, organization and activities of foreign-invested enterprises
shall be governed, among others, by the Company Law of PRC and the Partnership Enterprise Law of PRC. Foreign-invested enterprises established
before the implementation of the Foreign Investment Law may retain the original business organization and so on within five years after
the implementation of this Law.
According
to the Foreign Investment Law, foreign investments are entitled to pre-entry national treatment and are subject to negative list management
system. The pre-entry national treatment means that the treatment given to foreign investors and their investments at the stage of investment
access shall not be less favorable than that of domestic investors and their investments. The negative list management system means that
the state implements special administrative measures for access of foreign investment in specific fields. Foreign investors shall not
invest in any forbidden fields stipulated in the negative list and shall meet the conditions stipulated in the negative list before investing
in any restricted fields. Foreign investors' investment, earnings and other legitimate rights and interests within the territory
of China shall be protected in accordance with the law, and all national policies on supporting the development of enterprises shall
equally apply to foreign-invested enterprises.
Pursuant
to the Provisional Administrative Measures on Establishment and Modifications (Filing) for Foreign Investment Enterprises promulgated
by the MOFCOM, on October 8, 2016 and amended on July 30, 2017 and June 29, 2018, respectively, establishment and changes of foreign
investment enterprises which are not subject to the approval under the special entry management measures shall be filed with the relevant
commerce authorities. However, as the PRC Foreign Investment Law has taken effect, the MOFCOM and the State Administration for Market
Regulation, or the SAMR, jointly promulgated the Foreign Investment Information Report Measures, or the Information Report Measures,
on December 19, 2019, which has taken effect since January 1, 2020. According to the Information Report Measures, which repealed the
Provisional Administrative Measures on Establishment and Modifications (Filing) for Foreign Investment Enterprises, foreign investors
or foreign invested enterprises shall report their investment related information to the competent local counterpart of the MOFCOM through
Enterprise Registration System and National Enterprise Credit Information Notification System.
Regulation
on Foreign Debt
A
loan made by a foreign entity as direct or indirect shareholder in a FIE is considered to be foreign debt in China and is regulated by
various laws and regulations, including the Regulation of the People's Republic of China on Foreign Exchange Administration, the
Interim Provisions on the Management of Foreign Debts, the Statistical Monitoring of Foreign Debts Tentative Provisions, the Detailed
Rules for the Implementation of Provisional Regulations on Statistics and Supervision of External Debt, and the Administrative Measures
for Registration of Foreign Debts. Under these rules and regulations, a shareholder loan in the form of foreign debt made to a mainland
China entity does not require the prior approval of SAFE. However, such foreign debt must be registered with and recorded by SAFE or
its local branches within fifteen (15) business days after entering into the foreign debt contract. Pursuant to these rules and regulations,
the maximum amount of the aggregate of (i) the outstanding balance of foreign debts with a term not longer than one year, and (ii) the
accumulated amount of foreign debts with a term longer than one year, of a FIE shall not exceed the difference between its registered
total investment and its registered capital, or Total Investment and Registered Capital Balance.
67
On
January 12, 2017, the People's Bank of China, or PBOC, promulgated the Notice of the People's Bank of China on Matters concerning
the Macro-Prudential Management of Full-Covered Cross-Border Financing, or PBOC Circular 9, which sets forth an upper limit for mainland
China entities, including FIEs and domestic enterprises, regarding their foreign debts. Pursuant to PBOC Circular 9, the outstanding
cross-border financing of an enterprise (the outstanding balance drawn, here and below) shall be calculated using a risk-weighted approach,
or Risk-Weighted Approach, and shall not exceed the specified upper limit, namely: risk-weighted outstanding cross-border financing ≤
the upper limit of risk-weighted outstanding cross-border financing. Risk-weighted outstanding cross-border financing = ∑ outstanding
amount of RMB and foreign currency denominated cross- border financing * maturity risk conversion factor * type risk conversion factor
+∑ outstanding foreign currency denominated cross-border financing * exchange rate risk conversion factor. Maturity risk conversion
factor shall be 1 for medium- and long-term cross-border financing with a term of more than one year and 1.5 for short-term cross-border
financing with a term of one year or less. Type risk conversion factor shall be 1 for on-balance-sheet financing and 1 for off-balance-sheet
financing (contingent liabilities) for the time being. Exchange rate risk conversion factor shall be 0.5. The PBOC Circular 9 further
provides that the upper limit of risk-weighted outstanding cross-border financing for enterprises, or Net Asset Limits, shall be 200%
of its net assets. The PBOC Circular 9 does not supersede the Interim Provisions on the Management of Foreign Debts, but rather serves
as a supplement to it. PBOC Circular 9 provided for a one-year transitional period, or the Transitional Period, from its promulgation
date for FIEs, during which period FIEs could choose to calculate their maximum amount of foreign debt based on either (i) the Total
Investment and Registered Capital Balance, or (ii) the Risk-Weighted Approach and the Net Asset Limits. Under the PBOC Circular 9, after
the Transitional Period ends on January 11, 2018, the PBOC and SAFE will determine the cross-border financing administration mechanism
for the foreign-invested enterprises after evaluating the overall implementation of PBOC Circular 9. In addition, according to PBOC Circular
9, a foreign loan must be filed with SAFE through the online filing system of SAFE after the loan agreement is signed and at least three
business days prior to the borrower withdraws any amount from such foreign loan.
Employment
Laws
In
accordance with the PRC National Labor Law, which became effective in January 1995, as amended subsequently in 2009 and 2018, and the
PRC Labor Contract Law, which became effective in January 2008, as amended subsequently in December 2012, employers must enter into written
labor contracts with full-time employees in order to establish an employment relationship. All employers must pay their employees at
least with the local minimum wage standards. All employers are required to establish a work environment of safety and sanitation, strictly
abide by state rules and standards, and provide employees with appropriate workplace safety training. In addition, employers are obliged
to pay contributions to the social insurance plan and the housing fund plan for employees.
We
have entered into employment agreements with all of our full-time employees. We have contributed to the basic and minimum social insurance
plan.  Due to a high employee turnover rate in our industry, however, it is difficult for us to comply fully with the law. Some
of our employees have even request not to participate in the social insurance plan because they do not want us to make deduction on their
salaries.
68
While
we believe we have made adequate provision of such outstanding amounts of contributions to such plans in our financial statements, any
failure to make sufficient payments to such plans would be in violation of applicable PRC laws and regulations and, if we are found to
be in violation of such laws and regulations, we could be required to make up the contributions for such plans as well as to pay late
fees and fines.
PRC
Enterprise Income Tax Law and Individual Income Tax Law
In
2007 China published Enterprise Income Tax Law ("EIT Law") and its Implementation Rule, both of which came into effect since
January 1, 2008. Under the EIT Law and its Rule, enterprises are classified as resident enterprises and non-resident enterprises. Resident
enterprises typically pay an enterprise income tax at the rate of 25%. An enterprise established outside of mainland China with its "de
facto management bodies" located within the PRC is considered a "resident enterprise," meaning that it can be treated
in a manner similar to a mainland China domestic enterprise for enterprise income tax purposes. The Rule defines "de facto management
body" as a managing body that in practice exercises "substantial and overall management and control over the production and
operations, personnel, accounting, and properties" of the enterprise.
On
the other hand, the State Administration of Taxation provides certain specific criteria for determining whether the "de facto management
body" of a mainland China-controlled offshore enterprise is located within mainland China. Simply speaking, the criteria is more
focused on substantive rather than format. Pursuant to its Circular 82 of 2009, the criteria to determine "de facto management
body" include: (a) the senior management and core management departments in charge of its daily operations function have their
presence mainly in mainland China; (b) its financial and human resources decisions are subject to determination or approval by persons
or bodies in mainland China; (c) its major assets, accounting books, company seals, and minutes and files of its board and shareholders'
meetings are located or kept in mainland China; and (d) more than half of the enterprise's directors or senior management with
voting rights habitually reside in mainland China. Furthermore, the SAT published Bulletin 45 in September 2011, which provides more
guidance on the implementation of the definition and provides for procedures and administration details on determining resident status
and administration on post-determination matters.
However,
the SAT Circular 82 and Bulletin 45 only apply to offshore enterprises controlled by mainland China enterprises or mainland China enterprise
groups rather than those controlled by mainland China individuals or foreign individuals. So far there is no further criteria passed
yet and no applicable legal precedents either, therefore it remains unclear how the PRC tax authorities will determine the mainland China
tax resident treatment of a foreign company controlled by individuals. Under these existing criteria, it is possible that we will be
classified as a "resident enterprise" for mainland China enterprise income tax purposes. If so, it would likely result in
unfavorable tax consequences to our non-mainland China shareholders and have a material adverse effect on our results of operations and
the value of your investment.
69
Regulations
on Intellectual Property
China
joined WTO in 2001 and signed the treaty of TRIPS (Agreement on Trade-Related Aspects of Intellectual Property Rights), therefore China's
IP laws are very much close to TRIPS.
Trademarks
Trademarks
are protected by the PRC Trademark Law adopted in 1982 and lastly amended in 1993, 2001, and 2013 as well as the Implementation Regulation
of the PRC Trademark Law adopted by the State Council in 2002 and amended in 2014. The Trademark Office under the State Administration
for Industry and Commerce ("SAIC") handles trademark registrations. Trademarks can be registered for a term of ten years
and can be repeatedly extended for another ten-year term at the time of expiry. The PRC Trademark Law has adopted a "first-to-file"
principle with respect to trademark registration. As of the date of this report, we have registered 181 trademarks (including 162 trademarks
in China), all of which are fully owned and in use by us. According to Chinese Trademark Law, if anyone has a dispute the officially
registered trademarks, he can file a petition to the review board of the Trademark Office, requesting a comprehensive review that may
result in the revoking the registered trademarks. So far, we have not received any such kind of petition and we strongly believe there
will not be such petition because our trademarks are firstly used as well as firstly registered by us.
Patents
Inventions,
utility models, and designs with the features of novelty, inventiveness and practical applicability, are three kinds of patent defined
and protected under China's Patent Law. The State Intellectual Property Office is responsible for examining and approving patent
applications. Once the application is approved, the applicants can have their patent under Chinese legal protection for a long term since
its application date, which is 20 years for invention and ten years for utility models and designs. As of the date of this report, we
have successfully obtained 135 patents (including 87 in China), which includes 15 invention patents, 50 utility patents, and 70 appearance
patents.
70
C.
Organizational Structure
Below
is a chart representing our current corporate structure:
Our
registered office in the British Virgin Islands is at AMS Trustees Limited, Sea Meadow House, Blackburne Highway, P.O. Box 116, Road
Town, Tortola, British Virgin Islands, telephone +1 (284) 494-3399.
D.
Property, Plants and Equipment
There
is no private land ownership in China. Individuals and entities are permitted to acquire land use rights for specific purposes. The land
use rights to the property on which our facilities are situated are held by the parties from which we lease such property.
At
our facility in Dongguan, our company leases the factory building, office building, guard booth, power room and dormitory from Dongguan
Dongcheng District Tongsha Huanggongkeng Co-op, an unrelated third party. The total leased area spans 10,292 square meters. The lease
commenced May 1, 2009 has been renewed twice; the current expiration date is April 30, 2027. We estimate that the productive capacity
of our main factory is 8,500,000 pieces per year, and our current utilization rate is approximately 65%.
The
registered office of Dogness Intelligent Technology (Dongguan) Co., LTD. is leased from Dongguan Jiasheng and consists of 500 square
meters on the site of our facility in Dongguan.
On
March 14, 2018, Dogness Group purchased an office building of 6,373 square feet for $1.37 million in Dallas, Texas, which serves as the
office, quality control, testing area and drop shipment location for Dogness Group.
On
March 16, 2018, the Company acquired all of the equity of Zhangzhou Meijia Metal Product Co., Ltd ("Meijia"). The Company
paid total consideration of approximately $10.0 million in connection with the acquisition of equity of Meijia. Meijia owns the land
use right to a land parcel of 19,144.54 square meters and a factory and office buildings of an aggregate of 18,912.38 square meters.
Except for holding the land use right and the buildings, Meijia has no substantial business operations, nor has it had any production
or sales activities since its inception. The Company plans to use this land use right and buildings as a production facility. The Company
originally budgeted approximately RMB 110 million ($17.0 million) to develop the facility. The actual costs were adjusted based on additional
work required for waterproofing, sewage pipeline and hazardous waste leakage prevention. As a result, total actual costs incurred as
of June 30, 2021, amounted to RMB 118.5 million ($18.4 million). The Meijia plant started test operations in August 2019 and started
normal production in December 2019 upon passing the final inspection conducted by the local government. The Meijia plant has reached
its designed production capacity in June 2021.
71
In
July 2018, the Company entered a long-term lease that expires October 14, 2038 for 7,026 square meters of land and 5,000 square meters
of buildings in Dongguan city. The Company plans to use this new property as a warehousing facility, given limited storage capacity at
its other facilities. Lease expenses for this property were approximately $4.5 million, which amount was paid in full on October 9, 2018.
The total budget was approximately RMB263.5 million ($36.3 million). As of June 30, 2022, the Company had completed this project and
transferred all of the related CIP to fixed assets. As of June 30, 2023, the Company has made total payments of approximately RMB261.7
million ($36.1 million) in connection to this project, which resulted in future minimum capital expenditure payments of approximately
RMB1.8 million ($0.3 million), the Company plan to pay remaining payments within twelve months after June 30, 2023.
The
Company's subsidiary Dogness Culture (in the process of being liquidated as of the date of this report) also worked on a project
to decorate a pet themed retail store. Total budget was RMB 2.2 million ($0.3 million). This project was fully completed during the year
ended June 30, 2021. As of June 30, 2023, the Company has fully paid for the project.
Fixed
assets at our properties consist of office equipment, buildings, structures, ancillary facilities, and equipment for production of metal,
plastic and nylon components of leashes, collars and lanyards, including jacquard machines, injection modeling equipment, die casting
machines, dying machines, and computerized sewing machines.
None
of our property is affected by any environmental issues that may affect our use of the property.
Item
4A. Unresolved Staff Comments
None.
Item
5. Operating and Financial Review and Prospects
The
following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated
financial statements and related notes that appear in this report. In addition to historical consolidated financial information, the
following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ
materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include
those discussed below and elsewhere in this report, particularly in "Risk Factors."
Overview
of Company
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. We are not a Chinese operating company but a British Virgin
Islands holding company with operations conducted by our subsidiaries established in Delaware, mainland China, Hong Kong Special Administrative
Region of the People's Republic of China and British Virgin Islands. 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.
72
Dongguan
Jiasheng Enterprise Co., Ltd. ("Dongguan Jiasheng") was incorporated in mainland China on May 15, 2009, and was established
to develop and manufacture pet leash and lanyard products. Dongguan Jiasheng is the main operating entity and is engaged in the research
and development, manufacturing and distribution of various types of gift suspenders, pet belts ribbon, lace, elastic belt, computer jacquard
ribbon and high-grade textile lace. Dogness (Hongkong) Pet's Products Co., Limited ("HK Dogness") and Jiasheng Enterprise
(Hongkong) Co., Limited ("HK Jiasheng") were incorporated in Hong Kong on March 10, 2009 and July 12, 2007, respectively,
and were established to operate principally as trading companies. The equity interests of Dongguan Jiasheng, HK Dogness, and HK Jiasheng
(collectively, the "Transferred Entities") were 100% controlled by our founder and Chief Executive Officer, Mr. Silong Chen
(the "Controlling Shareholder").
A
reorganization of the legal structure was completed on January 9, 2017. The reorganization involved (i) the incorporation of the Company,
(ii) the incorporation of Dogness Intelligent Technology (Dongguan) Co., Ltd. ("Dongguan Dogness"), a holding company established
under PRC laws, 100% owned by HK Dogness, and considered a wholly foreign-owned entity ("WFOE") in mainland China, and (iii)
the transfer of HK Dogness, HK Jiasheng and Dongguan Jiasheng (collectively, the "Transferred Entities") from the Controlling
Shareholder to the Company and Dongguan Dogness. Specifically, on November 24, 2016, the Controlling Shareholder transferred his 100%
ownership interest in Dongguan Jiasheng to Dongguan Dogness. On January 9, 2017, the Controlling Shareholder transferred his 100% equity
interests in HK Dogness and HK Jiasheng to the Company. After the reorganization, the Company ultimately owns 100% of the equity interests
of the entities mentioned above. As of the date of this Report, the Controlling Shareholder owns 23.85% equity interest of the Company.
Since
the Company and its wholly-owned subsidiaries were 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.
In
January 2018, the Company formed a Delaware limited liability company, Dogness Group LLC, with its operation focusing primarily on promoting
the Company's pet products sales in the United States. In February 2018, Dogness Overseas Ltd, which is wholly owned by the Company,
was established in the British Virgin Islands as a holding company. Dogness Overseas Ltd owns all of the interests in Dogness Group LLC.
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 $11.1 million (or RMB71.0 million). After the acquisition,
Mejia became the Company's wholly-owned subsidiary. Meijia owns the land use right to a land parcel of 19,144.54 square meters
and a factory and office buildings of an aggregate of 18,912.38 square meters. This Acquisition enables the Company to build its own
facility instead of leasing manufacturing facilities and expand its production capacity sustainably to meet increased customer demand.
Total budgeted capital expenditure to bring Meijia manufacturing facility into use was originally estimated to be completed at a cost
of RMB 110 million ($17.0 million). The actual costs have been adjusted based on additional works required for waterproofing, sewage
pipeline and hazardous waste leakage prevention. Meijia plant has reached its designed production capacity by June 2021.
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 $11.0 million). One
of the Company's subsidiaries, Dongguan Jiasheng, own
ed
58% of Intelligence Guangzhou, with the remaining 42% ownership interest
owned by two unrelated entities. Intelligence Guangzhou had immaterial operation since its inception and
was expected to
conduct research and manufacturing
of the Company's fast-growing intelligent pet products in the future. Due to the fact that Intelligence Guangzhou
had
no business
activities since the incorporation and Dongguan Jiasheng
had
not made any capital contribution, in August 2022, the Board approved to
sell the Company's 58% ownership interest in Intelligence Guangzhou to a third party for a nominal price. The transaction was completed
on August 10, 2022.
73
Dogness
Pet Culture (Dongguan) Co., Ltd. ("Dogness Culture") was incorporated on December 14, 2018 with registered capital of RMB
10 million (approximately $1.5 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, our Chief Executive Officer, to acquire 51.2% ownership interest of Dogness Culture for a nominal fee. The
remaining equity interest of 48.8% was also transferred to other two third parties for a nominal fee. Dongguan Dogness thereafter contributed
cash consideration of RMB 5.12 million (approximately $0.79 million) on April 16, 2020 along with other two shareholders' capital
contributions of RMB 4.88 million (approximately $0.76 million). Dogness Culture was focusing on developing and expanding pet food market
in China. On July 19, 2023, the Board approved the liquidation, dissolution, and termination of Dogness culture following the signing
of a termination agreement among Dogness's Culture's shareholders on May 8, 2023. As of the date of this annual report, Dogness Culture is in the process of being liquidated.
In
recent years, we have invested large amounts of funds, to establish an environmentally friendly ribbon dying process, computer jacquard
department, screen printing department and thermal transfer printing department. The adoption of ISO 9001:2015 international quality
system enables us to be more effective in the various production processes to guarantee product quality, and ensure stable and efficient
production. We also have an in-house testing laboratory and frequently perform tests on all of our products to maintain a high level
of quality in both materials and workmanship.
Our
primary raw materials in production of our products are plastic, leather, nylon, polyester, chemical fiber blended fabric, metal, GPPS
and HIPS, most of which are extracted from crude oil. Thus, our cost of raw material is highly impacted by fluctuations in the price
of oil. Cost of revenues mainly includes costs of raw materials, costs of direct labor, utilities, depreciation expenses and other overhead.
Our
major products include traditional pet products, intelligent pet products, and climbing hooks and others products, such as mouth covers
and pet charms. We also provide ribbon dyeing service for external customers, as well as other services, such as pet grooming services.
Revenues by products and services categories are summarized below:
For the Years ended June 30,
2023
2022
2021
Products and services category
Amount
% of total
Revenue
Amount
% of total
Revenue
Amount
% of
total
Revenue
Products
Traditional pet products
$
8,302,299
47.2
%
$
11,433,159
42.2
%
$
14,331,492
58.9
%
Intelligent pet products
7,404,407
42.1
%
13,492,076
49.8
%
7,801,070
32.1
%
Climbing hooks and others
1,806,369
10.3
%
1,761,341
6.5
%
1,340,686
5.5
%
Total revenue from product sales
17,513,075
99.6
%
26,686,576
98.5
%
23,473,248
96.5
%
Services
Dyeing services
-
-
%
342,561
1.3
%
817,145
3.4
%
Other services
71,379
0.4
%
66,060
0.2
%
29,728
0.1
%
Total revenue from services
71,379
0.4
%
408,621
1.5
%
846,873
3.5
%
Total revenue
$
17,584,454
100.0
%
$
27,095,197
100.0
%
$
24,320,121
100.0
%
During
the year ended June 30, 2023, our products were sold in 32 countries. Our major customers include Anyi trading, Costco, Trendspark, PetSmart,
Petco, Pet Value, Walmart, Target, IKEA, SimplyShe, Pets at Home, PETZL, and Petmate, etc. We also sold our products on popular online
shopping sites, including Amazon, Chewy, JD, Tmall and Taobao, and on those live streaming sales platforms hosted by influencers.
74
Export
sales accounted for 64.0%, 53.7% and 43.7% of the total sales for the years ended June 30, 2023, 2022 and 2021, respectively, while China
domestic sales accounted for 36.0%, 46.3% and 56.3% for the years ended June 30, 2023, 2022 and 2021, respectively. The breakdown of
the sales by geographic areas is shown below:
For the year ended
June 30, 2023
For the year ended
June 30, 2022
For the year ended
June 30, 2021
Geographic location
Amount
% of total
Revenue
Amount
% of total
Revenue
Amount
% of total
Revenue
Sales to international markets
$
11,253,079
64.0
%
$
14,542,323
53.7
%
$
10,627,253
43.7
%
Sales in China domestic market
6,331,375
36.0
%
12,552,874
46.3
%
13,692,868
56.3
%
Total
$
17,584,454
100.0
%
$
27,095,197
100.0
%
$
24,320,121
100.0
%
For
the year ended June 30, 2023, the Company's four largest customers accounted for 15.4%, 11.6%, 8.8% and 5.3% of the
Company's total revenue, respectively. For the year ended June 30, 2022, the Company's four largest customers accounted
for 23.4%, 6.7%, 6.7% and 5.7% of the Company's total revenue, respectively. For the year ended June 30, 2021, the
Company's three largest customers accounted for 32.0%, 9.1% and 6.9% of the Company's total revenue,
respectively.
For the years ended June 30,
2023
2022
2021
% of total revenue
Dongguan Anyi Trading Co., Ltd.
15.4
%
23.4
%
32.0
%
Petco Asua LLC
-
%
-
%
9.1
%
Shenzhen Wosibao Technology Co., Ltd
-
%
-
%
6.9
%
Mid Ocean Brands B.V.
11.6
%
6.7
%
-
%
Dogness Network Technology Co., Ltd
8.8
%
6.7
%
5.0
%
Dongguan Ruisheng Development Co., Ltd.
-
%
-
%
3.6
%
Costco Wholesale Corporation
-
%
5.7
%
-
%
Velcro Europe S.A.
5.3
%
-
%
-
%
Market
outlook
The
company's operations will continue to be negatively affected by the ongoing trade dispute between China and the United States,
which may result in uncertainties in our export sales in the coming months.
To
mitigate the impact of weak sales, we are focusing on developing new customers and markets, as well as developing a new generation of
intelligent pet products. We have expanded our sales channels from traditional trading to online shopping channels, which allows us to
gain direct access to more potential customers from domestic and international markets. This is particularly important to attract younger
generations who are more interested in our smart pet products. At the same time, we are implementing cost-saving measures to improve
production efficiency and profit margins.
Our
Growth Strategy
We
are committed to enhancing profitability and cash flows through the following strategies:
Develop
innovative products and services.
We focus on developing and strengthening our brand identity and emphasizing our unique offerings
for customers and promoting our strong value proposition. Through extensive and on-going customer research, we are gaining valuable insights
into the wants and needs of our customers and we are developing solutions and communication strategies to address them. We continually
seek opportunities to strengthen our merchandising capabilities, which allow us to provide a differentiated product assortment, including
our exclusive smart pet specialty products and our proprietary brand offerings, to deliver innovative solutions and value to our customers.
We believe developing innovative products will further differentiate us from our competitors, allow us to forge a strong relationship
with our customers, build loyalty, enhance our market position, increase transaction size and enhance operating margins.
75
Mergers
and Acquisitions.
When capital permits, we intend to capitalize on the challenges that smaller companies are encountering in our
industry by acquiring complementary companies at favorable prices. We believe that acquiring rather than building capacity is an option
that may be more beneficial to us if replacement costs are higher than purchase prices. We continue to look into acquiring smaller pet
product manufacturers in China as part of our expansion plans. Some of the companies we may seek to acquire are suppliers of the raw
materials or components we purchase to manufacture our products to further expand and integrate the industrial chain. If we do acquire
such companies, we will have greater control over our manufacturing cost. Our expansion strategy includes increasing our share in existing
pet specialty products markets, penetrating new markets and achieving operating efficiencies and economies of scale in merchandising,
distribution, information systems, procurement, and marketing, while providing a return on investment to our stockholders.
Supply
Chain Efficiencies and Scale.
We intend to streamline our supply chain process and leverage our economies of scale. We seek suppliers
that will strategically partner with us to create long-term shareholder value. We also aim to scale our supply chain to accommodate growth,
cut costs and improve efficiency and drive continuous improvement, mitigate supply chain risks, and develop innovative approaches to
product development.
From
a long-term perspective, we believe the above-mentioned strategic initiatives will still help our future sales growth. Through continuous
endeavor for product innovation, better management our capital expenditure and leveraging costs, we expect that we could further improve
our sales and product margins to produce profitability and return on investment for our shareholders in the near future.
Results
of Operations
Comparison
of Operation Results for the Years Ended June 30, 2023 and 2022
The
following table summarizes the results of our operations for the years ended June 30, 2023 and 2022, respectively, and provides information
regarding the dollar and percentage increase or (decrease) during such periods.
For the Year ended
June 30, 2023
For the Year ended
June 30, 2022
Changes
Amount
% of total
Revenue
Amount
% of total
Revenue
Amount
%
Revenues
$
17,584,454
100.0
%
$
27,095,197
100.0
%
$
(9,510,743
)
(35.1
)%
Cost of revenues
13,923,166
79.2
%
16,956,132
62.6
%
(3,032,966
)
(17.9
)%
Gross profit
3,661,288
20.8
%
10,139,065
37.4
%
(6,477,777
)
(63.9
)%
Operating expenses
Selling expenses
2,478,163
14.1
%
2,077,174
7.7
%
400,989
19.3
%
General and administrative expenses
9,800,714
55.7
%
6,742,687
24.9
%
3,058,027
45.4
%
Research and development expense
931,078
5.3
%
917,227
3.4
%
13,851
1.5
%
Loss from disposal of fixed assets
15,306
0.1
%
327,921
1.2
%
(312,615
)
(95.3
)%
Total operating expenses
13,225,261
75.2
%
10,065,009
37.1
%
3,160,252
31.4
%
(Loss) income from operations
(9,563,973
)
(54.4
)%
74,056
0.3
%
(9,638,029
)
(13,014.5
)%
Other income (expenses)
Interest income (expense), net
(330,824
)
(1.9
)%
(370,108
)
(1.4
)%
39,284
(10.6
)%
Foreign exchange gain
800,403
4.6
%
246,211
0.9
)%
554,192
225.1
%
Other income
112,109
0.6
%
115,016
0.4
%
(2,907
)
(2.5
)%
Rental income from related parties, net
295,362
1.7
%
173,089
0.6
%
122,273
70.6
%
Total other income
877,050
5.0
%
164,208
0.6
%
712,842
434.1
%
(Loss) income before income taxes
(8,686,923
)
(49.4
)%
238,264
0.9
%
(8,925,187
)
(3,745.9
)%
Income tax benefit
(1,227,449
)
(7.0
)%
(2,777,868
)
(10.3
)%
1,550,419
(55.8
)%
Net (loss) income
$
(7,459,474
)
(42.4
)%
$
3,016,132
11.1
%
$
(10,475,606
)
(347.3
)%
76
Revenues.
Revenues decreased by approximately $9.5 million, or 35.1%, to approximately $17.6 million in fiscal 2023 from approximately
$27.1 million in fiscal 2022. The decrease in revenue was primarily attributable to the significant decreased sales in both domestic
and international markets.
Revenue
by Products and Services Type
The
breakdown of our revenue by products and services categories is as follows:
For the Years ended June 30,
2023
2022
Changes
Products and services category
Amount
% of total
Revenue
Amount
% of total
Revenue
Amount
%
Products
Traditional pet products
$
8,302,299
47.2
%
$
11,433,159
42.2
%
$
(3,130,860
)
(27.4
)%
Intelligent pet products
7,404,407
42.1
%
13,492,076
49.8
%
(6,087,669
)
(45.1
)%
Climbing hooks and others
1,806,369
10.3
%
1,761,341
6.5
%
45,028
2.6
%
Total revenue from products
17,513,075
99.6
%
26,686,576
98.5
%
(9,173,501
)
(34.4
)%
Services
Dyeing services
-
-
%
342,561
1.3
%
(342,561
)
(100.0
)%
Other services
71,379
0.4
%
66,060
0.2
%
5,319
8.1
%
Total revenue from services
71,379
0.4
%
408,621
1.5
%
(337,242
)
(82.5
)%
Total
$
17,584,454
100.0
%
$
27,095,197
100.0
%
$
(9,510,743
)
(35.1
)%
Total Revenue for the years
ended June 30,
Average unit price
Price
Products
2023
2022
Units sold in 2023
Units sold in 2022
Variance in Units sold
% of units variance
2023
2022
Difference
Traditional pet products
$
8,302,299
$
11,433,159
10,949,243
10,813,092
136,151
1.3
%
$
0.8
$
1.1
$
(0.3
)
Intelligent pet products
7,404,407
13,492,076
373,796
441,042
(67,246
)
(15.2
)%
19.8
30.6
(10.8
)
Climbing hooks and others
1,806,369
1,761,341
940,733
1,040,551
(99,818
)
(9.6
)%
1.9
1.7
0.2
Total
$
17,513,075
$
26,686,576
12,263,772
12,294,685
(30,913
)
(0.3
)%
$
1.4
$
2.2
$
(0.8
)
77
Traditional
pet products
Revenue
from traditional pet products decreased by approximately $3.1 million, or 27.4%, from approximately $11.4 million in fiscal 2022, to
approximately $8.3 million in fiscal 2023. The decrease was mainly due to decrease in average selling price of $0.3 per unit in fiscal
2023 compared to fiscal 2022. Among the total revenue decrease, approximately $2.7 million was due to the decreased sales in Chinese
domestic market, as a result of fierce competition, while the remaining approximately $0.5 million decrease was from sales to customers
in overseas markets.
Intelligent
pet products
Revenue
from intelligent pet products decreased by approximately $6.1 million, or 45.1%, from approximately $13.5 million in fiscal 2022 to approximately
$7.4 million in fiscal 2023. The decrease was mainly driven by a decrease in sales volume and a decrease in average selling price of
$10.8 per unit in fiscal 2023 compared to fiscal 2022. Among the total revenue decrease, approximately $3.2 million was due to the decreased
sales in Chinese domestic market, while the remaining approximately $2.9 million decrease was from sales to customers in overseas markets.
Climbing
hooks and others
Revenue
from climbing hooks and others kept consistently at approximately $1.8 million in fiscal 2023 and 2022.
Dyeing
services
We
utilize our manufacturing capability and color dyeing technology to provide dyeing solutions to customers. We recognize revenue at the
point when dyeing solutions and related services are rendered, and the products after dyeing are delivered and accepted by the customers.
We earned dyeing services fees of $Nil and $342,561 in fiscal 2023 and 2022, respectively.
Sales
to related parties
During
the year ended June 30, 2019, we acquired 10% of the ownership interest in Dogness Network Technology Co., Ltd ("Dogness Network"),
for the purpose of working together to develop new products and new technologies in smart pet tech area.
The
legal representative of Dogness Technology Co., Ltd ("Dogness Technology") is Junqiang Chen, the relative of Mr. Silong Chen.
We
sold certain intelligent pet products to Dogness Network and Dogness Technology, and accordingly reported related party sales of $1,700,173
and $2,212,579, which accounted for 9.7% and 8.2% of our total revenue in fiscal 2023 and 2022, respectively.
Cost
of revenue associated with the sales to these two related parties amounted to $1,162,314 and $1,301,180 in fiscal 2023 and 2022, respectively.
Revenue
by Geographic Area
The
breakdown of our revenue by geographic areas is as follows:
For the Years Ended June 30,
2023
2022
Changes
Country and Region
Amount
% of
total
Revenue
Amount
% of
total
Revenue
Amount
%
Mainland China
$
6,331,375
36.0
%
$
12,552,874
46.3
%
$
(6,221,499
)
(49.6
)%
United States
6,221,436
35.4
%
7,980,436
29.6
%
(1,759,000
)
(22.0
)%
Europe
1,596,603
9.1
%
1,770,052
6.5
%
(173,449
)
(9.8
)%
Japan and other Asian countries and regions
2,572,091
14.6
%
3,009,931
11.1
%
(437,840
)
(14.5
)%
Australia
531,906
3.0
%
579,677
2.1
%
(47,771
)
(8.2
)%
Canada
294,241
1.7
%
1,168,689
4.3
%
(874,448
)
(74.8
)%
Central and South America
36,802
0.2
%
33,538
0.1
%
3,264
9.7
%
Total
$
17,584,454
100.0
%
$
27,095,197
100
%
$
(9,510,743
)
(35.1
)%
78
The
breakdown of sales by products and services categories in international markets is as follows:
International
sales
For the Years ended June 30,
2023
2022
Changes
International sales
Amount
% of total Revenue
Amount
% of total Revenue
Amount
%
Traditional pet products
$
5,710,572
50.7
%
$
6,187,697
42.5
%
$
(477,125
)
(7.7
)%
Intelligent pet products
4,611,727
41
%
7,538,259
51.9
%
(2,926,532
)
(38.8
)%
Climbing hooks and others
930,780
8.3
%
816,367
5.6
%
114,413
14.0
%
Total
$
11,253,079
100
%
$
14,542,323
100.0
%
$
(3,289,244
)
(22.6
)%
Our
total sales in international markets decreased by approximately $3.3 million or 22.6% to approximately $11.3 million in fiscal 2023,
from approximately $14.5 million in fiscal 2022. The decrease in our international sales was the result of the soft landing of the world
economy post-pandemic, which was caused by inflation and interest rate hikes in the United States.
We
had decreases in traditional pet products sales and intelligent pet products sales in fiscal 2023, compared to the same period
in 2022. Sales of our traditional pet products and intelligent pet products, decreased by 7.7% and 38.8%, respectively.
We
continue to collaborate with large retail chains in the US and Canada to distribute our smart pet products under our own brand, rather
than just serving as an OEM supplier. Furthermore, we continue to expand our sales on online shopping platforms, such as Amazon and Chewy,
to reach more potential customers. We anticipate that these efforts, coupled with the global economic recovery and the release of our
new generation of intelligent pet products, will result in an increase in revenue in the near future. We believe that our new generation
of intelligent pet products will continue to be the primary source of revenue for our international sales.
The
breakdown of sales by products and services categories in China's domestic market is as follows:
Domestic
sales
For the Years ended June 30,
2023
2022
Changes
Domestic sales
Amount
% of total Revenue
Amount
% of total Revenue
Amount
%
Traditional pet products
$
2,591,727
41.0
%
$
5,245,462
41.8
%
$
(2,653,735
)
(50.6
)%
Intelligent pet products
2,792,680
44.1
%
5,953,817
47.5
%
(3,161,137
)
(53.1
)%
Climbing hooks and others
875,589
13.8
%
944,974
7.5
%
(69,385
)
(7.3
)%
Dyeing services
-
-
%
342,561
2.7
%
(342,561
)
(100.0
)%
Other services
71,379
1.1
%
66,060
0.5
%
5,319
8.1
%
Total
$
6,331,375
100.0
%
$
12,552,874
100.0
%
$
(6,221,499
)
(49.6
)%
Our
domestic sales decreased by approximately $6.2 million or 49.6% from approximately $12.6 million in fiscal 2022 to approximately $6.3
million in fiscal 2023. The decrease was mainly due to a decrease in customer orders caused by intense competition in the domestic market.
Our
domestic sales of traditional pet products and intelligent pet products, decreased by 50.6% and 53.1% in fiscal 2023 as compared to fiscal
2022.
Cost
of revenues
During
fiscal 2023, the cost of revenues amounted to approximately $13.9 million, compared to approximately $17.0 million in fiscal 2022. As
a percentage of revenues, the cost of goods sold increased by approximately 16.6 percentage points, reaching 79.2% in fiscal 2023 from
62.6% in fiscal 2022. The decreased cost of goods sold was the result of lower sales volume.
Gross
profit
Our
gross profit decreased by approximately $6.5 million or 63.9%, to approximately $3.7 million in fiscal 2023 from approximately $10.1
million in fiscal 2022, primarily attributable to the decreased average selling price of our intelligent pet products. Overall gross
profit margin was 20.8%, a decrease of 16.6 percentage points, as compared to 37.4% in fiscal 2022.
79
Gross
profit by products and services type
The
breakdown of gross profit by product types is as follows:
For the Year ended June 30,
2023
2022
Changes
Products
Amount
Gross
profit %
Amount
Gross
profit %
Amount
Gross
profit Pct.
Pt.
Traditional pet products
$
1,178,545
14.3
%
$
3,670,566
32.1
%
$
(2,492,021
)
(17.8) pct
Intelligent pet products
1,804,804
24.4
%
5,909,099
43.8
%
(4,104,295
)
(19.4) pct
Climbing hooks and others
616,282
34.2
%
535,758
30.4
%
80,524
3.8 pct
3,599,631
20.6
%
10,115,423
37.9
%
(6,515,792
)
(17.3) pct
Services
Dyeing services
-
-
%
(35,272
)
(10.3
)%
35,272
10.3 pct
Other services
61,657
86.5
%
58,914
89.2
2,743
(2.7) pct
Total
$
3,661,288
20.8
%
$
10,139,065
37.4
%
$
(6,477,777
)
(16.6) pct
Gross
profit for traditional pet products decreased by approximately $2.5 million in fiscal 2023 as compared to fiscal 2022. Gross profit margin
decreased by 17.8 percentage points from 32.1% in fiscal 2022 to 14.3% in fiscal 2023, mainly due to a decrease of 27.3% in average selling
price and increased costs.
Gross
profit for intelligent pet products decreased by approximately $4.1 million from approximately $5.9 in fiscal 2022 to approximately
$1.9 million in fiscal 2023. Gross profit margin decreased by 19.4 percentage point from 43.8% in fiscal 2022 to 24.2% in fiscal
2023, mainly driven by a decrease of 35.3% in average selling price and increased costs.
Gross
profit for climbing hooks and others increased by approximately $0.1 million from approximately $0.5 million in fiscal 2022 to $0.6 million
in fiscal 2023, mainly driven by a 11.8% increase in the average selling price. Overall gross margin for climbing hook increased by 3.8
percentage points from 30.4% in fiscal 2022 to 34.2% in fiscal 2023.
Expenses
For the Years ended June 30,
2023
2023
2022
2022
Changes
Amount
% of total Expense
Amount
% of total Expense
Amount
%
Selling expenses
$
2,478,163
$
18.8
$
2,077,174
20.6
$
400,989
19.3
General and administrative expenses
9,800,714
74.1
6,742,687
67.0
3,058,027
45.4
Research and development expenses
931,078
7.0
917,227
9.1
13,851
1.5
Loss from disposal of fixed assets
15,306
0.1
327,921
3.3
(312,615
)
(95.3
)
Total
$
13,225,261
$
100.0
$
10,065,009
100
$
3,160,252
31.4
80
Selling
expenses.
Selling expenses primarily include expenses incurred for participating in various
trade shows to promote product sales, salary and sales commission expenses paid to the Company's sales personnel, and shipping
and delivery expenses. Selling expenses increased by approximately $0.4 million or 19.3% from approximately $2.1 million in fiscal 2022
to approximately $2.5 million in fiscal 2023. The
increase was
due to more marketing research
activities aimed at expanding our customer base. As a percentage of sales, our selling expenses were 14.1% and 7.7% of our total revenues
in fiscal 2023 and 2022, respectively.
General
and administrative expenses.
Our general and administrative expenses include employee salaries,
welfare and insurance expenses, depreciation and bad debt expenses, as well as consulting expenses. In fiscal 2023, general and administrative
expenses increased by approximately $3.1 million or 45.4% from approximately $6.7 million in fiscal 2022 to approximately $9.8 million
in fiscal 2023. The increase was mainly due to higher rental expenses, share base compensations and professional consultant fees. As
a percentage of sales, our general and administrative expenses were 74.1% and 24.9% of our total revenues in fiscal 2023 and 2022, respectively.
Research
and development expenses
.
Our research and development expenses kept consistently at approximately $0.9 million in fiscal 2023
and 2022 As a percentage of sales, our research and development expenses were 7.0% and 3.4% of our total revenues for in fiscal 2023
and 2022, respectively. We expect research and development expenses to continue to increase as we expand our research and development
activities to increase the use of environmentally-friendly materials and develop more new high-tech products to meet customer demands.
Other
income (expense), net.
Other income primarily included interest income or expenses, foreign exchange gain or loss, rental
income from related parties, gain from disposition of a subsidiary and other income or expenses. Other income was approximately $0.9
million in fiscal 2023 as compared to approximately $0.2 million in fiscal 2022. The increase was mainly attributable to an increase
of approximately $0.6 million in foreign exchange gain in fiscal 2023 as compared to fiscal 2022.
Income
tax benefit.
Income tax benefit was approximately $1.3 million in fiscal 2023 as compared to approximately $2.8 million in fiscal
2022.
The
Company may be subject to challenges from various PRC taxing authorities regarding the amounts of taxes due, although the Company's
management believes the Company has paid or accrued for all taxes owed by the Company. According to PRC taxation regulation and administrative
practice and procedures, the statute of limitation on tax authority's audit or examination of previously filed tax returns expires
three years from the date they were filed. The Company also obtained a written statement from the local tax authority that no additional
taxes are due as of June 30, 2023. Based on these facts, the Company reversed the accrued tax liabilities in the total amount of approximately
$3.4 million (or RMB24,370,181) relating to the tax liabilities accrued for the period from fiscal 2016 to fiscal 2019, resulting in
the decrease of accrued income tax liabilities from approximately $4.2 million to approximately $0.9 million as of June 30, 2023. The
Company continues to discuss with the local tax authority to try to settle the remaining tax liabilities as soon as practicable, mostly
related to its unpaid income tax and business tax.
Due
to uncertainties associated with the status of examinations, including the protocols of finalizing audits by the relevant tax authorities,
there is a high degree of uncertainty regarding the future cash outflows associated with the interest and penalties on these unpaid tax
balances. The final outcome of this tax uncertainty is dependent upon various matters including tax examinations, interpretation of tax
laws or expiration of status of limitation.
Net
(loss) income
. Net loss was approximately $7.5 million in fiscal 2023, as compared to net income of approximately $3.0 million
in fiscal 2022. The net loss was the result of decreased sales and gross profit, as well as increased operating expenses as discussed
above.
81
Other
comprehensive loss.
Foreign currency translation adjustments amounted to a loss of $6,204,254 and $3,203,448 in fiscal 2023 and
2022, respectively. The balance sheet amounts with the exception of equity at June 30, 2023 were translated at RMB7.2513 to $1.00 as
compared to RMB 6.6981 to $1.00 at June 30, 2022. The equity accounts were stated at their historical rate. The average translation rates
applied to the income statements accounts for the years ended June 30, 2023 and 2022 were RMB 6.9536 to $1.00 and RMB 6.4554 to $1.00,
respectively. The change in the value of the RMB relative to the U.S. dollar may affect our financial results reported in the U.S, dollar
terms without giving effect to any underlying change in our business or results of operation. The impact attributable to changes in revenue
and expenses due to foreign currency translation are summarized as follows.
For the Year ended
June 30, 2023
For the Year ended
June 30, 2023
Impact on revenue
$
721,476
$
979,555
Impact on operating expenses
$
542,622
$
363,874
Impact on net (loss) income
$
(306,056
)
$
109,040
For
the year ended June 30, 2023, if using RMB7.2513 to $1.00 (foreign exchange rate as of June 30, 2023), rather than the average exchange
rate for year ended June 30, 2023, to translate our revenue, operating expense and net loss, our reported revenue, operation expense
and net loss would decrease by $721,476, $542,622 and $(306,056), respectively.
For
the year ended June 30, 2022, if using the RMB6.6981 to $1.00 (foreign exchange rate as of June 30, 2022), rather than the average exchange
rate for the year ended June 30, 2022, to translate our revenue, operating expense and net income, our reported revenue, operation expense
and net income would decrease by $979,555, $363,874 and negative $109,040, respectively.
Comparison
of Operation Results for the Years Ended June 30, 2022 and 2021
The
following table summarizes the results of our operations for the years ended June 30, 2022 and 2021, respectively, and provides information
regarding the dollar and percentage increase or (decrease) during such periods.
For the Year ended
June 30, 2022
For the Year ended
June 30, 2021
Changes
Amount
% of total
Revenue
Amount
% of total
Revenue
Amount
%
Revenues
$
27,095,197
100.0
%
$
24,320,121
100.0
%
$
2,775,076
11.4
%
Cost of revenues
16,956,132
62.6
%
15,164,908
62.4
%
1,791,224
11.8
%
Gross profit
10,139,065
37.4
%
9,155,213
37.6
%
983,852
10.7
%
Operating expenses
Selling expenses
2,077,174
7.7
%
1,815,771
7.5
%
261,403
14.4
%
General and administrative expenses
6,742,687
24.9
%
4,941,036
20.3
%
1,801,651
36.5
%
R&D expense
917,227
3.4
%
540,613
2.2
%
376,614
69.7
%
Loss from disposal of fixed assets
327,921
1.2
%
-
-
%
327,921
-
%
Total operating expenses
10,065,009
37.1
%
7,297,420
30.0
%
2,767,589
37.9
%
(Loss) income from operations
74,056
0.3
%
1,857,793
7.6
%
(1,783,737
)
(96.0
)%
Other income (expenses)
Interest income (expense), net
(370,108
)
(1.4
)%
(264,408
)
(1.1
)%
(105,700
)
40.0
%
Foreign exchange (loss) gain
246,211
0.9
%
(228,260
)
(0.9
)%
474,471
(207.9
)%
Other income
115,016
0.4
%
215,233
0.9
%
(100,217
)
(46.6
)%
Rental income from related parties, net
173,089
0.6
%
354,968
1.5
%
(181,879
)
(51.2
)%
Gain from disposition of a subsidiary
-
-
%
5,162
0.0
%
(5,162
)
(100.0
)%
Total other income
164,208
0.6
%
82,695
0.3
%
81,513
98.6
%
Income (loss) before income taxes
238,264
0.9
%
1,940,488
8.0
%
(1,702,224
)
(87.7
)%
Income tax benefit (expense)
(2,777,868
)
(10.3
)%
641,460
2.6
%
(3,419,328
)
(533.1
)%
Net income
$
3,016,132
11.1
%
$
1,299,028
5.3
%
$
1,717,104
132.2
%
82
Revenues.
Revenues increased by approximately $2.8 million, or 11.4%, to approximately $27.1 million in fiscal 2022 from approximately $24.3
million in fiscal 2021. The increase in revenue was primarily attributable to the increased sales of our intelligent pet products which
have much higher average selling price than our traditional pet products. The increase was mainly due to following reasons:
1)
We continue to shift our focus and resources to produce and promote the sales of higher margin intelligent pet products. As a result,
our sales volume for intelligent pet products increased by 14.1% for the year ended June 30, 2022 as compared to the year ended June
30, 2021
2)
We continue to upgrade our production lines for traditional pet products to improve the productivity and lower the production costs.
As a result, we are able to lower our selling price for traditional pet products, but still maintain desirable profit margins. Our sales
strategy for traditional pet products successfully retained our customers, attracted new customers, and increased awareness for our intelligent
pet products.
3)
To mitigate the impact caused by COVID-19, we expanded our sales channels to more online shopping platforms, such as Amazon, Chewy, JD,
Tmall and Taobao, as well as the live streaming sales platforms hosted by influencers. These ecommerce sales normally have higher profit
margin than traditional sales channels.
Our
average selling price increase in by 22.2% during the year ended June 30, 2022 as compared to the year ended June 30, 2021. The increase
was largely due to increased sales of our intelligent pet products. Our sales of intelligent pet products account for approximately 49.8%
of the total sales in fiscal 2022, as compared to approximately 32.1% in fiscal 2021.
Revenue
by products and services type
The
breakdown of our revenue by products and services type is as follows:
For the Years ended June 30,
2022
2021
Changes
Products and services category
Amount
% of total
Revenue
Amount
% of total
Revenue
Amount
%
Products
Traditional pet products
$
11,433,159
42.2
%
$
14,331,492
58.9
%
$
(2,898,333
)
(20.2
)%
Intelligent pet products
13,492,076
49.8
%
7,801,070
32.1
%
5,691,006
73.0
%
Climbing hooks and others
1,761,341
6.5
%
1,340,686
5.5
%
420,655
31.4
%
Total revenue from products
26,686,576
98.5
%
23,473,248
96.5
%
3,213,328
13.7
%
Services
Dyeing services
342,561
1.3
%
817,145
3.4
%
(474,584
)
(58.1
)%
Other services
66,060
0.2
%
29,728
0.1
%
36,332
122.2
%
Total revenue from services
408,621
1.5
%
846,873
3.5
%
(438,252
)
(51.7
)%
Total
$
27,095,197
100.0
%
$
24,320,121
100.0
%
$
2,775,076
11.4
%
83
Total Revenue for years
ended June 30,
Average unit price
Price
Products
2022
2021
Units sold in 2022
Units sold in 2021
Variance in Units sold
% of units variance
2022
2021
Difference
Traditional pet products
$
11,433,159
$
14,331,492
10,813,092
12,064,685
(1,251,593
)
(10.4
)%
$
1.1
$
1.2
$
(0.1
)
Intelligent pet products
13,492,076
7,801,070
441,042
386,467
54,575
14.1
%
30.6
20.2
10.4
Climbing hooks and others
1,761,341
1,340,686
1,040,551
828,070
212,481
25.7
%
1.7
1.6
0.1
Total
$
26,686,576
$
23,473,248
12,294,685
13,279,222
(984,537
)
(7.4
)%
$
2.2
$
1.8
$
0.4
Traditional
pet products
Revenue
from traditional pet products decreased by approximately $2.9 million or 20.2% from approximately $14.3 million in fiscal 2021 to approximately
$11.4 million in fiscal 2022. The decrease was mainly due to decrease of 10.4% in sales volume and decrease in average selling price
of $0.1 per unit in fiscal 2022 compared to fiscal 2021.
Intelligent
pet products
Revenue
from intelligent pet products increased by approximately $5.7 million or 73.0%, from approximately $7.8 million in fiscal 2021 to approximately
$13.5 million in fiscal 2022. The increase was driven by the increased average selling price of $10.4 per unit in fiscal 2022 due to
more higher selling price intelligent pet products we made, and increase of 14.1% in sales volume during fiscal 2022 compared to fiscal
2021.
We
launched our intelligent pet products in March 2018, which include App-controlled pet feeders, pet water fountains, and smart pet toys.
Comparing with other products, intelligent pet products typically have higher selling price. As part of our strategic changes, we have
shifted our focus and resources from traditional pet products to new, smart, and high value innovative smart pet products. We have seen
significant increase of sales during fiscal year 2022 and are expected the sales of intelligent pet products will continue to be one
of the primary sources of revenue in the near future.
Climbing
hooks and others
Revenue
from climbing hooks and others increased by approximately $0.4 million from approximately $1.3 million in fiscal 2021 to approximately
$1.8 million in fiscal 2022. The increase was mainly due to a 25.7% increase in sales volume, and a slight increase of the average selling
price of $0.1 per unit for fiscal 2022 as compared to fiscal 2021. We expect the sales for the climbing hooks and gears will continue
to increase after the pandemic due to the growth trend of participating the outdoors activities both domestically and globally.
Dyeing
services
During
fiscal 2021, we started to provide ribbon dyeing service to customers. We utilize our 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. We recognize revenue at the point when dyeing solutions and related services
are rendered, products after dyeing are delivered and accepted by the customers. We earned service fees of $342,561 and $817,145 in fiscal
2022 and 2021, respectively
84
Sales
to related parties
During
the year ended June 30, 2019, we acquired 10% of the ownership interest in Dogness Network Technology Co., Ltd ("Dogness Network"),
for the purpose of working together to develop new products and new technologies in smart pet tech area.
The
legal representative of Dogness Technology is Junqiang Chen, the relative of Mr. Silong Chen.
We
sold certain intelligent pet products to Dogness Network and Dogness Technology, and accordingly reported related party sales of $2,212,579
and $1,207,686, which accounted for 8.2% and 5.0% of our total revenue in fiscal 2022 and 2021, respectively.
Cost
of revenue associated with the sales to these two related parties amounted to $1,301,180 and $663,742 for the in fiscal 2022 and 2021,
respectively.
Revenue
by Geographic Area
The
breakdown of our revenue by geographic areas is as follows:
For the Years Ended June 30,
2022
2021
Changes
Country and Region
Amount
% of
total
Revenue
Amount
% of
total
Revenue
Amount
%
Mainland China
$
12,552,874
46.3
%
$
13,692,868
56.3
%
$
(1,139,994
)
(8.3
)%
United States
7,980,436
29.6
%
6,028,326
24.7
%
1,952,110
32.4
%
Europe
1,770,052
6.5
%
1,653,923
6.8
%
116,129
7.0
%
Japan and other Asian countries and regions
3,009,931
11.1
%
1,302,967
5.4
%
1,706,964
131.0
%
Australia
579,677
2.1
%
392,985
1.6
%
186,692
47.5
%
Canada
1,168,689
4.3
%
1,180,631
4.9
%
(11,942
)
(1.0
)%
Central and South America
33,538
0.1
%
68,421
0.3
%
(34,883
)
(51.0
)%
Total
$
27,095,197
100
%
$
24,320,121
100.0
%
$
2,775,076
11.4
%
The
breakdown of sales by products and services categories in international markets is as follows:
International
sales
For the Years ended June 30,
2022
2021
Changes
Products and services type
Amount
% of total Revenue
Amount
% of total Revenue
Amount
%
Traditional pet products
$
6,187,697
42.5
%
$
6,742,503
63.4
%
$
(554,806
)
(8.2
)%
Intelligent pet products
7,538,259
51.9
%
3,173,393
29.9
%
4,364,866
137.5
%
Climbing hooks and others
816,367
5.6
%
711,357
6.7
%
105,010
14.8
%
Total international sales
$
14,542,323
100.0
%
$
10,627,253
100.0
%
$
3,915,070
36.8
%
Our
total sales in international markets increased by approximately $3.9 million or 36.8% from approximately $10.6 million in fiscal 2021
to approximately $14.5 million in fiscal year 2022. We have seen sharp increase of consumer demand in U.S., Japan and other Asian countries
because of the stimulus plan and the strong recovery of the economy. Our sales to U.S. market increased by approximately $2.0 million
or 32.4% to approximately $8.0 million in fiscal 2022 from approximately $6.0 million for the fiscal 2021. Our sales to Japan and other
Asian countries and regions market increased by approximately $1.7 million or 131.0% to approximately $3.0 million for fiscal 2022 from
approximately $1.3 million for fiscal 2021. However, due to the ongoing negative impact of the outbreak and spread of COVID-19 around
the world, we still experienced weak market demand and received less sales orders from other international customers.
85
In
terms of our international sales by product type and mix, sales of intelligent pet products and climbing hooks increased by 137.5% and
14.8%, respectively, in fiscal 2022 as compared to fiscal 2021. However, our sales of our traditional pet products decreased by 8.2%,
in fiscal 2022 as compared to fiscal 2021.
In
fiscal 2021, we have started working with large retail chains in the US and Canada for the distribution of smart pet products under our
own brand rather than just serving as an OEM supplier. In addition, we started expanding our sales on online shopping platforms, such
as Amazon and Chewy to access more potential customers in a safely and timely manner. We expect that the revenue to be generated from
these efforts could mitigate, at least in part, offset the decreased OEM sales in the United States and Canada and the mitigate the impact
of the COVID-19. We also expect that the newly developed intelligent pet products will continue become the leading revenue source for
our international sales.
The
breakdown of sales by products and services categories in China's domestic market is as follows:
Domestic
sales
For the Years ended June 30,
2022
2021
Changes
Products and services type
Amount
% of
total
revenue
Amount
% of
total
revenue
Amount
%
Traditional pet products
$
5,245,462
41.8
%
$
7,588,989
55.4
%
$
(2,343,527
)
(30.9
)%
Intelligent pet products
5,953,817
47.5
%
4,627,677
33.8
%
1,326,140
28.7
%
Climbing hooks and others
944,974
7.5
%
629,329
4.6
%
315,645
50.2
%
Dyeing services
342,561
2.7
%
817,145
6.0
%
(474,584
)
(58.1
)%
Other services
66,060
0.5
%
29,728
0.2
%
36,332
122.2
%
Total domestic sales
$
12,552,874
100.0
%
$
13,692,868
100.0
%
$
(1,139,994
)
(8.3
)%
Our
domestic sales decreased by approximately $1.1 million or 8.3% from approximately $13.7 million in fiscal 2021 to approximately $12.6
million in fiscal 2022. The decrease was mainly due to decreased revenue from traditional pet products.
With
the booming of pet culture in China, more and more young consumers have become pet owners in Mainland China. There are growing demands
for smart pet products, including App-controlled smart pet food feeders, pet water fountains, pet tracking devices and smart pet toys.
In addition, the shopping channels are diversified due to the rapid change of technology and lifestyle. The younger generations are more
tech savvy and more willing to purchase products from popular online shopping sites, including Amazon, Chewy, JD, Tmall and Taobao, and
from live streaming sales platforms hosted by influencers. Therefore, during fiscal 2022, we increased our marketing activities and sales
efforts in domestic market, especially on those online shopping sites and channels. As a result, our domestic sales of intelligent pet
products increased approximately $1.3 million or 28.7% in fiscal 2022 as compared to fiscal 2021.
On
the other hand, due to our strategic changes, we have shifted our focus and resource from traditional pet products to intelligent pet
products, our domestic sales of traditional pet products decreased approximately $2.3 million or 30.9% in fiscal 2022 as compared to
fiscal 2021.
86
Cost
of revenues
Cost
of revenues decreased by approximately $1.8 million, or 11.8%, from approximately $15.2 million in fiscal 2021 to approximately $17.0
million in fiscal 2022. As a percentage of revenues, the cost of goods sold slightly increased by approximately 0.2 percentage points
to 62.6% in fiscal 2022 from 62.4% in fiscal 2021. We expect to continue to upgrade our production lines for both traditional and intelligent
pet products to improve the productivity and lower the production costs.
Gross
profit
Our
gross profit increased by approximately $1.0 million or 10.7%, to approximately $10.1 million in fiscal 2022 from approximately $9.2
million in fiscal 2021 primarily attributable to the increased sales volume of our intelligent pet products which have much higher gross
profit than our traditional pet products. Overall gross profit margin was 37.4%, a decrease of 0.2 percentage points, as compared to
37.6% in fiscal 2021.
Gross
profit by products and services type
The
breakdown of gross profit by products and services categories is as follows:
For the Year ended June 30,
2022
2021
Changes
Products and services category
Amount
Gross profit %
Amount
Gross profit %
Amount
Gross profit Pct.
Pt.
Traditional pet products
$
3,670,566
32.1
%
$
4,738,159
33.1
%
$
(1,067,593
)
(1.0) pct.
Intelligent pet products
5,909,099
43.8
%
3,997,768
51.2
%
1,911,331
(7.4) pct.
Climbing hooks and others
535,758
30.4
%
423,143
31.6
%
112,615
(1.2) pct.
10,115,423
37.9
%
9,159,070
39.0
%
956,353
(1.1) pct.
Services
Dyeing services
(35,272
)
(10.3
)%
(23,957
)
(2.9
)%
(11,315
)
(7.4) pct.
Other services
58,914
89.2
%
20,100
67.6
%
38,814
(21.6) pct.
Total
$
10,139,065
37.4
%
$
9,155,213
37.6
%
$
983,852
(0.2) pct.
Gross
profit for traditional pet products decreased by approximately $1.1 million in fiscal 2022 as compared to fiscal 2021. Gross profit margin
decreased by 1.0 percentage points from 33.1% in fiscal 2021 to 32.1% in fiscal 2022, mainly because we lowered the average selling price
in fiscal 2022.
Gross
profit for intelligent pet products increased by approximately $1.9 million from approximately $4.0 million in fiscal 2021 to approximately
$5.9 million in fiscal 2022. Gross profit margin decreased by 7.4 percentage point from 51.2% in fiscal 2021 to 43.8% in fiscal 2022,
mainly driven by increased average unit cost of intelligent pet products due to improved manufacturing process.
Gross
profit for climbing hooks and others increased by approximately $0.1 million from approximately $0.4 million in fiscal 2021 to $0.5 million
in fiscal 2022, mainly driven by 25.7% increase in sales volume. Overall gross margin for climbing hook decreased by 1.2 percentage points
from 31.6% in fiscal 2021 to 30.4% in fiscal 2022.
87
Expenses
For the Years ended June 30,
2022
2022
2021
2021
Changes
Amount
% of total Expenses
Amount
% of total Expenses
Amount
%
Selling expenses
2,077,174
20.6
%
1,815,771
24.9
%
261,403
14.4
%
General and administrative expenses
6,742,687
67.0
%
4,941,036
67.7
%
1,801,651
36.5
%
Research and development expenses
917,227
9.1
%
540,613
7.4
%
376,614
69.7
%
Loss from disposal of fixed assets
327,921
3.3
-
-
%
327,921
-
%
Total operating expenses
10,065,009
100
%
7,297,420
100
%
2,767,589
37.9
%
Selling
expenses.
Selling expenses primarily included expenses incurred for participating in various trade shows to promote product sales,
salary and sales commission expenses paid to the Company's sales personnel, and shipping and delivery expenses. Selling expenses
increased by $0.3 million, or 14.4% from approximately $1.8 million in fiscal 2021 to approximately $2.1 million in fiscal 2022. The
increase in selling expense was primarily due to increased Amazon online sales promotion fee approximately $0.2 million, As a percentage
of sales, our selling expenses were 7.7% and 7.5% of our total revenues in fiscal 2022 and 2021, respectively.
General
and administrative expenses.
Our general and administrative expenses primarily include employee salary, welfare and insurance
expenses, depreciation and bad debt expenses as well as consulting expense. General and administrative expenses increased by approximately
$1.8 million or 36.5% from approximately $4.9 million in fiscal 2021 to approximately $6.7 million in fiscal 2022. The increase was mainly
due to increased professional consultant expense approximately $0.5 million, decoration and maintenance fee of approximately $0.5 million,
increased depreciation and amortization expenses of $0.4 million. As a percentage of sales, our general and administrative expenses were
24.9% and 20.3% of our total revenues in fiscal 2022 and 2021, respectively.
Research
and development expenses.
Our research and development expenses increased by approximately $0.4 million or 69.7% from approximately
$0.5 million in fiscal 2021 to $0.9 million in fiscal 2022. As a percentage of sales, our research and development expenses were 3.4%
and 2.2% of our total revenues in fiscal 2022 and 2021, respectively. The increase was due to more research activities in fiscal 2022.
We expect R&D expenses to continue to increase, as we continue to expand our research and development activities to increase the
use of environmentally-friendly materials, and develop more new high-tech products to meet customer demands.
Disposition
of fixed assets.
We disposed some old fashioned or outdated molding machinery and equipment in fiscal 2022, which resulted in
approximately $0.3 million loss from disposition of fixed assets in fiscal 2022.
Other
income, net.
Other income primarily included interest income or expenses, foreign exchange gain or loss, rental income from related
parties, gain from disposition of a subsidiary and other income or expenses. In fiscal 2022, the Company had other income of approximately
$0.2 million as compared to approximately $0.1 million in fiscal 2021. The increase was mainly attributable to an increase of approximately
$0.5 million in foreign exchange gain in fiscal 2022 as compared to fiscal 2021, offset by less miscellaneous other income in fiscal
2022 as compared to fiscal 2021.
Income
tax benefit (expense).
Income tax benefit was approximately $2.8 million in fiscal 2022, compared to, income tax expense approximately
$0.6 million in fiscal 2021. The decrease was mainly due to the reversal of accrued tax liabilities in the total amount of approximately
$3.0 million relating to the tax liabilities accrued for the period from fiscal 2016 to fiscal 2018.
The
Company may be subject to challenges from various PRC taxing authorities regarding the amounts of taxes due, although the Company's
management believes the Company has paid or accrued for all taxes owed by the Company. As of June 30, 2022 and 2021, the Company had
accrued (before adjustment) total income tax liabilities of approximately $4.6 million and $4.3 million, respectively. According to PRC
taxation regulation and administrative practice and procedures, the statute of limitation on tax authority's audit or examination
of previously filed tax returns expires three years from the date they were filed. The Company also obtained a written statement from
the local tax authority that no additional taxes are due as of June 30, 2022. Based on these facts, the Company reversed the accrued
tax liabilities in the total amount of approximately $3.0 million (or RMB20,424,826) relating to the tax liabilities accrued for the
period from fiscal 2016 to fiscal 2018, resulting in the decrease of accrued income tax liabilities from approximately $4.6 million to
approximately $1.5 million as of June 30, 2022. The Company continues to discuss with the local tax authority to try to settle the remaining
tax liabilities as soon as practicable, mostly related to its unpaid income tax and business tax.
88
Due
to uncertainties associated with the status of examinations, including the protocols of finalizing audits by the relevant tax authorities,
there is a high degree of uncertainty regarding the future cash outflows associated with the interest and penalties on these unpaid tax
balances. The final outcome of this tax uncertainty is dependent upon various matters including tax examinations, interpretation of tax
laws or expiration of status of limitation.
Net
income.
Net income was approximately $3.0 million in fiscal 2022, increase by approximately $1.7 million from $1.3 million in
fiscal 2021. The increased net income was the result of increased income tax benefit offset by increased operating expenses as discussed
above.
Other
comprehensive income (loss).
Foreign currency translation adjustments amounted to a loss of $3,203,448 and a gain of $4,879,315
in fiscal 2022 and 2021, respectively. The balance sheet amounts with the exception of equity at June 30, 2022 were translated at 6.6981
RMB to 1.00 USD as compared to 6.4566 RMB to 1.00 USD at June 30, 2021. The equity accounts were stated at their historical rate. The
average translation rates applied to the income statements accounts for the years ended June 30, 2022 and 2021 were 6.4554 RMB to 1.00
USD and 6.6221 RMB to 1.00 USD, respectively. The change in the value of the RMB relative to the U.S. dollar may affect our financial
results reported in the U.S, dollar terms without giving effect to any underlying change in our business or results of operation. The
impact attributable to changes in revenue and expenses due to foreign currency translation are summarized as follows.
For the Year ended
June 30, 2022
For the Year ended
June 30, 2021
Impact on revenue
$
979,555
$
(628,136
)
Impact on operating expenses
$
363,874
$
(188,476
)
Impact on net income
$
109,040
$
(33,551
)
For
the year ended June 30, 2022, if using the RMB6.6981 to $1.00 (foreign exchange rate as of June 30, 2022), rather than the average exchange
rate for the year ended June 30, 2022, to translate our revenue, operating expense and net income, our reported revenue, operation expense
and net income would decrease by $979,555, $363,874 and negative $109,040, respectively.
For
the year ended June 30, 2021, if using the RMB6.4566 to $1.00 (foreign exchange rate as of June 30, 2021), rather than the average exchange
rate for the year ended June 30, 2021, to translate our revenue, operating expense and net income, our reported revenue, operation expense
and net income would be increased by $628,316, $188,476 and $33,551, respectively.
Liquidity
and Capital Resources
The
following table sets forth summary of our cash flows for the years indicated:
For the Years Ended June 30,
2023
2022
2021
Net cash (used in) provided by operating activities
$
(8,902,265
)
$
6,160,458
$
3,752,232
)
Net cash used in investing activities
(1,455,354
)
(14,741,379
)
(11,245,631
)
Net cash (used in) provided by financing activities
(1,066,364
)
20,868,786
11,051,571
Effect of exchange rate change on cash
(698,581
)
(617,747
)
110,709
Net (decrease) increase in cash
(12,122,564
)
11,670,118
3,668,881
Cash and restricted cash, beginning of year
16,605,872
4,935,754
1,266,873
Cash and restricted cash, end of year
$
4,483,308
$
16,605,872
$
4,935,754
89
Operating
Activities
Net
cash used in operating activities was approximately $8.9 million in fiscal 2023, including net loss of approximately $7.5 million, adjusted
for non-cash items for approximately $5.3 million (including depreciation and amortization of approximately $3.3 million, amortization
of right of use lease assets of approximately $1.0 million, share based compensation for services of approximately $1.2 million), and
adjustments for changes in working capital approximately $6.8 million. The adjustments for changes in working capital mainly include
decrease of approximately $2.4 million in lease liabilities, and increase of approximately $3.1 million in prepayments and other assets.
Net
cash provided by operating activities was approximately $6.2 million in fiscal 2022, including net income of approximately $3.0 million,
adjusted for non-cash items for approximately $4.1 million (including depreciation and amortization of approximately $3.5 million, amortization
of right of use lease assets of approximately $0.4 million), and adjustments for changes in working capital approximately $0.9 million.
The adjustments for changes in working capital mainly include decrease of approximately $2.8 million in tax payable primary due to income
tax reserved, offset by decrease of approximately $1.2 million in prepayments and other assets.
Net
cash provided by operating activities was approximately $3.7 million in fiscal 2021, including net income of $1.3 million, adjusted for
non-cash items for approximately $3.3 million (including depreciation and amortization of $3.1 million, amortization of ROU assets of
$0.4 million, and stock-based compensation of $0.2 million and deferred tax expense negative $0.5 million) and adjustments for changes
in working capital around negative $0.8 million. The adjustments for changes in working capital mainly included increase of $1.2 million
in inventories due to increased sales orders, decreased of 0.6 million in accrued expenses and other liabilities and increased of $0.5
million in accounts receivable, offset by increase of $1.3 million in taxes payable.
90
Investing
Activities
Net
cash used in investing activities was approximately $1.5 million in fiscal 2023 primarily due to the spending of approximately $1.5 million on
our construction projects for improvement of our manufacturing facilities and warehouse and purchased machinery and
equipment.
Net
cash used in investing activities was approximately $14.7 million in fiscal 2022 primarily due to the spending of approximately $14.2 million on
our construction projects for improvement of our manufacturing facilities and warehouse and the purchase of approximately $1.1 million machinery
and equipment. On the other hand, we decreased short term investment of approximately $0.5 million when we collected the investment upon
maturity of these interest-bearing wealth management financial products and used such cash to invest on our construction projects.
Net
cash used in investing activities was approximately $11.2 million in fiscal 2021 primarily due to the purpose of approximately $0.8
million machinery and equipment to improve our production capacity and the spending of approximately $13.7 million on our
construction-in-progress projects for improvement of our manufacturing facilities and warehouse. We also paid additional capital
contributions of approximately $0.2 million to one of our long-term equity investees, offset by decreased purchase in short-term
investment of $3.3 million.
Financing
Activities
Net
cash used in financing activities was approximately $1.1 million in fiscal 2023. During fiscal 2023, the net repayment bank loans
was of approximately $1.0 million.
Net
cash provided by financing activities was approximately $20.9 million in fiscal 2022. During fiscal 2022, we had net proceeds from private
placement of approximately $19.1 million and approximately $4.6 million proceeds from exercise of warrants and options, offset by net
repayment related parties loans of approximately $1.9 million and bank loans of approximately $0.9 million.
Net
cash provided by financing activities was approximately $11.1 million in fiscal 2021. During fiscal 2021, we had net proceeds from private
placements of approximately $6.6 million, we net proceeds from bank loan of approximately $2.4 million and net proceeds from related
party of approximately $1.9 million We also received capital contribution of approximately $0.1 million from non-controlling shareholders
in Dogness Culture.
Commitments
and Contractual Obligations
The
following table sets forth our contractual obligations and commercial commitments as of June 30, 2023:
Contractual Obligations
Total
Less than 1
year
1-3 years
3-5 years
More than 5
years
Operating lease commitment (1)
$
19,054,485
$
2,913,507
$
937,036
$
2,263,406
$
12,940,536
Repayment of bank loan (2)
5,442,467
3,846,918
745,797
842,687
7,065
Capital injection obligation (3)
2,119,523
-
2,119,523
-
-
Capital expenditures on Dongguan Jiasheng (4)
254,070
254,070
-
-
-
Total
$
26,870,545
$
7,014,495
$
3,802,356
$
3,106,093
$
12,947,601
91
(1)
The
    Company's subsidiary Dogness Jiasheng leases manufacturing facilities and administration office spaces under multiple operating
    lease agreements. We adopted ASU No. 2016-02—Leases (Topic 842) on July 1, 2019, using a modified retrospective transition
    method. 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 lease assets and lease liabilities.
(2)
As
                                            of June 30, 2023, the Company had a loan balance of RMB21,464,235 ($4,555,467) borrowed from
                                            Dongguan Rural Commercial Bank. The loans have terms of eight years with a maturity date
                                            on July 16, 2028 with effective interest rate at 6.15% and 6.55% per annum.
As
    of June 30, 2023, the Company had a loan balance of $887,000 borrowed from Cathay Bank. The Company has extended the repayment date
    to February 2024.
(3)
The
    Company is also obligated to make registered capital contributions to its subsidiary Zhangzhou Meijia Metal Product Ltd. ("Meijia")
    to meet the requirement of State Administration for Industry and Commerce ("SAIC") of China. As of June 30, 2023, future
    registered capital contribution commitments for Meijia was RMB15.37 million ($2.1 million), respectively. As of the date of this
    report, pursuant to the articles of incorporation of Meijia, the Company is obligated to contribute the remaining RMB15.37 million
    ($2.1 million) capital investment into Meijia before December 30, 2025 whenever the Company has available funds.
(4)
Dongguan
                                            Jiasheng had a construction project which expanded from the original plan of building a warehouse,
                                            to build new manufacturing and operating facilities, which include warehouse, workshops,
                                            office building, security gate, employee apartment building, electrical transformer station
                                            and exhibition hall, etc. The total budget is approximately RMB263.5 million ($36.3 million).
                                            As of June 30, 2022, the Company had completed this project and transferred all of the related
                                            CIP to fixed assets. As of June 30, 2023, the Company has made total payments of approximately
                                            RMB261.7 million ($36.1 million) in connection to this project, which resulted in future
                                            minimum capital expenditure payments of approximately RMB1.8 million ($0.3 million), the
                                            Company plan to pay remaining payments in twelve months after June 30, 2023.
Loan
Facilities
As
of June 30, 2023 and 2022, the details of all our short-term bank loans are as follows:
As of
As of
June 30, 2023
June 30, 2022
Cathay Bank
Effective interest rate at 4.25%
$
887,000
$
564,000
Total
$
887,000
$
564,000
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, 2023, the outstanding balance was $887,000. The Company has extended the repayment date to February 2024 from the original
due date of February 2022. As of the date of this report, the Company made total payments of $828,416.
92
Long-term
loan consisted of the following:
As of
As of
June 30, 2023
June 30, 2022
Dongguan Rural Commercial Bank
Effective interest rate at 6.15% and 6.55%
$
4,555,467
$
6,320,534
Less: current portion of long-term loans
(2,959,918
)
(1,386,160
)
Long-term loans
$
1,595,549
$
4,934,374
On
July 17, 2020, the Company entered into multiple loan agreements with Dongguan Rural Commercial Bank to borrow an aggregate of $6.9 million
(RMB50 million) of loans to support the working capital needs and the construction of the Company's current CIP projects. The loans
have tenure varying between three and eight years. 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
$1.8 million and buildings of approximately $4.8 million from Meijia as collateral to secure total loans of $4.1 million (RMB30 million).
Mr. Silong Chen, the CEO of the Company, pledged personal property as collateral to secure the remaining loans of $2.8 million (RMB20
million). Dongguan Dogness, Meijia and Mr. Silong Chen also provided guarantee for the loans. As of June 30, 2023, the outstanding balance
was $4,555,467. The Company further repaid $2,702,960 (RMB19,600,873) and drew down $2,620,100 (RMB19,000,000) subsequent to the year
end.
Impact
of Inflation
The
Company's business operations are affected by the inflation post pandemic. Inflation can have a significant impact on a company's
financial performance. Rising prices for raw materials, labor, and other costs can increase a company's cost of goods sold, leading
to lower gross margins and profitability. Additionally, inflation can increase the prices of products, which can lead to a decrease in
demand for those products, ultimately affecting sales volume. Inflation can also impact a company's expenses, such as salaries
and benefits, rent, and utilities. As prices rise, these expenses can increase, leading to higher general and administrative expenses.
Finally, inflation can impact a company's debt service, as interest rates may rise, leading to higher borrowing costs.
Impact
of Foreign Currency Fluctuations
Although
all our raw material and production cost and expense were denominated in RMB, almost all our revenues were generated under agreements
denominated in U.S. dollars. Export sales represent 64.0% and 53.7% of our revenue for the years ended June 30, 2023 and 2022, respectively.
Moreover, for the next few years we expect that the substantial majority of our revenues from international sales will continue to be
denominated in U.S. dollars. Having the substantial portion of our revenues contracts denominated in U.S. dollars while having most of
our raw material and production costs and expenses denominated in RMB exposes us to risk, associated with exchange rate fluctuations
vis-à-vis the U.S. dollar.
A
devaluation of the RMB in relation to the U.S. dollar has the effect of reducing the U.S. dollar amount of our expenses or payables that
are payable in RMB. Conversely, any appreciation of the RMB in relation to the U.S. dollar has the effect of increasing the U.S. dollar
value of our RMB raw material and productions and expenses, which would have a negative impact on our profit margins. In fiscal 2023,
the value of the RMB appreciated in relation to the U.S. dollar by approximately 8.26%. In fiscal 2022, the value of the RMB depreciated
in relation to the U.S. dollar by 3.70%. In fiscal 2021, the value of the RMB appreciated in relation to the U.S. dollar by approximately
8.70%. Because exchange rates between the U.S. dollar and the RMB fluctuate continuously, such fluctuations have an impact on our results
and period-to-period comparisons of our results.
RMB against the USD (%)
2023
(8.26
)%
2022
(3.70
)%
2021
8.70
%
93
We
will continue to monitor exposure to currency fluctuations. We have not engaged in any currency hedging activities in order to reduce
our exposure to currency fluctuations.
Off-balance
Sheet Commitments and Arrangements
There
were no off-balance sheet arrangements for the years ended June 30, 2023 and 2022 that have or that in the opinion of management are
likely to have, a current or future material effect on our financial condition or results of operations.
Critical
Accounting Policies
We
prepare our financial statements in conformity with accounting principles generally accepted by the United States of America ("U.S.
GAAP"), which requires us to make judgments, estimates and assumptions that affect our reported amount of assets, liabilities,
revenue, costs and expenses, and any related disclosures. Although there were no material changes made to the accounting estimates and
assumptions in the past three years, we continually evaluate these estimates and assumptions based on the most recently available information,
our own historical experience and various other assumptions that we believe to be reasonable under the circumstances. Since the use of
estimates is an integral component of the financial reporting process, actual results could differ from our expectations as a result
of changes in our estimates.
We
believe that the following accounting policies involve a higher degree of judgment and complexity in their application and require us
to make significant accounting estimates. Accordingly, these are the policies we believe are the most critical to understanding and evaluating
our consolidated financial condition and results of operations.
Use
of Estimates
In
preparing the consolidated financial statements in conformity with US GAAP, management makes estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting period. These estimates are based on information as of the date
of the consolidated financial statements. Significant estimates required to be made by management include, but are not limited to, the
valuation of accounts receivable, inventories, advances to suppliers, useful lives of property, plant, right-of-use assets (including
lease liabilities) and equipment, intangible assets, the recoverability of long-lived assets, provision necessary for contingent liabilities,
and realization of deferred tax assets. Actual results could differ from those estimates.
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 occur, (iv) allocate the transaction price
to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance
obligation.
Revenue
is recognized when obligations under the terms of a contract with the Company's customers are satisfied. Satisfaction of contract
terms occur with the transfer of title of the Company's products to the customers. Net sale is measured as the amount of consideration
the Company expects to receive in exchange for transferring the goods to the wholesaler and retailers.
94
The
amount of consideration the Company expects to receive consists of the sales price adjusted for any incentives if applicable. Such incentives
do not represent a standalone value and are accounted for as a reduction of revenue in accordance with ASC 606. For the years ended June
30, 2023, 2022 and 2021, 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 selling expenses. 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 smart pet products, to wholesalers and retailers. Revenue is recognized when the merchandise is delivered, title is transferred
and the Company's performance obligations to fulfill the customer contracts have been satisfied. Revenue is reported net of all
value added taxes ("VAT"). The Company does not routinely permit customers to return products and historically, customer
returns have been immaterial.
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 June 30, 2023 and 2022, 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 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, 2022 and 2021 are disclosed in notes of the unaudited consolidated financial statements.
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. In June 2016, the FASB issued ASU No. 2016-13, "Financial
Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments," which requires the Company
to measure and recognize expected credit losses for financial assets held and not accounted for at fair value through net income. The
Company adopted this guidance effective January 1, 2023. The Company establishes a provision for doubtful receivables based on management's
best estimates of specific losses on individual exposures, as well as a provision on historical trends of collections. The provision
is recorded against accounts receivables balances, with a corresponding charge recorded in the consolidated statements of income and
comprehensive income. Delinquent account balances are written-off against the allowance for doubtful accounts after management has determined
that the likelihood of collection is not probable.
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.
95
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.
Leases
The
Company is the lessee in a lease contract when the Company obtains the right to use the asset. Operating leases are included in the line
items right-of-use asset, lease liabilities, current, and lease liabilities, long-term in the consolidated balance sheet.
Right-of-use
("ROU") asset represents the Company's right to use an underlying asset for the lease term and lease obligations represent
the Company's obligations to make lease payments arising from the lease, both of which are recognized based on the present value
of the future minimum lease payments over the lease term at the commencement date. Leases with a lease term of 12 months or less at inception
are not recorded on the consolidated balance sheet and are expensed on a straight-line basis over the lease term in the consolidated
statement of operations and comprehensive loss. The Company determines the lease term by agreement with lessor. As the Company's
lease does not provide implicit interest rate, the Company uses the Company's incremental borrowing rate based on the information
available at commencement date in determining the present value of future payments. Refer to Note 7 for further discussion.
Income
Tax
The
Company accounts for current income taxes in accordance with the laws of the relevant tax authorities. Deferred income taxes are recognized
when temporary differences exist between the tax bases of assets and liabilities and their reported amounts in the consolidated financial
statements. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years
in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period including the enactment date. Valuation allowances are established, when necessary,
to reduce deferred tax assets to the amount expected to be realized.
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 June 30, 2023, the
years from fiscal 2021 to fiscal 2023 for the Company's mainland China subsidiaries remain open for statutory examination by PRC
Tax authorities. For the Company's Hong Kong subsidiaries, and the U.S subsidiary, all tax years remain open for statutory examination
by relevant tax authorities.
Recently
Issued Accounting Pronouncements
The
Company considers the applicability and impact of all accounting standards updates ("ASUs"). Management periodically reviews
new accounting standards that are issued.
In
December 2019, the FASB issued ASU No. 2019-12, "Income Taxes" (Topic 740): Simplifying the Accounting for Income Taxes ("ASU
2019-12"). ASU 2019-12 will simplify the accounting for income taxes by removing certain exceptions to the general principles in
Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending
existing guidance. For public business entities, the amendments in this Update are effective for fiscal years, and interim periods within
those fiscal years, beginning after December 15, 2020. For all other entities, the amendments are effective for fiscal years beginning
after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. The adoption of ASU 2019-12 does
not have a material impact on its consolidated 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 adoption of ASU 2019-12 does not have a material impact on its consolidated financial statements.
96
In
October 2021, the FASB issued ASU No. 2021-08, "'Business Combinations (Topic 805): Accounting for Contract Assets and Contract
Liabilities from Contracts with Customers" ("ASU 2021-08"). This ASU requires entities to apply Topic 606 to recognize
and measure contract assets and contract liabilities in a business combination. The amendments improve comparability after the business
combination by providing consistent recognition and measurement guidance for revenue contracts with customers acquired in a business
combination and revenue contracts with customers not acquired in a business combination. The amendments are effective for the Company
beginning after December 15, 2023, and are applied prospectively to business combinations that occur after the effective date. The Company
does not expect the adoption of ASU 2021-04 to have a material effect on the consolidated financial statements.
In
June 2022, the FASB issued ASU 2022-03 Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual
Sale Restrictions. The update clarifies that a contractual restriction on the sale of an equity security is not considered part of the
unit of account of the equity security and, therefore, is not considered in measuring fair value. The update also clarifies that an entity
cannot, as a separate unit of account, recognize and measure a contractual sale restriction. The update also requires certain additional
disclosures for equity securities subject to contractual sale restrictions. For public business entities, the amendments in this Update
are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. For all other entities,
the amendments are effective for fiscal years beginning after December 15, 2024, and interim periods within those fiscal years. Early
adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance.
As an emerging growth company, the standard is effective for the Company for the year ended December 31, 2025. The Company is in the
process of evaluating the impact of the new guidance on its consolidated financial statements.
Except
for the above-mentioned pronouncements, there are no new recent issued accounting standards that will have material impact on the consolidated
financial statements
Item
6. Directors, Senior Management and Employees
A.
Directors and Senior Management
Executive
Officers and Directors
The
following table sets forth our executive officers and directors, their ages and the positions held by them:
Name
Age
Position
    Held
Silong
    Chen
41
Chief
    Executive Officer and Director
Aihua
    Cao
46
Chief
    Financial Officer and Director
Qingshen
    Liu
49
Independent
    Director
Zhiqiang
    Shao
48
Independent
    Director (Audit Committee Chair)
Changqing
    Shi
40
Independent
    Director
97
The
business address of all such senior management and directors is Tongsha Industrial Estate, East District, Dongguan, Guangdong, People's
Republic of China 523217.
Silong
Chen, Chief Executive Officer
Director
since 2017
Mr.
Chen serves as our Chief Executive Officer and Chairman of our Board of Directors. Mr. Chen founded our Chinese subsidiary in 2003 and
has more than 15 years of experience in the pet products industry. Mr. Chen created the brand Dogness in 2008. Since 2017, Mr. Chen has
served as the executive director of the Guangdong Province Economic Research Institute. We have chosen Mr. Chen to serve as a director
because of his expertise and experience in the pet supply industry.
Aihua
Cao, Chief Financial Officer
Director
since 2023
Ms.
Cao serves as our Chief Financial Officer. Prior to this position, Ms. Cao served as the Finance and Accounting Manager of the Company
since 2015. Ms. Cao has more than 32 years of experience in financing and accounting, and is specialized in financial system construction,
financial investment, business analysis, tax planning, and cost control. Ms. Cao received her bachelor's degree from Hunan University
of Finance and Economics in 1991. We have chosen Dr. Chen as our Chief Financial Officer because of her knowledge and experience with
U.S. GAAP and SEC reporting and compliance requirements. We have chosen Dr. Chen to serve as a director because of her experience with
financial matters and her knowledge of our company's operations.
Yunhao
Chen, Chief Financial Officer (from 2019 to August 2023)
Director
(from 2019 to August 2023)
Dr.
Chen served as our Chief Financial Officer and a director from 2019 to August 2023. Prior to joining our company, Dr. Chen served as
the CFO for a US company since 2014, where she directed and managed the company's financial reporting and accounting functions.
With a Ph.D. in Accounting and an MBA from the University of Minnesota, and a BE degree from University of International Business and
Economics of China, Dr. Chen has also been active in the academic area. From 2007 to 2014, Dr. Chen has been a faculty member at Florida
International University and University of Miami. From 2011 till present, she has been teaching at Southern Medical University as a Visiting
Professor (Healthcare MBA). We have chosen Dr. Chen as our Chief Financial Officer because of her knowledge and experience with U.S.
GAAP and SEC reporting and compliance requirements. She holds a CPA license and has conducted analyses and research of a large amount
of formal filings of SEC registrants, with focuses on financial disclosure, capital market anomaly, business valuation, internal control
and auditing, corporate tax avoidance, and earnings-returns relation. Dr. Chen also published research results in both accounting and
finance journals such as Journal of American Tax Association, Journal of Information System, and Financial Management. We chose Dr. Chen
to serve as a director because of her experience with financial matters and her knowledge of our company's operations. Dr. Chen
has resigned as the Company's Chief Financial Officer effective August 1, 2023.
Qingshen
Liu
Director
since 2018
Dr.
Liu has been an independent director since 2018. He is an associate professor in the Faculty of Animal Science at South China Agriculture
University. He has many years of experience in teaching, research, and social services and focuses on commercial animal breeding, nutrition,
and biotechnology. Dr. Liu's vast industry involvement includes senior roles at the Chinese Association of Animal Science and Veterinary
Medicine, the Guangdong Zoological Society, the Guangdong Association of Animal Husbandry and Veterinary Medicine, the Guangdong Pet
Industry Technology Innovation Alliance, the Guangdong Vocational Education Strategic Alliance for the pet industry, and the China Native
Dog Protection Association. He is also a consultant for the China Pet Health Nutrition Association, the Dongguan Pet Industry Association,
and the Guangdong Province Science and Technology Project. He is an editor of Kennel Technology and the Guangdong Journal of Animal and
Veterinary Science. Dr. Qingshen Liu holds a Ph.D in animal nutrition and feed science from South China Agricultural University. We have
appointed Dr. Liu because of his expertise in animal science and knowledge of research, product development and education.
98
Zhiqiang
Shao
Director
since 2017
Mr.
Shao has been an independent director since 2017. Since May 2015, Mr. Shao has been the Vice Risk Control Officer in Paisheng Technology
Group Co., Ltd, where he is responsible for implementing the company's corporate risk control strategy. From March 2010 through
April 2015, Mr. Shao was the Financial and Risk Control Director at Dongguan Xiangbang Credit Guarantee Ltd. From November 2006 through
February 2010, Mr. Shao was the Financial and Risk Control Manager at China Zhongkezhi Guarantee Group Co., Ltd, Dongguan Branch. From
July 1996 to October 2006, Mr. Shao worked as the Financial Manager for Huiyang Wanli Plastic Products Co., Ltd/Dongguan Wanjia Toys
Co., Ltd. In July 1996, he graduated from a three-year college in Accounting, Shanghai Lixin Institute of Accounting and Finance (formerly
Shanghai Lixin College of Accounting), and earned his Bachelor in Financial Management from South China Normal University in May 2017.
We believe Mr. Shao's experience with accounting and risk management make him a qualified member of our Board of Directors.
Changqing
Shi
Director
since 2020
Mr.
Shi has been an independent director since April 2020. Since September 2019, Mr. Shi has been the Deputy General Manager of Dongguan
Newspaper Culture Communication Co., Ltd. From May 2018 through August 2019, he was Executive Dean of Duowei Training Institute. From
April 2017 through April 2018, Mr. Shi was Vice Principal of Guangdong School of Science and Technology. From September 2016 through
March 2017, he was Vice Principal of Dongguan Yuehua School. From May 2014 through August 2016, Mr. Shi was the Chief Counselor of the
Dongguan Youth Leadership Program. Mr. Shi earned his B.A. from Yantai Normal University and is studying for a master's degree
in cultural industry management from Peking University. We believe Mr. Shi is a qualified member of our Board of Directors due to his
media experience and corporate governance experience, which we are hopeful will benefit Dogness' efforts to promote its products
and brand and to further Dogness' efforts to grow as a public company.
Election
of Officers
Our
executive officers are elected by, and serve at the discretion of, our board of directors. There are no familial relationships among
any members of the executive officers.
99
B.
Employment Agreements
In
accordance with the PRC National Labor Law, which became effective in January 1995, and the PRC Labor Contract Law, which became effective
in January 2008, as amended subsequently in 2012, employers must execute written labor contracts with full-time employees of the Chinese
entity in order to establish an employment relationship.
In
China, all employers must compensate their employees equal to at least the local minimum wage standards. Our employees are all entitled
to receive payment of at least RMB 1,720 per month for full-time workers and RMB 16.4 per hour for part-time employees, with overtime
calculated at 1.5 times normal rate for weekday overtime, 2 times normal rate for weekends and 3 times normal rate for holidays. Our
employment agreements typically begin with a one month trial period.
All
employers are required to establish a system for labor safety and sanitation, strictly abide by state rules and standards and provide
employees with appropriate workplace safety training. In addition, employers in China are obliged to pay contributions to the social
insurance plan and the housing fund plan for employees. Accordingly, all of our employees, including management, have executed their
employment agreements. Our employment agreements with our executives provide the amount of each executive officer's salary and
establish their eligibility to receive a bonus. We believe our labor relationships are good.
Our
employment agreements with our executive officers generally provide for a salary to be paid monthly. The agreements also provide that
executive officers are to work full time for our company and are entitled to all legal holidays as well as other paid leave in accordance
with PRC laws and regulations and our internal work policies. The employment agreements also provide that we will pay for all mandatory
social insurance programs for our executive officers in accordance with PRC regulations. In addition, our employment agreements with
our executive officers prevent them from rendering services for our competitors for so long as they are employed.
Other
than the salary, bonuses, equity grants and necessary social benefits required by the government, which are defined in the employment
agreements, we currently do not provide other benefits to the officers. Our executive officers are not entitled to severance payments
upon the termination of their employment agreement or following a change in control. We are not aware of any arrangement that may at
a subsequent date, result in a change of control of our company.
We
have not provided retirement benefits (other than a state pension scheme in which all of our employees in China participate) or severance
or change of control benefits to our named executive officers.
Under
Chinese law, we may terminate an employment agreement without penalty by providing the employee thirty days' prior written notice
or one month's wages in lieu of notice if the employee is incompetent or remains incompetent after training or adjustment of the
employee's position in other limited cases. If we wish to terminate an employment agreement in the absence of cause, then we are
obligated to pay the employee one month's salary for each year we have employed the employee. We are, however, permitted to terminate
an employee for cause without penalty to our company, where the employee has committed a crime or the employee's actions or inactions
have resulted in a material adverse effect to us.
100
Silong
Chen
On
May 28, 2017, we entered a written employment agreement with Mr. Chen. Under the terms of Mr. Chen's employment agreement, he is
entitled to base compensation of  $10,000 per month. Mr. Chen received options to purchase 360,000 Class A Common Shares for a
purchase price of $1.50 per share, which options will vest monthly at a rate of 10,000 per month for the next three years following the
completion of our initial public offering, with the first tranche vesting one month after completion of the offering. On October 31,
2019, Mr. Chen voluntarily waived the remaining unvested 140,000; as a result, Mr. Chen holds a total of 220,000 vested options. Mr.
Chen's employment agreement has no expiration date but may be terminated immediately for cause or at any time by either party upon
presentation of 30 days' prior notice in the event he is unable to perform assigned tasks or the parties are unable to agree to
changes to his employment agreement.
Aihua
Cao
Effective
August 16, 2023, we entered a written employment agreement with Ms. Cao to serve as our Chief Financial Officer. Under the terms of Ms.
Cao's employment agreement, she was entitled to base compensation of $42,000 per month. Ms. Cao's employment agreement has
no expiration date but may be terminated at any time for any reason or for no reason, with or without cause, by either party upon presentation
of 30 days' prior notice. The employment can be terminated immediately under certain circumstances specified under section 7 of
the employment agreement.
Yunhao
Chen(resigned since August 1, 2023)
Effective
May 28, 2017, we entered a written employment agreement with Dr. Chen to serve as our Chief Financial Officer. Dr. Chen has resigned
as the Company's Chief Financial Officer effective August 1, 2023 therefore the employment agreement was terminated as of the same
date. Under the terms of Dr. Chen's employment agreement, she was entitled to base compensation of $10,000 per month through December
31, 2017. Beginning in January 2018, Dr. Chen's salary increased to $150,000 per year. Effective as of the closing of our initial
public offering, Dr. Chen received options to purchase 120,000 Class A Common Shares for a purchase price of $1.50 per share, which options
vested monthly at a rate of 5,000 per month for the next two years following the completion of the offering, with the first tranche vesting
one month after completion of the offering. All of such options have vested and have been exercised. Dr. Chen's employment agreement
was for a term of two years initially and renewed in 2019 with no fixed term and may be terminated immediately for cause or at any time
by either party upon presentation of 30 days' prior notice in the event she is unable to perform assigned tasks or the parties
are unable to agree to changes to her employment agreement.
Director
Compensation
The
following section presents information regarding the compensation paid during fiscal 2023, 2022 and 2021 to members of our Board of Directors
who are not also our employees (referred to herein as "Non-Employee Directors"). As of each of June 30, 2023, 2022 and 2021,
we had five (5) directors. Other than Qingshen Liu, who received approximately $8000, $8000 and 8,000 for services in each of 2023, 2022 and 2021 and Changqing Shi, who received approximately $9000, $9000 and $9,000 for services in fiscal 2023, 2022 and 2021, none
of the Non-Employee Directors received any compensation in fiscal year 2023, 2022, and 2021, and Mr. Silong Chen and Dr. Yunhao Chen
did not receive any compensation other than as employees of our company.
Non-Employee
Directors
We
pay our independent directors an annual cash retainer to be determined from time to time by our board of directors, currently around
$8,000 per year, depending on the committee responsibilities of the director. We may also provide stock option equity-based incentives
to our directors for their service. We also plan to reimburse our directors for any out-of-pocket expenses incurred by them in connection
with their services provided in such capacity. Pursuant to our service agreements with our directors, neither we nor our subsidiaries
will provide benefits to directors upon termination of appointment.
101
C.
Board Practice
Board
of Directors and Board Committees
Our
Board of Directors currently consists of five (5) directors. A majority of our directors (namely, Liu, Shi and Shao) are independent,
as such term is defined by the Nasdaq Global Market.
A
director may vote in respect of any contract or transaction in which he is interested, provided, however that the nature of the interest
of any director in any such contract or transaction shall be disclosed by him at or prior to its consideration and any vote on that matter.
A general notice or disclosure to the directors or otherwise contained in the minutes of a meeting or a written resolution of the directors
or any committee thereof of the nature of a director's interest shall be sufficient disclosure and after such general notice, it
shall not be necessary to give special notice relating to any particular transaction. A director may be counted for a quorum upon a motion
in respect of any contract or arrangement which he shall make with our company, or in which he is so interested and may vote on such
motion.
Mr.
Silong Chen currently holds both the positions of Chief Executive Officer and Chairman of the Board. These two positions have not been
consolidated into one position; Mr. Chen simply holds both positions at this time. We do not have a lead independent director, and we
do not anticipate having a lead independent director because we will encourage our independent directors to freely voice their opinions
on a relatively small company board. We believe this leadership structure is appropriate because we are a relatively small company in
the process of listing on a public exchange. Our Board of Directors plays a key role in our risk oversight. The Board of Directors makes
all relevant Company decisions. As a smaller company with a small board of directors, we believe it is appropriate to have the involvement
and input of all of our directors in risk oversight matters.
Board
Committees
We
have established three standing committees under the board: the audit committee, the compensation committee and the nominating committee.
Each committee has three members, and each member is independent, as such term is defined by the Nasdaq Global Market. The audit committee
is responsible for overseeing the accounting and financial reporting processes of our company and audits of the financial statements
of our company, including the appointment, compensation and oversight of the work of our independent auditors. The compensation committee
of the board of directors reviews and makes recommendations to the board regarding our compensation policies for our officers and all
forms of compensation, and also administers and has authority to make grants under our incentive compensation plans and equity-based
plans (but our board will retain the authority to interpret those plans). The nominating committee of the board of directors is responsible
for the assessment of the performance of the board, considering and making recommendations to the board with respect to the nominations
or elections of directors and other governance issues. The nominating committee considers diversity of opinion and experience when nominating
directors.
The
members of the audit committee, the compensation committee and the nominating committee are set forth below. All such members qualify
as independent under the rules of the Nasdaq Global Market.
102
Director Name
Audit Committee
Compensation Committee
Nominating Committee
Zhiqiang Shao
(1)(2)(3)
(1)
(1)
Changqing Shi
(1)
(1)
(1)(2)
Qingshen Liu
(1)
(1)(2)
(1)
(1)
Committee
    member
(2)
Committee
    chair
(3)
Audit
    committee financial expert
Duties
of Directors
Under
British Virgin Islands law, our directors have a duty to act honestly, in good faith and with a view to our best interests. Our directors
also have a duty to exercise the care, diligence and skills that a reasonably prudent person would exercise in comparable circumstances.
See "Description of Share Capital — Differences in Corporate Law" for additional information on our directors'
fiduciary duties under British Virgin Islands law. In fulfilling their duty of care to us, our directors must ensure compliance with
our Memorandum and Articles of Association. We have the right to seek damages if a duty owed by our directors is breached.
The
functions and powers of our board of directors include, among others:
●
appointing officers and determining the term of office of the officers;
●
authorizing the payment of donations to religious, charitable, public or other bodies, clubs, funds or associations as deemed advisable;
●
exercising the borrowing powers of the company and mortgaging the property of the company;
●
executing checks, promissory notes and other negotiable instruments on behalf of the company; and
●
maintaining or registering a register of mortgages, charges or other encumbrances of the company.
Interested
Transactions
A
director may vote, attend a board meeting or, presuming that the director is an officer and that it has been approved, sign a document
on our behalf with respect to any contract or transaction in which he or she is interested. We require directors to promptly disclose
the interest to all other directors after becoming aware of the fact that he or she is interested in a transaction we have entered into
or are to enter into. A general notice or disclosure to the board or otherwise contained in the minutes of a meeting or a written resolution
of the board or any committee of the board that a director is a shareholder, director, officer or trustee of any specified firm or company
and is to be regarded as interested in any transaction with such firm or company will be sufficient disclosure, and, after such general
notice, it will not be necessary to give special notice relating to any particular transaction.
103
Compensation
and Borrowing
The
directors may receive such remuneration as our board of directors may determine or change from time to time. The compensation committee
will assist the directors in reviewing and approving the compensation structure for the directors. Our board of directors may exercise
all the powers of the company to borrow money and to mortgage or charge our undertakings and property or any part thereof, to issue debentures,
debenture stock and other securities whenever money is borrowed or as security for any debt, liability or obligation of the company or
of any third party.
Qualification
A
majority of our Board of Directors is required to be independent. There are no membership qualifications for directors. Further, there
are no share ownership qualifications for directors unless so fixed by us in a general meeting, and this has not been so fixed as of
the date of this report. There are no other arrangements or understandings pursuant to which our directors are selected or nominated.
Director
Compensation
All
directors hold office until the next annual meeting of shareholders at which they are re-elected and until their successors have been
duly elected and qualified. Officers are elected by and serve at the discretion of the Board of Directors. Employee directors do not
receive any compensation for their services. Non-employee directors will be entitled to receive such remuneration as our board of directors
may determine or change from time to time for serving as directors and may receive incentive option grants from our company. In addition,
each non-employee director is entitled to be repaid or prepaid all traveling, hotel and incidental expenses reasonably incurred or expected
to be incurred in attending meetings of our board of directors or committees of our board of directors or shareholder meetings or otherwise
in connection with the discharge of his or her duties as a director.
Limitation
of Director and Officer Liability
Under
British Virgin Islands law, each of our directors and officers, in performing his or her functions, is required to act honestly and in
good faith with a view to our best interests and exercise the care, diligence and skill that a reasonably prudent person would exercise
in comparable circumstances. British Virgin Islands law does not limit the extent to which a company's memorandum and articles
of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the
British Virgin Islands courts to be contrary to public policy, such as to provide indemnification against civil fraud or the consequences
of committing a crime.
Under
our Memorandum and Articles of Association, we shall indemnify our directors, officers and liquidators against all expenses, including
legal fees, and against all judgments, fines and amounts paid in settlement and reasonably incurred in connection with civil, criminal,
administrative or investigative proceedings to which they are party or are threatened to be made a party by reason of their acting as
our director, officer or liquidator. To be entitled to indemnification, these persons must have acted honestly and in good faith with
a view to the best interest of the company and, in the case of criminal proceedings, they must have had no reasonable cause to believe
their conduct was unlawful. Such limitation of liability does not affect the availability of equitable remedies such as injunctive relief
or rescission. These provisions will not limit the liability of directors under United States federal securities laws.
104
We
shall indemnify any of our directors or anyone serving at our request as a director of another entity against all expenses, including
legal fees, and against all judgments, fines and amounts paid in settlement and reasonably incurred in connection with legal, administrative
or investigative proceedings. We may only indemnify a director if he or she acted honestly and in good faith with the view to our best
interests and, in the case of criminal proceedings, the director had no reasonable cause to believe that his or her conduct was unlawful.
The decision of our board of directors as to whether the director acted honestly and in good faith with a view to our best interests
and as to whether the director had no reasonable cause to believe that his or her conduct was unlawful, is in the absence of fraud sufficient
for the purposes of indemnification, unless a question of law is involved. The termination of any proceedings by any judgment, order,
settlement, conviction or the entry of no plea does not, by itself, create a presumption that a director did not act honestly and in
good faith and with a view to our best interests or that the director had reasonable cause to believe that his or her conduct was unlawful.
If a director to be indemnified has been successful in defense of any proceedings referred to above, the director is entitled to be indemnified
against all expenses, including legal fees, and against all judgments, fines and amounts paid in settlement and reasonably incurred by
the director or officer in connection with the proceedings.
We
may purchase and maintain insurance in relation to any of our directors or officers against any liability asserted against the directors
or officers and incurred by the directors or officers in that capacity, whether or not we have or would have had the power to indemnify
the directors or officers against the liability as provided in our Memorandum and Articles of Association.
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted for our directors, officers or persons controlling
our company under the foregoing provisions, we have been informed that in the opinion of the SEC, such indemnification is against public
policy as expressed in the Securities Act and is therefore unenforceable.
Involvement
in Certain Legal Proceedings
To
the best of our knowledge, none of our directors or officers has been convicted in a criminal proceeding, excluding traffic violations
or similar misdemeanors, nor has been a party to any judicial or administrative proceeding during the past five years that resulted in
a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state
securities laws, or a finding of any violation of federal or state securities laws, except for matters that were dismissed without sanction
or settlement. Except as set forth in our discussion below in "Related Party Transactions," our directors and officers have
not been involved in any transactions with us or any of our affiliates or associates which are required to be disclosed pursuant to the
rules and regulations of the SEC.
105
Code
of Business Conduct and Ethics
We
have adopted a code of business conduct and ethics applicable to our directors, officers and employees in connection with our application
to list on the Nasdaq Global Market. Our Code of Business Conduct and Ethics requires us to comply with applicable laws, regulations
and rules; keep accurate corporate records; avoid conflicts of interest; maintain corporate confidentiality; refrain from insider trading,
corruption, harassment and other inappropriate behavior; and encourage reporting of any known or suspected violations without fear of
reprisal.
D.
Employees
As
of September 25, 2023, we employed a total of 259 full-time and 24 part-time employees. As of June 30, 2023, we employed a total of 197
full-time and 34 part-time employees. As of June 30, 2022, we employed a total of 309 full-time and 8 part-time employees. As of June
30, 2021, we employed a total of 272 full-time and 59 part-time employees.
Department
September 25, 2023
June 30, 2023
June 30, 2022
June 30, 2021
Senior Management
9
9
13
11
Human Resources & Administration
9
9
9
9
Finance
10
11
14
13
Research & Development
15
15
20
22
Production & Procurement (full time)
123
141
228
205
Production & Procurement (part time)
30
34
8
59
Sales & Marketing
14
12
25
12
Total
210
231
317
331
All
but five (5) of  our total employees are employed in China. Our employees are not represented by a labor organization or covered
by a collective bargaining agreement. We have not experienced any work stoppages.
We
are required under PRC law to make contributions to employee benefit plans at specified percentages of our after-tax profit. In addition,
we are required by PRC law to cover employees in China with various types of social insurance and housing funds. In fiscal 2023, we contributed
in aggregate approximately $360,000 to the employee benefit plans and social insurance but did not provide housing funds.  In fiscal
2022, we contributed in aggregate approximately $0.5 million to the employee benefit plans and social insurance but did not provide housing
funds. In fiscal 2021, we contributed in aggregate approximately $0.3 million to the employee benefit plans and social insurance but
did not provide housing funds. The effect on our liquidity by the payments for these contributions is immaterial. We believe that we
are in material compliance with the relevant PRC employment laws.
E.
Share Ownership
There
are no membership qualifications for directors. Further, there are no share ownership qualifications for directors unless so fixed by
us in a general meeting, and this has not been so fixed as of the date of this report. There are no other arrangements or understandings
pursuant to which our directors are selected or nominated.
106
Description
of Share Capital
Dogness
is a British Virgin Islands business company limited by shares and our affairs are governed by our Memorandum and Articles of Association,
and the BVI Business Companies Act (As Revised). We were registered with company number 1918432. As set forth in clause 5 of our Memorandum
of Association, the objects for which our Company is established are unrestricted.
As
of the date of this report, we are authorized to issue 110,000,000 shares of $0.002 par value per share divided into two classes being
90,931,000 Class A shares and 19,069,000 Class B shares of which 31,055,259 Class A Common Shares are issued and outstanding and 9,069,000
Class B shares are issued and outstanding.
The
following are summaries of the material provisions of our Memorandum and Articles of Association, insofar as they relate to the material
terms of our Common Shares. The forms of our Memorandum and Articles of Association are filed as exhibits to this report.
Share
and Share Options
Incentive
Securities Pool
We
have established a pool for shares and options for our employees that contain shares and options to purchase our Class A Common Shares
equal to ten percent (10%) of the number of Common Shares (including both Class A and B Common Shares) issued and outstanding at the
conclusion of our initial public offering. Subject to approval by the Compensation Committee of our Board of Directors, we may grant
options in any percentage determined for a particular grant. We may grant the award of options to existing employees, officers and consultants.
We may also grant the award of restricted stock as a hiring incentive to employees, officers and directors and to non-employee directors
on an ongoing basis.
Unless
otherwise provided in the grant, any options granted will vest at a rate of one third (1/3) per year for three (3) years and have a per
share exercise price equal to the fair market value of one of our Common Shares on the date of grant. As of September 25, 2023, we had
outstanding options to purchase an aggregate of 1,720,000   Class A Common Shares that are exercisable at a purchase price of $1.0
per share  . We may grant options under this pool to certain other employees in the future. We have not yet determined the
recipients of any such grants.
Common
Shares
General
All
of our outstanding Common Shares are fully paid and non-assessable. Our Common Shares are issued in registered form and are issued when
registered in our register of members. Our shareholders who are non-residents of the British Virgin Islands may freely hold and vote
their Common Shares. Our Memorandum and Articles of Association do not permit us to issue bearer shares. As of the date of this report,
we have (a) 9,069,000 Class B Common shares and (b) 31,055,259 Class A Common Shares issued and outstanding.
107
Distributions
The
holders of our Class A and Class B Common Shares are entitled to an equal share in such dividends or distributions as may be declared
by our board of directors subject to the BVI Business Companies Act (As Revised).
Conversion
of Class B Common Shares
Class
B Common Shares may be converted at the request of the shareholder into an equal number of Class A Common Shares at any time. Class A
Common Shares are not convertible into Class B Common Shares. In addition, Class B Common Shares automatically and immediately convert
into the same number of Class A Common Shares upon any direct or indirect sale, transfer, assignment or disposition. In the event Silong
Chen directly or indirectly owns less than 453,450 Class B Common Shares, all remaining Class B Common Shares will automatically be converted
into Class A Common Shares.
Voting
Any
action required or permitted to be taken by the shareholders must be effected at a duly called meeting of the shareholders entitled to
vote on such action and may be effected by a resolution in writing. At each general meeting, each holder of Class A shares who is present
in person or by proxy (or, in the case of a shareholder being a corporation, by its duly authorized representative) will have one vote
for each Class A Common Share which such shareholder holds and each Class B Holder who is present in person or by proxy (or, in the case
of a shareholder being a corporation, by its duly authorized representative) will have three votes for each Class B Common Share which
such shareholder holds.
Listing
Our
Class A Common Shares are listed on the Nasdaq Global Market under the symbol "DOGZ."
Transfer
agent and registrar
The
transfer agent and registrar for the Class A Common Shares is Transhare Corporation, 2849 Executive Drive, Suite 200 Clearwater, Florida
33762.
Election
of directors
Delaware
law permits cumulative voting for the election of directors only if expressly authorized in the certificate of incorporation. The laws
of the British Virgin Islands, however, do not specifically prohibit or restrict the creation of cumulative voting rights for the election
of our directors. Cumulative voting is not a concept that is accepted as a common practice in the British Virgin Islands, and we have
made no provisions in our Memorandum and Articles of Association to allow cumulative voting for elections of directors.
108
Meetings
We
must provide written notice of all meetings of shareholders, stating the time, place and, in the case of a special meeting of shareholders,
the purpose or purposes thereof, at least 7 days before the date of the proposed meeting to those persons whose names appear as shareholders
in the register of members on the date of the notice and are entitled to vote at the meeting. Our board of directors shall call a special
meeting upon the written request of shareholders holding at least 30% of our outstanding voting shares. In addition, our board of directors
may call a special meeting of shareholders on its own motion. A meeting of shareholders held in contravention of the requirement to give
notice is valid if shareholders holding at least 90 percent of the total voting rights on all the matters to be considered at the meeting
have waived notice of the meeting and, for this purpose, the presence of a shareholder at the meeting shall constitute waiver in relation
to all the shares which that shareholder holds.
Our
company's management is entrusted to our board of directors, who will make corporate decisions by board resolution. Our directors
are free to meet at such times and in such manner and places within or outside the BVI as the directors determine to be necessary or
desirable. A 3 days' notice of a meeting of directors must be given. At any meeting of directors, a quorum will be present if half
of the total number of directors is present, unless there are only 2 directors in which case the quorum is 2. If a quorum is not present,
the meeting will be dissolved. If a quorum is present, votes of half of present directors are required to pass a resolution of directors.
As
few as one-third of our outstanding shares may be sufficient to hold a shareholder meeting. Although our Memorandum and Articles of Association
require that holders of at least one-half of our outstanding shares of each class appear in person or by proxy to hold a shareholder
meeting, to the extent we fail to have quorum on this initial meeting date, we will reschedule the meeting for the next week, at which
second meeting the holders of one-third or more of our outstanding shares will constitute a quorum. As mentioned, at the initial date
set for any meeting of shareholders, a quorum will be present if there are shareholders present in person or by proxy representing not
less than one-half of the issued Common Shares entitled to vote on the resolutions to be considered at the meeting. A quorum may comprise
a single shareholder or proxy and then such person may pass a resolution of shareholders and a certificate signed by such person accompanied
where such person be a proxy by a copy of the proxy instrument shall constitute a valid resolution of shareholder. If within thirty minutes
from the time appointed for the meeting a quorum is not present, the meeting, if convened upon the requisition of shareholders, shall
be dissolved; in any other case it shall stand adjourned to the next week in the jurisdiction in which the meeting was to have been held
at the same time and place or to such other time and place as the directors may determine, and if at the adjourned meeting there are
present within one hour from the time appointed for the meeting in person or by proxy not less than one-third of the votes of the shares
or each class or series of shares entitle to vote on the matter to be considered by the meeting, those present shall constitute a quorum
but otherwise the meeting shall be dissolved. No business may be transacted at any general meeting unless a quorum is present at the
commencement of business. If present, the chair of our board of directors shall be the chair presiding at any meeting of the shareholders.
109
A
corporation that is a shareholder shall be deemed for the purpose of our Memorandum and Articles of Association to be present in person
if represented by its duly authorized representative. This duly authorized representative shall be entitled to exercise the same powers
on behalf of the corporation which he represents as that corporation could exercise if it were our individual shareholder.
Protection
of minority shareholders
We
would normally expect British Virgin Islands courts to follow English case law precedents, which permit a minority shareholder to commence
a representative action, or derivative actions in our name, to challenge (1) an act which is
ultra vires
or illegal, (2) an act
which constitutes a fraud against the minority by parties in control of us, (3) the act complained of constitutes an infringement of
individual rights of shareholders, such as the right to vote and pre-emptive rights and (4) an irregularity in the passing of a resolution
which requires a special or extraordinary majority of the shareholders.
Pre-emptive
rights
There
are no pre-emptive rights applicable to the issue by us of new Common Shares under either British Virgin Islands law or our Memorandum
and Articles of Association.
Transfer
of Common Shares
Subject
to the restrictions in our Memorandum and Articles of Association and applicable securities laws, any of our shareholders may transfer
all or any of his or her Common Shares by written instrument of transfer signed by the transferor and containing the name and address
of the transferee. The transfer of a registered share is effective when the name of the transferee is entered in the register of members.
The entry of the name of a person in the company's register of members is prima facie evidence that legal title in the share vests
in that person. Our board of directors may resolve by resolution to refuse or delay the registration of the transfer of any Common Share.
If our board of directors resolves to refuse or delay any transfer, it shall specify the reasons for such refusal in the resolution.
Our directors may not resolve or refuse or delay the transfer of a Common Share unless: (a) the person transferring the shares has failed
to pay any amount due in respect of any of those shares; or (b) such refusal or delay is deemed necessary or advisable in our view or
that of our legal counsel in order to avoid violation of, or in order to ensure compliance with, any applicable, corporate, securities
and other laws and regulations.
Liquidation
If
we are wound up and the assets available for distribution among our shareholders are more than sufficient to repay all amounts paid to
us on account of the issue of shares immediately prior to the winding up, the excess shall be distributable
pari passu
among those
shareholders in proportion to the amount paid up immediately prior to the winding up on the shares held by them, respectively. If we
are wound up and the assets available for distribution among the shareholders as such are insufficient to repay the whole of the amounts
paid to us on account of the issue of shares, those assets shall be distributed so that, to the greatest extent possible, the losses
shall be borne by the shareholders in proportion to the amounts paid up immediately prior to the winding up on the shares held by them,
respectively. If we are wound up, the liquidator appointed by us may, in accordance with the BVI Business Companies Act (As Revised),
divide among our shareholders in specie or kind the whole or any part of our assets (whether they shall consist of property of the same
kind or not) and may, for such purpose, set such value as the liquidator deems fair upon any property to be divided and may determine
how such division shall be carried out as between the shareholders or different classes of shareholders.
110
Calls
on Common Shares and forfeiture of Common Shares
Our
board of directors may from time to time make calls upon shareholders for any amounts unpaid on their Common Shares in a notice served
to such shareholders at least 14 days prior to the specified time of payment. The Common Shares that have been called upon and remain
unpaid are subject to forfeiture.
Redemption
of Common Shares
Subject
to the provisions of the BVI Business Companies Act (As Revised), we may issue shares on terms that are subject to redemption, at our
option or at the option of the holders, on such terms and in such manner as may be determined by our Memorandum and Articles of Association
and subject to any applicable requirements imposed from time to time by, the BVI Business Companies Act (As Revised), the SEC, the Nasdaq
Global Market, or by any recognized stock exchange on which our securities are listed.
Modifications
of rights
All
or any of the special rights attached to any class of shares may, subject to the provisions of the BVI Business Companies Act (As Revised),
be amended only pursuant to a resolution passed at a meeting by a majority of the votes cast by those entitled to vote at a meeting of
the holders of the shares of that class.
Changes
in the number of shares we are authorized to issue and those in issue
We
may from time to time by resolution of our board of directors:
●
amend our Memorandum of Association to increase or decrease the maximum number of shares we are authorized to issue;
●
subject to our Memorandum, divide our authorized and issued shares into a larger number of shares; and
●
subject to our Memorandum, combine our authorized and issued shares into a smaller number of shares.
Untraceable
shareholders
We
are entitled to sell any shares of a shareholder who is untraceable, provided that:
●
all checks or warrants in respect of dividends of these shares, not being less than three in number, for any sums payable in cash to
the holder of such shares have remained uncashed for a period of twelve years prior to the publication of the notice and during the three
months referred to in the third bullet point below;
●
we have not during that time received any indication of the whereabouts or existence of the shareholder or person entitled to these shares
by death, bankruptcy or operation of law; and
111
●
we have caused a notice to be published in newspapers in the manner stipulated by our Memorandum and Articles of Association, giving
notice of our intention to sell these shares, and a period of three months has elapsed since such notice.
●
The net proceeds of any such sale shall belong to us, and when we receive these net proceeds we shall become indebted to the former shareholder
for an amount equal to the net proceeds.
Inspection
of books and records
Under
British Virgin Islands Law, holders of our Common Shares are entitled, upon giving written notice to us, to inspect (i) our Memorandum
and Articles of Association, (ii) the register of members, (iii) the register of directors and (iv) minutes of meetings and resolutions
of members, and to make copies and take extracts from the documents and records. However, our directors can refuse access if they are
satisfied that to allow such access would be contrary to our interests.
Rights
of non-resident or foreign shareholders
There
are no limitations imposed by our Memorandum and Articles of Association on the rights of non-resident or foreign shareholders to hold
or exercise voting rights on our shares. In addition, there are no provisions in our Memorandum and Articles of Association governing
the ownership threshold above which shareholder ownership must be disclosed.
Issuance
of additional Common Shares
Our
Memorandum and Articles of Association authorizes our board of directors to issue additional Common Shares from authorized but unissued
shares, to the extent available, from time to time as our board of directors shall determine.
Compulsory
Acquisition
Subject
to the Memorandum and Articles of Association, members of the company holding 90 per cent of the votes of the outstanding shares entitled
to vote may give a written instruction to the company directing the company to redeem the shares held by the remaining members. Upon
receipt of the written instruction, the company is required to redeem the shares specified in the written instruction irrespective of
whether or not the shares are by their terms redeemable and give written notice to each member whose shares are to be redeemed stating
the redemption price and the manner in which the redemption is to be effected. In such circumstances minority members can dissent from
the acquisition and are entitled to receive payment of the "fair value" of their shares which is assessed on the basis of
a statutory appraisal process.
112
Differences
in corporate law
The
BVI Business Companies Act (As Revised) and the laws of the British Virgin Islands affecting British Virgin Islands business companies
like us and our shareholders differ from laws applicable to U.S. corporations and their shareholders. Set forth below is a summary of
the material differences between the provisions of the laws of the British Virgin Islands applicable to us and the laws applicable to
companies incorporated in the United States and their shareholders.
Mergers
and similar arrangements
Under
the laws of the British Virgin Islands, two or more companies may merge or consolidate in accordance with Section 170 of the BVI Business
Companies Act (As Revised). A merger means the merging of two or more constituent companies into one of the constituent companies and
a consolidation means the uniting of two or more constituent companies into a new company. In order to merge or consolidate, the directors
of each constituent company must approve a written plan of merger or consolidation, which must be authorized by a resolution of shareholders.
While
a director may vote on the plan of merger or consolidation even if he has a financial interest in the plan, the interested director must
disclose the interest to all other directors of the company promptly upon becoming aware of the fact that he is interested in a transaction
entered into or to be entered into by the company.
A
transaction entered into by our company in respect of which a director is interested (including a merger or consolidation) is voidable
by us unless the director's interest was (a) disclosed to the board prior to the transaction or (b) the transaction is (i) between
the director and the company and (ii) the transaction is in the ordinary course of the company's business and on usual terms and
conditions. Notwithstanding the above, a transaction entered into by the company is not voidable if the material facts of the interest
are known to the shareholders and they approve or ratify it or the company received fair value for the transaction.
Shareholders
not otherwise entitled to vote on the merger or consolidation may still acquire the right to vote if the plan of merger or consolidation
contains any provision which, if proposed as an amendment to the memorandum or articles of association, would entitle them to vote as
a class or series on the proposed amendment. In any event, all shareholders must be given a copy of the plan of merger or consolidation
irrespective of whether they are entitled to vote at the meeting to approve the plan of merger or consolidation.
The
shareholders of the constituent companies are not required to receive shares of the surviving or consolidated company but may receive
debt obligations or other securities of the surviving or consolidated company, other assets, or a combination thereof. Further, some
or all of the shares of a class or series may be converted into a kind of asset while the other shares of the same class or series may
receive a different kind of asset. As such, not all the shares of a class or series must receive the same kind of consideration.
After
the plan of merger or consolidation has been approved by the directors and authorized by a resolution of the shareholders, articles of
merger or consolidation are executed by each company and filed with the Registrar of Corporate Affairs in the British Virgin Islands.
A
shareholder may dissent from a mandatory redemption of his shares, an arrangement (if permitted by the court), a merger (unless the shareholder
was a shareholder of the surviving company prior to the merger and continues to hold the same or similar shares after the merger) or
a consolidation. A shareholder properly exercising his dissent rights is entitled to a cash payment equal to the fair value of his shares.
113
A
shareholder dissenting from a merger or consolidation must object in writing to the merger or consolidation before the vote by the shareholders
on the merger or consolidation, unless notice of the meeting was not given to the shareholder. If the merger or consolidation is approved
by the shareholders, the company must give notice of this fact to each shareholder within 20 days who gave written objection. These shareholders
then have 20 days to give to the company their written election in the form specified by the BVI Business Companies Act (As Revised)
to dissent from the merger or consolidation, provided that in the case of a merger, the 20 days starts when the plan of merger is delivered
to the shareholder.
Upon
giving notice of his election to dissent, a shareholder ceases to have any shareholder rights except the right to be paid the fair value
of his shares. As such, the merger or consolidation may proceed in the ordinary course notwithstanding his dissent.
Within
seven days of the later of the delivery of the notice of election to dissent and the effective date of the merger or consolidation, the
company must make a written offer to each dissenting shareholder to purchase his shares at a specified price per share that the company
determines to be the fair value of the shares. The company and the shareholder then have 30 days to agree upon the price. If the company
and a shareholder fail to agree on the price within the 30 days, then the company and the shareholder shall, within 20 days immediately
following the expiration of the 30-day period, each designate an appraiser and these two appraisers shall designate a third appraiser.
These three appraisers shall fix the fair value of the shares as of the close of business on the day prior to the shareholders'
approval of the transaction without taking into account any change in value as a result of the transaction.
Shareholders'
suits
There
are both statutory and common law remedies available to our shareholders as a matter of British Virgin Islands law. These are summarized
below:
Prejudiced
members
A
shareholder who considers that the affairs of the company have been, are being, or are likely to be, conducted in a manner that is, or
any act or acts of the company have been, or are, likely to be oppressive, unfairly discriminatory or unfairly prejudicial to him in
that capacity, can apply to the court under Section 184I of the BVI Business Companies Act (As Revised), inter alia, for an order that
his shares be acquired, that he be provided compensation, that the Court regulate the future conduct of the company, or that any decision
of the company which contravenes the BVI Business Companies Act (As Revised) or our Memorandum and Articles of Association be set aside.
114
Derivative
actions
Section
184C of the BVI Business Companies Act (As Revised) provides that a shareholder of a company may, with the leave of the Court, bring
an action in the name of the company to redress any wrong done to it.
Just
and equitable winding up
In
addition to the statutory remedies outlined above, shareholders can also petition for the winding up of a company on the grounds that
it is just and equitable for the court to so order. Save in exceptional circumstances, this remedy is only available where the company
has been operated as a quasi partnership and trust and confidence between the partners has broken down.
Indemnification
of directors and executive officers and limitation of liability
British
Virgin Islands law does not limit the extent to which a company's articles of association may provide for indemnification of officers
and directors, except to the extent any provision providing indemnification may be held by the British Virgin Islands courts to be contrary
to public policy, such as to provide indemnification against civil fraud or the consequences of committing a crime.
Under
our Memorandum and Articles of Association, we indemnify against all expenses, including legal fees, and against all judgments, fines
and amounts paid in settlement and reasonably incurred in connection with legal, administrative or investigative proceedings for any
person who:
●
is or was a party or is threatened to be made a party to any threatened, pending or completed proceedings, whether civil, criminal, administrative
or investigative, by reason of the fact that the person is or was our director; or
●
is or was, at our request, serving as a director or officer of, or in any other capacity is or was acting for, another body corporate
or a partnership, joint venture, trust or other enterprise.
These
indemnities only apply if the person acted honestly and in good faith with a view to our best interests and, in the case of criminal
proceedings, the person had no reasonable cause to believe that his conduct was unlawful. This standard of conduct is generally the same
as permitted under the Delaware General Corporation Law for a Delaware corporation.
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers or persons controlling
us under the foregoing provisions, we have been advised that in the opinion of the SEC, such indemnification is against public policy
as expressed in the Securities Act and is therefore unenforceable.
115
Anti-takeover
provisions in our Memorandum and Articles of Association
Some
provisions of our Memorandum and Articles of Association may discourage, delay or prevent a change in control of our company or management
that shareholders may consider favorable, including provisions that provide for a staggered board of directors and prevent shareholders
from taking an action by written consent in lieu of a meeting. However, under British Virgin Islands law, our directors may only exercise
the rights and powers granted to them under our Memorandum and Articles of Association, as amended and restated from time to time, as
they believe in good faith to be in the best interests of our company.
Directors'
fiduciary duties
Under
Delaware corporate law, a director of a Delaware corporation has a fiduciary duty to the corporation and its shareholders. This duty
has two components: the duty of care and the duty of loyalty. The duty of care requires that a director act in good faith, with the care
that an ordinarily prudent person would exercise under similar circumstances. Under this duty, a director must inform himself of, and
disclose to shareholders, all material information reasonably available regarding a transaction that is material to the company. The
duty of loyalty requires that a director act in a manner he reasonably believes to be in the best interests of the corporation. He must
not use his corporate position for personal gain or advantage. This duty prohibits self-dealing by a director and mandates that the best
interest of the corporation and its shareholders take precedence over any interest possessed by a director, officer or controlling shareholder
and not shared by the shareholders generally. In general, actions of a director are presumed to have been made on an informed basis,
in good faith and in the honest belief that the action taken was in the best interests of the corporation. However, this presumption
may be rebutted by evidence of a breach of one of the fiduciary duties. Should such evidence be presented concerning a transaction by
a director, a director must prove the procedural fairness of the transaction and that the transaction was of fair value to the corporation.
Under
British Virgin Islands law, our directors owe the company certain statutory and fiduciary duties including, among others, a duty to act
honestly, in good faith, for a proper purpose and with a view to what the directors believe to be in the best interests of the company.
Our directors are also required, when exercising powers or performing duties as a director, to exercise the care, diligence and skill
that a reasonable director would exercise in comparable circumstances, taking into account without limitation, the nature of the company,
the nature of the decision and the position of the director and the nature of the responsibilities undertaken. In the exercise of their
powers, our directors must ensure neither they nor the company acts in a manner which contravenes the BVI Business Companies Act (As
Revised) or our Memorandum and Articles of Association, as amended and re-stated from time to time. A shareholder has the right to seek
damages for breaches of duties owed to us by our directors.
Shareholder
action by written consent
Under
the Delaware General Corporation Law, a corporation may eliminate the right of shareholders to act by written consent by amendment to
its certificate of incorporation. British Virgin Islands law provides that shareholders may approve corporate matters by way of a written
resolution without a meeting signed by or on behalf of shareholders sufficient to constitute the requisite majority of shareholders who
would have been entitled to vote on such matter at a general meeting; provided that if the consent is less than unanimous, notice must
be given to all non-consenting shareholders. Our Memorandum and Articles of Association permit shareholders to act by written consent.
116
Shareholder
proposals
Under
the Delaware General Corporation Law, a shareholder has the right to put any proposal before the annual meeting of shareholders, provided
it complies with the notice provisions in the governing documents. A special meeting may be called by the board of directors or any other
person authorized to do so in the governing documents, but shareholders may be precluded from calling special meetings. British Virgin
Islands law and our Memorandum and Articles of Association allow our shareholders holding not less than 30% of the votes of the outstanding
voting shares to requisition a shareholders' meeting. We are not obliged by law to call shareholders' annual general meetings,
but our Memorandum and Articles of Association do permit the directors to call such a meeting. The location of any shareholders'
meeting can be determined by the board of directors and can be held anywhere in the world.
Cumulative
voting
Under
the Delaware General Corporation Law, cumulative voting for elections of directors is not permitted unless the corporation's certificate
of incorporation specifically provides for it. Cumulative voting potentially facilitates the representation of minority shareholders
on a board of directors since it permits the minority shareholder to cast all the votes to which the shareholder is entitled on a single
director, which increases the shareholder's voting power with respect to electing such director. As permitted under British Virgin
Islands law, our Memorandum and Articles of Association do not provide for cumulative voting. As a result, our shareholders are not afforded
any less protections or rights on this issue than shareholders of a Delaware corporation.
Removal
of directors
Under
the Delaware General Corporation Law, a director of a corporation with a classified board may be removed only for cause with the approval
of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. Under our Memorandum
and Articles of Association, directors can be removed from office, with cause, by a resolution of shareholders or by a resolution of
directors passed at a meeting of directors called for the purpose of removing the director or for purposes including the removal of the
director.
Transactions
with interested shareholders
The
Delaware General Corporation Law contains a business combination statute applicable to Delaware public corporations whereby, unless the
corporation has specifically elected not to be governed by such statute by amendment to its certificate of incorporation, it is prohibited
from engaging in certain business combinations with an "interested shareholder" for three years following the date that such
person becomes an interested shareholder. An interested shareholder generally is a person or group who or which owns or owned 15% or
more of the target's outstanding voting shares within the past three years. This has the effect of limiting the ability of a potential
acquirer to make a two-tiered bid for the target in which all shareholders would not be treated equally. The statute does not apply if,
among other things, prior to the date on which such shareholder becomes an interested shareholder, the board of directors approves either
the business combination or the transaction which resulted in the person becoming an interested shareholder. This encourages any potential
acquirer of a Delaware public corporation to negotiate the terms of any acquisition transaction with the target's board of directors.
British Virgin Islands law has no comparable statute.
117
Dissolution;
winding up
Under
the Delaware General Corporation Law, unless the board of directors approves the proposal to dissolve, dissolution must be approved by
shareholders holding 100% of the total voting power of the corporation. Only if the dissolution is initiated by the board of directors
may it be approved by a simple majority of the corporation's outstanding shares. Delaware law allows a Delaware corporation to
include in its certificate of incorporation a supermajority voting requirement in connection with dissolutions initiated by the board.
Under the BVI Business Companies Act (As Revised) and our Memorandum and Articles of Association, we may appoint a voluntary liquidator
by a resolution of the shareholders or by resolution of directors.
Variation
of rights of shares
Under
the Delaware General Corporation Law, a corporation may vary the rights of a class of shares with the approval of a majority of the outstanding
shares of such class, unless the certificate of incorporation provides otherwise. Under our Memorandum and Articles of Association, if
at any time our shares are divided into different classes of shares, the rights attached to any class may only be varied, whether or
not our company is in liquidation, with the consent in writing of or by a resolution passed at a meeting by the holders of not less than
50 percent of the issued shares in that class.
Amendment
of governing documents
Under
the Delaware General Corporation Law, a corporation's governing documents may be amended with the approval of a majority of the
outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. As permitted by British Virgin Islands
law, our Memorandum and Articles of Association may be amended by a resolution of shareholders and, subject to certain exceptions, by
a resolution of directors. Any amendment is effective from the date it is registered at the Registry of Corporate Affairs in the British
Virgin Islands.
Item
7. Major Shareholders and Related Party Transactions
A.
Major Shareholders
The
following table sets forth information with respect to beneficial ownership of our Common Shares as of October 27, 2021 by:
●
Each
    person who is known by us to beneficially own 5% or more of our outstanding Common Shares;
●
Each
    of our directors and named executive officers; and
●
All
    directors and named executive officers as a group.
118
The
number and percentage of Common Shares beneficially owned are based on 40,124,259 Common Shares outstanding as of September 30, 2023.
Information with respect to beneficial ownership has been furnished by each director, officer or beneficial owner of 5% or more of our
Common Shares. Beneficial ownership is determined in accordance with the rules of the SEC and generally requires that such person have
voting or investment power with respect to securities. In computing the number of Common Shares beneficially owned by a person listed
below and the percentage ownership of such person, Common Shares underlying options, warrants or convertible securities held by each
such person that are exercisable or convertible within 60 days of October 27, 2021 are deemed outstanding, but are not deemed outstanding
for computing the percentage ownership of any other person. Except as otherwise indicated in the footnotes to this table, or as required
by applicable community property laws, all persons listed have sole voting and investment power for all Common Shares shown as beneficially
owned by them. Unless otherwise indicated in the footnotes, the address for each principal shareholder is in the care of our Company
at Tongsha Industrial Estate, East District, Dongguan, Guangdong, People's Republic of China 523217. As of the date of the report,
we have approximately 9 shareholders of record. This does not include shareholders who hold their shares in "street name".
A majority of our Common Shares are held outside the United States, and none of our directors is located in the United States.
Shares Beneficially Owned (1)
Percentage
of
Voting
Number
Percent
Power (2)
Named Executive Officers and Directors:
Silong Chen
(3)
10,069,000
24.48
%
73.80
%
Zhiqiang Shao
0
0
%
-
Changqing Shi
0
0
%
-
Qingshen Liu
0
0
%
-
Yunhao Chen
(4)
50,000
*
*
Aihua Cao
(5)
0
0
%
-
5% or Greater Shareholders
Fine victory holding company Limited
(3)
9,069,000
22.60
%
74.50
%
*
Less
    than 1%
(1)
Beneficial
    ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the Common
    Shares. All shares represent Class A and Class B Common Shares and granted options to the extent such options will vest within 60
    days after October 11, 2023.
(2)
Class
    A Common Shares have one vote per share. Class B Common Shares have three votes per share.
(3)
Consists
    of 9,069,000 Class B Common Shares held by Fine victory holding company Limited, of which Silong Chen may be deemed to have voting
    and dispositive power, 500,000 Class A Common Shares, and vested options to purchase 500,000 Class A Common Shares. Due to his ownership of all outstanding Class
    B Common Shares (which have ten votes per share rather than one vote like Class A Common Shares), Mr. Silong Chen has substantial
    control over Dogness.
(4)
Consists
    of 50,000 options to purchase Class A Common Shares granted and vested as
part of the salary on January 26, 2023. Dr. Chen has resigned from
    the position as the Chief Financial Officer as of August 1, 2023
(5)
Aihua
    Cao started to serve as our Chief Financial Officer since August 16, 2023.
119
B.
Related party transactions
In
addition to the executive officer and director compensation arrangements discussed in "Executive Compensation," below we
describe transactions since July 1, 2020, to which we have been a participant, in which the amount involved in the transactions is material
to us or the related party. 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
Relative
    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
Dogness
    Technology Co., Ltd ("Dogness Technology")
The
    legal representative is Junqiang Chen, the relative of Mr. Silong Chen
(1)
Due from related parties
Due
from related parties consist of mainly rent receivables from the following:
As of
As of
June 30, 2023
June 30, 2022
Linsun
$
87,430
$
77,964
Dogness Network
-
7,340
Dogness Technology
-
20,099
Total
$
87,430
$
105,403
(2)
Due to related parties
Due
to related parties consist of the following:
As of
As of
June 30, 2023
June 30, 2022
Mr. Silong Chen
$
80,327
$
130,468
Dogness Technology
5,516
-
Total
$
85,843
$
130,468
Mr.
Silong Chen periodically provides working capital loans to support the Company's operations when needed. Such advances are non-interest
bearing and due on demand.
(3)
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 long-term bank loans. (See Note 8).
(4)
Sales to related parties
Revenue
from related parties consisted of the following:
For the Years Ended June 30,
Name
2023
2022
2021
Linsun
$
$
-
$
-
Dogness Network
1,543,979
1,806,732
1,207,686
Dogness Technology
156,194
405,847
-
Total
$
1,700,173
$
2,212,579
$
1,207,686
Cost
of revenue associated with the sales to these related parties amounted to $1,162,314 $1,301,180 and $663,742 for the years ended June
30, 2023, 2022 and 2021, respectively.
120
(5)
Accounts receivable from related parties
Accounts
receivable from related parties consisted of the following:
As of
As of
June 30, 2023
June 30, 2022
Accounts receivable - related parties:
Dogness Network
$
1,133,092
$
1,036,476
Dogness Technology
139,292
58,379
Total
$
1,272,384
$
1,094,855
As
of June 30, 2023, total accounts receivable from related parties amounted to $1,272,384, of which $164,807 has been collected as of August
2023.
(6)
Advance to supplier- related party
Advance
to supplier from related parties consisted of the following:
As of
As of
June 30, 2023
June 30, 2022
Advance to supplier - related party:
Linsun
$
239,729
$
-
Total
$
239,729
$
-
(7)
Accounts payable to related parties
Accounts
payables to related parties consisted of the following:
As of
As of
June 30, 2023
June 30, 2022
Accounts payable - related parties:
Linsun
$
-
$
393,625
Total
$
-
$
393,625
(8)
Purchase from related parties
During
the years ended June 30, 2023,2022 and 2021, the Company purchased certain pet product components and parts, such as smart pet water
and food feeding devices, from Linsun. Total purchases from Linsun amounted to $565,548, $3,199,833 and $3,015,442 for the years ended
June 30, 2023, 2022 and 2021, respectively.
(9)
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
$230,000 and is subject to 15% increase every three years. For the year ended June 30, 2023, 2022 and 2021, the Company recorded rent
income of $434,625, $462,210 and $300,511 as other income through leasing the manufacturing facilities to Linsun, respectively.
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. This lease agreement was terminated in October, 2022.
For the years ended June 30, 2023, 2022 and 2021, the Company recorded rent income of $10,952, $78,251 and $52,796 as other income through
leasing the manufacturing facilities to Dogness Network.
On
August 1, 2020, Dongguan Jiasheng signed a lease agreement with Dogness Technology, which enabled Dogness Technology to lease part of
Dongguan Jiasheng's new production facilities of approximately 50 square meters for ten years. Annual lease payment from Dogness
Technology amounted to $1,726. For the years ended June 30, 2023, 2022 and 2021, the Company recorded rent income of $1,584, $1,706 and
$1,661 as other income through leasing the manufacturing facilities to Dogness Technology.
121
Future
Related Party Transactions
The
Corporate Governance Committee of our Board of Directors must approve all related party transactions. All related party transactions
will be made or entered into on terms that are no less favorable to use than can be obtained from unaffiliated third parties. Related
party transactions that we have previously entered into were not approved by independent directors, as we had no independent directors
at that time.
C.
Interests of experts and counsel
Not
applicable for annual reports on Form 20-F.
Item
8. Financial Information
A.
Consolidated Statements and Other Financial Information
Please
refer to Item 18.
Legal
and Administrative Proceedings
We
are currently not a party to any material legal or administrative proceedings and are not aware of any pending or threatened material
legal or administrative proceedings against us. We may from time to time become a party to various legal or administrative proceedings
arising in the ordinary course of our business.
Dividend
Policy
We
have not declared or paid any cash dividends in the last two years.   We anticipate that we will retain any earnings to support
operations and to finance the growth and development of our business. Therefore, we do not expect to pay cash dividends in the foreseeable
future. Any future determination relating to our dividend policy will be made at the discretion of our Board of Directors and will depend
on a number of factors, including future earnings, capital requirements, financial conditions and future prospects and other factors
the Board of Directors may deem relevant.
Subject
to the memorandum and articles of association of the company, the directors of a British Virgin Islands business company may, by resolution
of directors, authorise a distribution by the company to members at such time and of such an amount, as the directors think fit if they
are satisfied, on reasonable grounds, that the company will, immediately after the distribution, satisfy the solvency test. A company
satisfies the solvency test if (a) the value of the company's assets exceeds its liabilities, and (b) the company is able to pay
its debts as they fall due. The resolution of the directors must contain a statement that, in the opinion of the directors, the company
will, immediately after the distribution, satisfy the solvency test.
If
we determine to pay dividends on any of our Common Shares in the future, as a holding company, we will be dependent on receipt of funds
from our Hong Kong subsidiaries, HK Jiasheng and HK Dogness. Current PRC regulations permit the Mainland China Subsidiaries to pay dividends
to HK Dogness only out of their accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations.
In addition, each of our subsidiaries in China is required to set aside at least 10% of its after-tax profits each year, if any, to fund
a statutory reserve until such reserve reaches 50% of its registered capital. Each of such entity in China is also required to further
set aside a portion of its after-tax profits to fund the employee welfare fund, although the amount to be set aside, if any, is determined
at the discretion of its board of directors. Although the statutory reserves can be used, among other ways, to increase the registered
capital and eliminate future losses in excess of retained earnings of the respective companies, the reserve funds are not distributable
as cash dividends except in the event of liquidation.
In
addition, pursuant to the EIT Law and its implementation rules, dividends generated after January 1, 2008 and distributed to us by our
Mainland China Subsidiaries are subject to withholding tax at a rate of 10% unless otherwise exempted or reduced according to treaties
or arrangements between the PRC central government and governments of other countries or regions where the non-mainland China-resident
enterprises are incorporated.
122
Under
existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and trade
and service-related foreign exchange transactions, can be made in foreign currencies without prior approval of the State Administration
of Foreign Exchange, or SAFE, by complying with certain procedural requirements. Specifically, under the existing exchange restrictions,
without prior approval of SAFE, cash generated from operations in China may be used to pay dividends to our company. The Mainland China
Subsidiaries may go to a licensed bank to remit their after-tax profits out of China. Nevertheless, the bank will require the Mainland
China Subsidiaries to produce the following documents for verification before they may transfer the dividends to an overseas bank account
of their parent company, HK Dogness, or indirect parent, Dogness: (1) tax payment statement and tax return; (2) auditor's report
issued by a Chinese certified public accounting firm confirming the availability of profits and dividends for distribution in the current
year; (3) the Board minutes authorizing the distribution of dividends to its shareholders; (4) the foreign exchange registration certificate
issued by SAFE; (5) the capital verification report issued by a Chinese certified public accounting firm; (6) if the declared dividends
will be distributed out of accumulated profits earned in prior years, the Mainland China Subsidiaries must appoint a Chinese certified
public accounting firm to issue an auditors' report to the bank to certify the Mainland China Subsidiaries' financial position
during the years from which the profits arose; and (7) other information as required by SAFE.
B.
Significant Changes
We
have not experienced any significant changes since the date of our audited consolidated financial statements included in this annual
report.
Item
9. The Offer and Listing
A.
Offer and listing details
We
completed our initial public offering on December 18, 2017. Our Class A Common Shares trade under the trading symbol "DOGZ"
on the NASDAQ Global Market.
As
of October 10, 2023, there were approximately 6 holders of record of our Class A Common Shares. This excludes our Class
A Common Shares owned by shareholders holding Class A Common Shares under nominee security position listings. On October 10, 2023,
the last sales price of our Class A Common Shares as reported on the NASDAQ Global Market was $0.43  per common
share.
B.
Plan of distribution
Not
applicable for annual reports on Form 20-F.
C.
Markets
Our
Class A Common Shares are listed on the Nasdaq Global Market under the symbol "DOGZ."
D.
Selling shareholders
Not
applicable for annual reports on Form 20-F.
E.
Dilution
Not
applicable for annual reports on Form 20-F.
F.
Expenses of the issue
Not
applicable for annual reports on Form 20-F.
Item
10. Additional Information
A.
Share capital
Not
applicable for annual reports on Form 20-F.
123
B.
Memorandum and articles of association
The
information required by this item is incorporated by reference to the material headed "Description of Share Capital" in our
Registration Statement on Form F-1, File no. 333-220547, filed with the SEC on September 20, 2017, as amended.
C.
Material contracts
On
July 15, 2021, the Company and certain institutional investors entered into a securities purchase agreement in connection with an offering,
pursuant to which the Company agreed to sell to investors an aggregate of 2,178,120 Class A Common Shares. The common share purchase
price was $1.82 per share. After payment of expenses, the Company received approximately $3.4 million in net proceeds from the sale of
the common shares. Additionally, the Company also issued warrants to purchase 174,249 common shares to the placement agent exercisable
at $1.82 per share.
On
January 15, 2021, the Company and certain institutional investors entered into a securities purchase agreement in connection with an
offering, pursuant to which the Company agreed to sell to investors an aggregate of 3,455,130 Class A Common Shares and investor warrants
to initially purchase an aggregate of 1,727,565 Class A Common Shares. The common share purchase price was $2.15 per Class A Common Share;
and the investor warrants are initially exercisable at $2.70 per share. The aggregate gross proceeds from the sale of the Class A Common
Shares, before deducting fees to the Placement Agent and other estimated offering expenses payable by the Company was approximately $7.4
million. This amount did not include any proceeds from warrant exercises.
On
February 22, 2022, the Company and certain institutional investors entered into a securities purchase agreement in connection with an
offering, pursuant to which the Company sold to investors an aggregate of 1,966,251 Class A Common Shares at a purchase price of $2.88
per share. The aggregate gross proceeds from the sale of the Class A Common Shares, before deducting fees to the Placement Agent (as
defined below) and other estimated offering expenses payable by the Company were approximately $5.66 million.
On
June 1, 2022, the Company and certain institutional investors entered into a securities purchase agreement for a registered direct offering
of approximately $12 million of Class A common shares and warrants at a price of $3.30 per unit. The Company will issued an aggregate
of 3,636,365 Class A common shares and warrants to purchase an aggregate of 2,181,819 Class A common shares to the investors. The aggregate
gross proceeds from the sale of the securities, before deducting fees payable to the placement agent and other estimated offering expenses
payable by the Company were approximately $12 million. This amount does not include any proceeds from the exercise of the warrants being
offered.
D.
Exchange controls
See
"Item 4. Information on the Company—B. Business Overview—Regulations—Regulation on Foreign Exchange Control
Regulation
of Dividend Distribution
See
"Item 4. Information on the Company—B. Business Overview—Regulations—Regulation on Dividend Distributions
E.
Taxation
The
following sets forth the material British Virgin Islands, Chinese and U.S. federal income tax consequences related to an investment in
our Class A Common Shares. It is directed to U.S. Holders (as defined below) of our Class A Common Shares and is based upon laws and
relevant interpretations thereof in effect as of the date of this report, all of which are subject to change. This description does not
deal with all possible tax consequences relating to an investment in our Class A Common Shares, such as the tax consequences under state,
local and other tax laws.
The
following brief description applies only to U.S. Holders (defined below) that hold Class A Common Shares as capital assets and that have
the U.S. dollar as their functional currency. This brief description is based on the tax laws of the United States in effect as of the
date of this report and on U.S. Treasury regulations in effect or, in some cases, proposed, as of the date of this report, as well as
judicial and administrative interpretations thereof available on or before such date. All of the foregoing authorities are subject to
change, which change could apply retroactively and could affect the tax consequences described below.
The
brief description below of the U.S. federal income tax consequences to "U.S. Holders" will apply to you if you are a beneficial
owner of shares and you are, for U.S. federal income tax purposes,
●
an individual who is a citizen or resident of the United States;
●
a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) organized under the laws of the United
States, any state thereof or the District of Columbia;
●
an estate whose income is subject to U.S. federal income taxation regardless of its source; or
●
a trust that (1) is subject to the primary supervision of a court within the United States and the control of one or more U.S. persons
for all substantial decisions or (2) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S.
person.
124
WE
URGE POTENTIAL PURCHASERS OF OUR SHARES TO CONSULT THEIR OWN TAX
ADVISORS
CONCERNING THE U.S. FEDERAL, STATE, LOCAL AND NON-U.S. TAX
CONSEQUENCES
OF PURCHASING, OWNING AND DISPOSING OF OUR SHARES.
Generally
Dogness
is a tax-exempt company incorporated in the British Virgin Islands. HK Dogness and HK Jiasheng are subject to Hong Kong profits tax rates.
Dongguan Dogness and Dongguan Jiasheng are governed by mainland China laws.
Our
company pays mainland China enterprise income taxes, value added taxes and business taxes in mainland China for revenues from Dongguan
Dogness and Dongguan Jiasheng. The Business Tax has been incorporated into VAT since May 1st of 2016. British Virgin Islands tax laws
apply to Dogness.
Mainland
China Enterprise Taxation
The
following brief description of Chinese enterprise laws is designed to highlight the enterprise-level taxation on our earnings, which
will affect the amount of dividends, if any, we are ultimately able to pay to our shareholders. See "Dividend Policy."
Mainland
China enterprise income tax is calculated based on taxable income determined under mainland China accounting principles. The Enterprise
Income Tax Law (the "EIT Law"), effective as of January 1, 2008, enterprises pay a unified income tax rate of 25% and unified
tax deduction standards are applied equally to both domestic-invested enterprises and foreign-invested enterprises. Under the EIT Law,
an enterprise established outside of mainland China with "de facto management bodies" within mainland China is considered
a resident enterprise and will normally be subject to the enterprise income tax at the rate of 25% on its global income. If the PRC tax
authorities subsequently determine that we, HK Jiasheng, HK Dogness or any future non-Mainland China Subsidiary should be classified
as a mainland China resident enterprise, then such entity's global income will be subject to mainland China income tax at a tax
rate of 25%. In addition, under the EIT Law, payments from HK Jiasheng or HK Dogness to us may be subject to a withholding tax. The EIT
Law currently provides for a withholding tax rate of 20%. If Dogness, HK Jiasheng or HK Dogness is deemed to be a non-resident enterprise,
then it will be subject to a withholding tax at the rate of 10% on any dividends paid by its Chinese subsidiaries to such entity. In
practice, the tax authorities typically impose the withholding tax rate of 10% rate, as prescribed in the implementation regulations;
however, there can be no guarantee that this practice will continue as more guidance is provided by relevant government authorities.
We are actively monitoring the proposed withholding tax and are evaluating appropriate organizational changes to minimize the corresponding
tax impact.
According
to the Sino-U.S. Tax Treaty which was effective on January 1, 1987 and aimed to avoid double taxation disadvantage, income that is incurred
in one nation should be taxed by that nation and credited by the other nation, but for the dividend that is generated in China and distributed
to foreigner in other nations, a rate 10% tax will be charged.
Our
company will have to withhold that tax when we are distributing dividends to our foreign investors. If we do not fulfill this duty, we
will receive a fine up to five times of the amount we are supposed to pay as tax or other administrative penalties from government. The
worst case could be criminal charge of tax evasion to responsible persons. The criminal penalty for this offense depends on the tax amount
the offender evaded, and the maximum penalty will be 3 – 7 years imprisonment plus fine.
Mainland
China Value Added Tax
Pursuant
to the Provisional Regulation of China on Value Added Tax and its implementing rules, issued in December 1993, all entities and individuals
that are engaged in the businesses of sales of goods, provision of repair and placement services and importation of goods into China
are generally subject to a VAT at a rate of 17% (with the exception of certain goods which are subject to a rate of 13%) of the gross
sales proceeds received, less any VAT already paid or borne by the taxpayer on the goods or services purchased by it and utilized in
the production of goods or provisions of services that have generated the gross sales proceeds.
125
Mainland
China Business Tax
Companies
in China are generally subject to business tax and related surcharges by various local tax authorities at rates ranging from 3% to 20%
on revenue generated from providing services and revenue generated from the transfer of intangibles. However, since May 1, 2016, the
Business Tax has been incorporated into Value Added Tax in China, which means there will be no more Business Tax and accordingly some
business operations previously taxed in the name of Business Tax will be taxed in the manner of VAT thereafter. In general, this newly
implemented policy is intended to relieve many companies from heavy taxes under currently slowing down economy. In the case of our Chinese
subsidiaries, Dongguan Dogness and Dongguan Jiasheng, even though the VAT rate is 17%, with the deductibles the company may get in the
business process, it will bear less burden than previous Business Tax.
British
Virgin Islands Taxation
Under
the BVI Business Companies Act (As Revised) as currently in effect, a holder of Common Shares who is not a resident of the British Virgin
Islands is exempt from British Virgin Islands income tax on dividends paid with respect to the Common Shares and all holders of Common
Shares are not liable to the British Virgin Islands for income tax on gains realized during that year on sale or disposal of such shares.
The British Virgin Islands does not impose a withholding tax on dividends paid by a company incorporated or re-registered under the BVI
Business Companies Act (As Revised).
There
are no capital gains, gift or inheritance taxes levied by the British Virgin Islands on companies incorporated or re-registered under
the BVI Business Companies Act (As Revised). In addition, shares of companies incorporated or re-registered under the BVI Business Companies
Act (As Revised) are not subject to transfer taxes, stamp duties or similar charges.
All
instruments relating to transfers of property to or by our company and all instruments relating to transactions in respect of the shares,
debt obligations or other securities of our company and all instruments relating to other transactions relating to the business of our
company are exempt from payment of stamp duty in the BVI. This assumes that our company does not hold an interest in real estate in the
BVI.
There
is no income tax treaty or convention currently in effect between the United States and the British Virgin Islands or between China and
the British Virgin Islands.
United
States Federal Income Taxation
The
following does not address the tax consequences to any particular investor or to persons in special tax situations such as:
●
banks;
●
financial institutions;
●
insurance companies;
●
regulated investment companies;
●
real estate investment trusts;
●
broker-dealers;
●
traders that elect to mark-to-market;
●
U.S. expatriates;
●
tax-exempt entities;
●
persons liable for alternative minimum tax;
●
persons holding our Common Shares as part of a straddle, hedging, conversion or integrated transaction;
●
persons that actually or constructively own 10% or more of our voting shares;
●
persons who acquired our Common Shares pursuant to the exercise of any employee share option or otherwise as consideration; or
●
persons holding our Common Shares through partnerships or other pass-through entities.
Prospective
purchasers are urged to consult their own tax advisors about the application of the U.S. Federal tax rules to their particular circumstances
as well as the state, local, foreign and other tax consequences to them of the purchase, ownership and disposition of our Common Shares.
126
Taxation
of Dividends and Other Distributions on our Common Shares
Subject
to the passive foreign investment company rules discussed below, the gross amount of distributions made by us to you with respect to
the Common Shares (including the amount of any taxes withheld therefrom) will generally be includable in your gross income as dividend
income on the date of receipt by you, but only to the extent that the distribution is paid out of our current or accumulated earnings
and profits (as determined under U.S. federal income tax principles). With respect to corporate U.S. Holders, the dividends will not
be eligible for the dividends-received deduction allowed to corporations in respect of dividends received from other U.S. corporations.
With
respect to non-corporate U.S. Holders, including individual U.S. Holders, dividends will be taxed at the lower capital gains rate applicable
to qualified dividend income, provided that (1) the Common Shares are readily tradable on an established securities market in the United
States, or we are eligible for the benefits of an approved qualifying income tax treaty with the United States that includes an exchange
of information program, (2) we are not a passive foreign investment company (as discussed below) for either our taxable year in which
the dividend is paid or the preceding taxable year, and (3) certain holding period requirements are met. Under U.S. Internal Revenue
Service authority, Common Shares are considered for purpose of clause (1) above to be readily tradable on an established securities market
in the United States if they are listed on the Nasdaq Global Market. You are urged to consult your tax advisors regarding the availability
of the lower rate for dividends paid with respect to our Common Shares, including the effects of any change in law after the date of
this report.
Dividends
will constitute foreign source income for foreign tax credit limitation purposes. If the dividends are taxed as qualified dividend income
(as discussed above), the amount of the dividend taken into account for purposes of calculating the foreign tax credit limitation will
be limited to the gross amount of the dividend, multiplied by the reduced rate divided by the highest rate of tax normally applicable
to dividends. The limitation on foreign taxes eligible for credit is calculated separately with respect to specific classes of income.
For this purpose, dividends distributed by us with respect to our Common Shares will constitute "passive category income"
but could, in the case of certain U.S. Holders, constitute "general category income."
To
the extent that the amount of the distribution exceeds our current and accumulated earnings and profits (as determined under U.S. federal
income tax principles), it will be treated first as a tax-free return of your tax basis in your Class A Common Shares, and to the extent
the amount of the distribution exceeds your tax basis, the excess will be taxed as capital gain. We do not intend to calculate our earnings
and profits under U.S. federal income tax principles. Therefore, a U.S. Holder should expect that a distribution will be treated as a
dividend even if that distribution would otherwise be treated as a non-taxable return of capital or as capital gain under the rules described
above.
Taxation
of Dispositions of Common Shares
Subject
to the passive foreign investment company rules discussed below, you will recognize taxable gain or loss on any sale, exchange or other
taxable disposition of a share equal to the difference between the amount realized (in U.S. dollars) for the share and your tax basis
(in U.S. dollars) in the Class A Common Shares. The gain or loss will be capital gain or loss. If you are a non-corporate U.S. Holder,
including an individual U.S. Holder, who has held the Class A Common Shares for more than one year, you will be eligible for (a) reduced
tax rates of 0% (for individuals in the 10% or 15% tax brackets), (b) higher tax rates of 20% (for individuals in the 39.6% tax bracket)
or (c) 15% for all other individuals. The deductibility of capital losses is subject to limitations. Any such gain or loss that you recognize
will generally be treated as United States source income or loss for foreign tax credit limitation purposes.
Passive
Foreign Investment Company
Based
on our current and anticipated operations and the composition of our assets, we do not expect to be a passive foreign investment company,
or PFIC, for U.S. federal income tax purposes for our current taxable year ending June 30, 2017. Our actual PFIC status for the current
taxable year ending June 30, 2017 will not be determinable until the close of such taxable year and, accordingly, there is no guarantee
that we will not be a PFIC for the current taxable year. Because PFIC status is a factual determination for each taxable year which cannot
be made until the close of the taxable year. A non-U.S. corporation is considered a PFIC for any taxable year if either:
127
●
at least 75% of its gross income is passive income; or
●
at least 50% of the value of its assets (based on an average of the quarterly values of the assets during a taxable year) is attributable
to assets that produce or are held for the production of passive income (the "asset test").
We
will be treated as owning our proportionate share of the assets and earning our proportionate share of the income of any other corporation
in which we own, directly or indirectly, at least 25% (by value) of the stock.
We
must make a separate determination each year as to whether we are a PFIC. As a result, our PFIC status may change from no to yes. In
particular, because the value of our assets for purposes of the asset test will generally be determined based on the market price of
our Common Shares, our PFIC status will depend in large part on the market price of our Common Shares. Accordingly, fluctuations in the
market price of the Common Shares may cause us to become a PFIC. In addition, the application of the PFIC rules is subject to uncertainty
in several respects and the composition of our income and assets will be affected by how, and how quickly, we spend the cash we raised
in our initial public offering. If we are a PFIC for any year during which you hold Common Shares, we will continue to be treated as
a PFIC for all succeeding years during which you hold Common Shares. However, if we cease to be a PFIC, you may avoid some of the adverse
effects of the PFIC regime by making a "deemed sale" election with respect to the Common Shares.
If
we are a PFIC for any taxable year during which you hold Common Shares, you will be subject to special tax rules with respect to any
"excess distribution" that you receive and any gain you realize from a sale or other disposition (including a pledge) of
the Common Shares, unless you make a "mark-to-market" election as discussed below. Distributions you receive in a taxable
year that are greater than 125% of the average annual distributions you received during the shorter of the three preceding taxable years
or your holding period for the Common Shares will be treated as an excess distribution. Under these special tax rules:
the
excess distribution or gain will be allocated ratably over your holding period for the Common Shares;
●
the amount allocated to the current taxable year, and any taxable year prior to the first taxable year in which we were a PFIC, will
be treated as ordinary income, and
●
the amount allocated to each other year will be subject to the highest tax rate in effect for that year and the interest charge generally
applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year.
The
tax liability for amounts allocated to years prior to the year of disposition or "excess distribution" cannot be offset by
any net operating losses for such years, and gains (but not losses) realized on the sale of the Common Shares cannot be treated as capital,
even if you hold the Common Shares as capital assets.
A
U.S. Holder of "marketable stock" (as defined below) in a PFIC may make a mark-to-market election for such stock to elect
out of the tax treatment discussed above. If you make a mark-to-market election for the Common Shares, you will include in income each
year an amount equal to the excess, if any, of the fair market value of the Common Shares as of the close of your taxable year over your
adjusted basis in such Common Shares. You are allowed a deduction for the excess, if any, of the adjusted basis of the Common Shares
over their fair market value as of the close of the taxable year. However, deductions are allowable only to the extent of any net mark-to-market
gains on the Common Shares included in your income for prior taxable years. Amounts included in your income under a mark-to-market election,
as well as gain on the actual sale or other disposition of the Common Shares, are treated as ordinary income. Ordinary loss treatment
also applies to the deductible portion of any mark-to-market loss on the Common Shares, as well as to any loss realized on the actual
sale or disposition of the Common Shares, to the extent that the amount of such loss does not exceed the net mark-to-market gains previously
included for such Common Shares. Your basis in the Common Shares will be adjusted to reflect any such income or loss amounts. If you
make a valid mark-to-market election, the tax rules that apply to distributions by corporations which are not PFICs would apply to distributions
by us, except that the lower applicable capital gains rate for qualified dividend income discussed above under "— Taxation
of Dividends and Other Distributions on our Common Shares" generally would not apply.
The
mark-to-market election is available only for "marketable stock", which is stock that is traded in other than de minimis
quantities on at least 15 days during each calendar quarter ("regularly traded") on a qualified exchange or other market
(as defined in applicable U.S. Treasury regulations), including the Nasdaq Global Market. If the Class A Common Shares are regularly
traded on the Nasdaq Global Market and if you are a holder of Class A Common Shares, the mark-to-market election would be available to
you were we to be or become a PFIC.
128
Alternatively,
a U.S. Holder of stock in a PFIC may make a "qualified electing fund" election with respect to such PFIC to elect out of
the tax treatment discussed above. A U.S. Holder who makes a valid qualified electing fund election with respect to a PFIC will generally
include in gross income for a taxable year such holder's pro rata share of the corporation's earnings and profits for the
taxable year. However, the qualified electing fund election is available only if such PFIC provides such U.S. Holder with certain information
regarding its earnings and profits as required under applicable U.S. Treasury regulations. We do not currently intend to prepare or provide
the information that would enable you to make a qualified electing fund election. If you hold Common Shares in any year in which we are
a PFIC, you will be required to file U.S. Internal Revenue Service Form 8621 regarding distributions received on the Common Shares and
any gain realized on the disposition of the Common Shares.
You
are urged to consult your tax advisors regarding the application of the PFIC rules to your investment in our Class A Common Shares and
the elections discussed above.
Information
Reporting and Backup Withholding
Dividend
payments with respect to our Common Shares and proceeds from the sale, exchange or redemption of our Common Shares may be subject to
information reporting to the U.S. Internal Revenue Service and possible U.S. backup withholding at a current rate of 28%. Backup withholding
will not apply, however, to a U.S. Holder who furnishes a correct taxpayer identification number and makes any other required certification
on U.S. Internal Revenue Service Form W-9 or who is otherwise exempt from backup withholding. U.S. Holders who are required to establish
their exempt status generally must provide such certification on U.S. Internal Revenue Service Form W-9. U.S. Holders are urged to consult
their tax advisors regarding the application of the U.S. information reporting and backup withholding rules.
Backup
withholding is not an additional tax. Amounts withheld as backup withholding may be credited against your U.S. federal income tax liability,
and you may obtain a refund of any excess amounts withheld under the backup withholding rules by filing the appropriate claim for refund
with the U.S. Internal Revenue Service and furnishing any required information. We do not intend to withhold taxes for individual shareholders.
Under
the Hiring Incentives to Restore Employment Act of 2010, certain United States Holders are required to report information relating to
Common Shares, subject to certain exceptions (including an exception for Common Shares held in accounts maintained by certain financial
institutions), by attaching a complete Internal Revenue Service Form 8938, Statement of Specified Foreign Financial Assets, with their
tax return for each year in which they hold Common Shares. U.S. Holders are urged to consult their tax advisors regarding the application
of the U.S. information reporting and backup withholding rules.
F.
Dividends and paying agents
Not
applicable for annual reports on Form 20-F.
G.
Statement by experts
Not
applicable for annual reports on Form 20-F.
H.
Documents on display
We
are subject to the information requirements of the Exchange Act. In accordance with these requirements, the Company files reports and
other information with the SEC. You may read and copy any materials filed with the SEC at the Public Reference Room at 100 F Street,
N.E., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
The SEC also maintains a web site at http://www.sec.gov that contains reports and other information regarding registrants that file electronically
with the SEC.
I.
Subsidiary Information
Not
applicable.
129
Item
11. Quantitative and Qualitative Disclosures About Market Risk
Interest
Rate Risk
Our
exposure to interest rate risk primarily relates to excess cash invested in short-term instruments with original maturities of less than
a year and long-term held-to-maturity securities with maturities of greater than a year. Investments in both fixed rate and floating
rate interest earning instruments carry a degree of interest rate risk. Fixed rate securities may have their fair market value adversely
impacted due to a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall.
Due in part to these factors, our future investment income may fall short of expectations due to changes in interest rates, or we may
suffer losses in principal if we have to sell securities that have declined in market value due to changes in interest rates. We have
not been, and do not expect to be, exposed to material interest rate risks, and therefore have not used any derivative financial instruments
to manage our interest risk exposure.
In
the year ended June 30, 2023, we had approximately $4.6 million in outstanding bank loans, with weighted average annual interest rates
of 6.22% and approximately $0.9 million in outstanding bank line of credit with interest rate of 4.25%. As of June 30, 2023, if interest
rates increased/decreased by 1 percentage point, with all other variables having remained constant, and assuming the amount of bank borrowings
outstanding at the end of the year was outstanding for the entire year, profit/loss attributable to equity owners of our company would
have been approximately RMB0.4 million ($0.05 million) lower/higher, respectively, mainly as a result of interest expense on our bank
loans.
In
the year ended June 30, 2022, we had approximately $6.3 million in outstanding bank loans, with weighted average annual interest rates
of 6.35% and approximately $0.6 million in outstanding bank line of credit with interest rate of 4.25%. As of June 30, 2022, if interest
rates increased/decreased by 1 percentage point, with all other variables having remained constant, and assuming the amount of bank borrowings
outstanding at the end of the year was outstanding for the entire year, profit/loss attributable to equity owners of our company would
have been approximately RMB 0.5 million ($0.07 million) lower/higher, respectively, mainly as a result of interest expense on our bank
loans.
In
the year ended June 30, 2021, we had approximately $7.4 million in outstanding bank loans, with weighted average annual interest rates
of 6.24% and approximately $0.7 million in outstanding bank line of credit with interest rate of 4.25%. As of June 30, 2021, if interest
rates increased/decreased by 1 percentage point, with all other variables having remained constant, and assuming the amount of bank borrowings
outstanding at the end of the year was outstanding for the entire year, profit/loss attributable to equity owners of our company would
have been approximately RMB 0.6 million ($0.09 million) lower/higher, respectively, mainly as a result of interest expense on our bank
loans.
The
Company had short-term investments of $Nil, $52,255 and ,$549,895 as of June 30,2023, 2022 and 2021, respectively. The Company recorded
interest income of $13,190, $1,385 and $48,058 for the years ended June 30, 2023, 2022 and 2021, respectively. We had no long-term held-to-maturity
investments as of June 30, 2023, 2022 and 2021.
Foreign
Exchange Risk
Our
functional currency is the RMB, and our financial statements are presented in U.S. dollars. The RMB, appreciated by 8.70% in 2021, depreciated
by 3.70% in 2022, and appreciated by approximately 8.26% in 2023. The change in the value of the RMB relative to the U.S. dollar may
affect our financial results reported in the U.S. dollar terms without giving effect to any underlying change in our business or results
of operation. The negative impact attributable to changes in revenue and expenses due to foreign currency translation are summarized
as follows.
Year ended
June 30, 2023
Year ended
June 30, 2022
Impact on revenue
$
721,476
$
979,555
Impact on operating expenses
$
542,622
$
363,874
Impact on net income (loss)
$
(306,056
)
$
109,040
Currently,
our assets, liabilities, revenues and costs are denominated in RMB and in U.S. dollars. Our exposure to foreign exchange risk will primarily
relate to those financial assets denominated in U.S. dollars. Any significant revaluation of RMB against U.S. dollars may materially
affect our earnings and financial position, and the value of, and any dividends payable on, our Common Shares in U.S. dollars in the
future. See "Operating and Financial Review and Prospects— Impact of Foreign Currency Fluctuations
130
Commodity
Risk
As
a developer and manufacturer of products composed largely of plastic, nylon and metal, our Company is exposed to the risk of an increase
in the price of raw materials. We historically have been able to pass on price increases to customers by virtue of pricing terms that
vary with changes in commodity prices, but we have not entered into any contract to hedge any specific commodity risk. Moreover, our
Company does not purchase or trade on commodity instruments or positions; instead, it purchases commodities for use.
Item
12. Description of Securities Other than Equity Securities
With
the exception of Items 12.D.3 and 12.D.4, this Item 12 is not applicable for annual reports on Form 20-F. As to Items 12.D.3 and 12.D.4,
this Item 12 is not applicable, as the Company does not have any American Depositary Shares.
Part
II
Item
13. Defaults, Dividend Arrearages and Delinquencies
We
do not have any material defaults in the payment of principal, interest, or any installments under a sinking or purchase fund.
Item
14. Material Modifications to the Rights of Securities Holders and Use of Proceeds
A.
Not
    applicable.
B.
Not
    applicable.
C.
Not
    applicable.
D.
Not
    applicable.
E.
Not
    applicable.
Item
15. Controls and Procedures
(a)
Disclosure
    Controls and Procedures.
The
Company's management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined
in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that is designed to ensure that information required to be disclosed by the Company
in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time
periods specified in the Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls
and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under
the Exchange Act is accumulated and communicated to the issuer's management, including its principal executive officer or officers
and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding
required disclosure.
As
of June 30, 2023, our company carried out an evaluation, under the supervision of and with the participation of management, including
our Company's chief executive officer and chief financial officer, of the effectiveness of the design and operation of our Company's
disclosure controls and procedures. Included in this Annual Report on Form 20-F, the chief executive officer and chief financial officer
concluded that our Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934) were ineffective in timely alerting them to information required to be included in the Company's U.S. Securities
and Exchange Commission (the "Commission") filings.
131
(b)
Management's
    annual report on internal control over financial reporting.
Management
of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. We used the 2013 Internal
Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the "2013 COSO Framework")
in performing the assessment of the effectiveness of the Company's internal control over financial reporting as of June 30, 2023.
Based on the assessment, management determined that, as of June 30, 2023, we did not maintain effective internal control over financial
reporting as we did not have sufficient full-time accounting and financial reporting personnel with appropriate levels of accounting
knowledge and experience to monitor the daily recording of transactions, to address complex U.S. GAAP accounting issues and the related
disclosures under U.S. GAAP. In addition, there was a lack of sufficient documented financial closing procedures.
(c)
Attestation
    report of the registered public accounting firm.
Not
applicable.
(d)
Changes
    in internal control over financial reporting.
Management
continues to focus on internal control over financial reporting. As of June 30, 2023, the Company has completed certain documentation
of our internal controls and will be implementing the following remedial initiatives including engaging more qualified accounting personnel
and consultants with relevant U.S. GAAP and SEC reporting experience and qualification to strengthen the financial reporting and U.S.
GAAP training. The Company also plans to take other steps to strengthen our internal control over financial reporting, including training
of the current accounting personal regarding U.S. GAAP and SEC reporting regulations; establishing an internal audit function and standardizing
the Company's semi-annual and year-end closing and financial reporting processes.
Item
16.
[Reserved]
Item
16A. Audit Committee Financial Expert
The
Company's board of directors has determined that Mr. Shao qualifies as an "audit committee financial expert" in accordance
with applicable Nasdaq Global Market standards. The Company's board of directors has also determined that Mr. Shao and the other
members of the Audit Committee are all "independent" in accordance with the applicable Nasdaq Global Market standards.
Item
16B. Code of Ethics
The
Company has adopted a Code of Business Conduct and Ethics that applies to the Company's directors, officers, employees and advisors.
The Code of Ethics is attached it as an exhibit to this annual report. We have also posted a copy of our code of business conduct and
ethics on our website at www.dognesspet.com.
Item
16C. Principal Accountant Fees and Services
Audit
Alliance LLP was engaged by the Company on June 21, 2023 to serve as its independent registered public accounting firm for fiscal 2023.
Fees
Paid To Independent Registered Public Accounting Firm
132
Audit
Fees
During
fiscal year 2023, Audit Alliance LLP's audit fees were $160,000, and Prager Metis CPAs, LLC's audit fees were $0.
During
fiscal year 2022, Audit Alliance LLP's audit fees were $160,000, and Prager Metis CPAs, LLC's audit fees were $30,000.
During
fiscal year 2021, Prager Metis CPAs, LLC's audit fees were $250,000, and Friedman LLP's audit fees were $50,000.
Audit
Related Fees
During
fiscal year 2023, Audit Alliance LLP's audit-related fees were $4,700.
During
fiscal year 2022, Audit Alliance LLP's audit-related fees were $2,250.
During
fiscal year 2021, Prager Metis CPAs, LLC's audit-related fees were $0, and Friedman LLP's audit-related fees were $0.
Tax
Fees
During
fiscal year 2023, Audit Alliance LLP's tax fees were $0].
During
fiscal year 2022, Audit Alliance LLP's tax fees were $0.
During
fiscal year 2021, Prager Metis CPAs, LLC's tax fees were $0, and Friedman LLP's tax fees were $0.
All
Other Fees
During
fiscal year 2023, Audit Alliance LLP's other fees were $40,000, and Prager Metis CPAs, LLC's other fess were $48,000.
During
fiscal year 2022, Audit Alliance LLP's other fees were $0, Prager Metis CPAs, LLC's other fees were $81,000, and Friedman
LLP's other fees were $80,000.
During
fiscal year 2021, Prager Metis CPAs, LLC's other fees were $0, and Friedman LLP's other fees were $30,000.
Audit
Committee Pre-Approval Policies
Before
Audit Alliance LLP was engaged by the Company to render audit or non-audit services, the engagement was approved by the Company's
audit committee. All services rendered by Audit Alliance LLP have been so approved.
Percentage
of Hours
The
percentage of hours expended on the principal accountants' engagement to audit our consolidated financial statements for fiscal
2022 that were attributed to work performed by persons other than Audit Alliance LLP's full-time permanent employees was less than
50%.
Item
16D. Exemptions from the Listing Standards for Audit Committees
Not
applicable.
Item
16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
Neither
the Company nor any affiliated purchaser has purchased any shares or other units of any class of the Company's equity securities
registered by the Company pursuant to Section 12 of the Securities Exchange Act during the fiscal year ended June 30, 2021.
Item
16F. Change in Registrant's Certifying Accountant
Not
applicable.
Item
16G. Corporate Governance
We
are incorporated in the British Virgin Islands and our corporate governance practices are governed by applicable BVI law. In addition,
because our Class A Common Shares are listed on The Nasdaq Global Market, we are subject to Nasdaq's corporate governance requirements.
As
a foreign private issuer, we are permitted to rely on exemptions from certain Nasdaq corporate governance standards applicable to U.S.
issuers, including the requirement that a majority of an issuer's directors consist of independent directors. If we opt to rely
on such exemptions in the future, such decision might afford less protection to holders of our Class A Common Shares.
133
Section
5605(b)(1) of the Nasdaq Listing Rules requires listed companies to have, among other things, a majority of its board members to be independent,
and Section 5605(d) and 5605(e) require listed companies to have independent director oversight of executive compensation and nomination
of directors. As a foreign private issuer, however, we are permitted to follow home country practice in lieu of the above requirements.
Our Board of Directors could make such a decision to depart from such requirements by ordinary resolution.
The
corporate governance practice in our home country, the British Virgin Islands, does not require a majority of our board to consist of
independent directors or the implementation of a nominating and corporate governance committee. Since a majority of our board of directors
would not consist of independent directors if we relied on the foreign private issuer exemption, fewer board members would be exercising
independent judgment and the level of board oversight on the management of our company might decrease as a result. In addition, we could
opt to follow British Virgin Islands law instead of the Nasdaq requirements that mandate that we obtain shareholder approval for certain
dilutive events, such as an issuance that will result in a change of control, certain transactions other than a public offering involving
issuances of 20% or greater interests in the company and certain acquisitions of the shares or assets of another company. For a description
of the material corporate governance differences between the Nasdaq requirements and British Virgin Islands law, see "Description
of Share Capital — Differences in Corporate Law".
Item
16 H. Mine Safety Disclosure
Not
applicable.
134
Part
III
Item
17. Financial Statements
See
Item 18.
Item
18. Financial Statements
Our
consolidated financial statements are included at the end of this annual report, beginning with page F-1.
Item
19. Exhibits
The
following documents are filed as part of this annual report:
1.1*
Articles of Association of Dogness (International) Corporation (incorporated by reference to registration statement on Form F-1, no. 333-220547)
1.2*
Memorandum of Association of Dogness (International) Corporation (incorporated by reference to registration statement on Form F-1, no. 333-220547)
2.1*
Specimen Class A Common Share Certificate (incorporated by reference to registration statement on Form F-1, no. 333-220547)
2.2*
Form of Underwriter Warrant (incorporated by reference to registration statement on Form F-1, no. 333-220547)
2.3*
Form of Incentive Securities Plan (incorporated by reference to registration statement on Form F-1, no. 333-220547)
4.1*
Employment Agreement with Mr. Silong Chen (incorporated by reference to registration statement on Form F-1, no. 333-220547)
4.2*
Employment Agreement with Dr. Yunhao Chen (incorporated by reference to registration statement on Form F-1, no. 333-220547)
4.3*
Form of Subscription Agreement (incorporated by reference to registration statement on Form F-1, no. 333-220547)
4.4*
Form of Purchase Order Agreement with Petco (incorporated by reference to registration statement on Form F-1, no. 333-220547)
4.5*
Summary Translation of Form of Purchase Framework Agreement with Dongguan Silk Import and Export Co., Ltd (incorporated by reference to registration statement on Form F-1, no. 333-220547)
4.6*
Summary Translation of Form of Purchase Framework Agreement with Dongguan Anyi Trading Co. (incorporated by reference to registration statement on Form F-1, no. 333-220547)
4.7*
Form of Purchase Order between Xiamen Xianglu Chemical Fiber Co., Ltd and Dongguan Jiasheng Enterprise Co., Ltd (incorporated by reference to registration statement on Form F-1, no. 333-220547)
4.8*
Summary Translation of Agreement between Dongguan Jiasheng Enterprise Co., Ltd and Dongguan University of Technology (incorporated by reference to registration statement on Form F-1, no. 333-220547)
4.9*
Form of Securities Purchase Agreement dated January 15, 2021, by and between the Company and the Investors (incorporated by reference to Exhibit 10.1 of the Company's Report on Form 6-K filed with the SEC on December 7, 2021)
4.10*
Form of Warrant to Purchase Common Shares in connection with the Securities Purchase Agreement dated January 15, 2021 (incorporated by reference to Exhibit 4.1 of the Company's Report on Form 6-K filed with the SEC on January 15, 2021)
4.11*
Form of Placement Agent Warrant to Purchase Common Shares in connection with the Securities Purchase Agreement dated January 15, 2021 (incorporated by reference to Exhibit 4.2 of the Company's Report on Form 6-K filed with the SEC on January 15, 2021)
4.12*
Form of Securities Purchase Agreement dated July 15, 2021, by and between the Company and the Investors (incorporated by reference to Exhibit 10.1 of the Company's Report on Form 6-K filed with the SEC on July 15, 2021)
135
4.13*
Form of Placement Agent Warrant to Purchase Common Shares in connection with the Securities Purchase Agreement dated July 15, 2021 (incorporated by reference to Exhibit 4.1 of the Company's Report on Form 6-K filed with the SEC on July 19, 2021)
4.14*
Form of Placement Agent Agreement dated July 15, 2021 (incorporated by reference to Exhibit 10.2 of the Company's Report on Form 6-K filed with the SEC on July 19, 2021)
4.15*
Form of Securities Purchase Agreement dated June 1, 2022, by and between the Company and the investors (incorporated by reference to Exhibit 10.2 of the Company's Report on Form 6-K filed with the SEC on June 2, 2022)
4.16*
Form of Placement Agent Agreement dated June 1, 2022 (incorporated by reference to Exhibit 10.1 of the Company's Report on Form 6-K filed with the SEC on June 2, 2022)
4.17*
Form of Securities Purchase Agreement dated February 22, 2022, by and between the Company and the investors (incorporated by reference to Exhibit 10.1 of the Company's Report on Form 6-K filed with the SEC on February 24, 2022)
4.18*
Form of Placement Agent Agreement dated February 22, 2022 (incorporated by reference to Exhibit 10.2 of the Company's Report on Form 6-K filed with the SEC on February, 2022)
4.19
Employment Agreement with Aihua Cao
8.1*
List of subsidiaries
11.1*
Code of Business Conduct and Ethics of Dogness (International) Corporation (incorporated by reference to registration statement on Form F-1, no. 333-220547)
12.1
Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Securities and Exchange Commission Release 34-46427 (filed herewith)
12.2
Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Securities and Exchange Commission Release 34-46427 (filed herewith)
13.1
Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith)
13.2
Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith)
15.1
Consent of Audit Alliance LLP (filed herewith)
15.2
Consent of Prager Metis CPAs, LLC (filed herewith)
23.1
Consent of Guangdong Jiamao Law
    Firm
99.1
Press
    release dated October 11, 2023 titled "Dogness Reports Financial Results for Fiscal Year Ended June 30,
    2023"
*
Previously
    filed.
136
SIGNATURES
The
registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized
the undersigned to sign this annual report on its behalf.
Dogness
    (International) Corporation
Date:
    October 11, 2023
By:
/s/
    Silong Chen
Name:
Silong
    Chen
Title:
Chief
    Executive Officer
137
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Board of Directors and Shareholders of Dogness (International) Corporation
Opinion
on the Financial Statements
We
have audited the accompanying consolidated balance sheets of Dogness (International) Corporation and its subsidiaries (collectively,
the "Company") as of June 30, 2023 and 2022, the related consolidated statements of income, comprehensive income, shareholders'
equity, and cash flows for each of the two-year period ended June 30, 2023, and the related notes to the consolidated financial statements
and schedule (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects,
the financial position of the Company as of June 30, 2023 and 2022, and the results of its operations and its cash flows for each of
the years in the two-year period ended June 30, 2023, in conformity with accounting principles generally accepted in the United States
of America.
Basis
for Opinion
These
financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's
financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent
with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities
and Exchange Commission and the PCAOB.
We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company
is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits,
we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion
on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our
audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error
or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding
the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits
provide a reasonable basis for our opinion.
/s/
Audit Alliance LLP
We
have served as the Company's auditor since 2022.
Singapore
October
11, 2023
PCAOB
ID Number
3487
F-
1
REPORT
    OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
    the Stockholders and Board of Directors of
Dogness
    (International) Corporation
Opinion
    on the Financial Statements
We
    have audited the accompanying consolidated balance sheet of Dogness (International) Corporation (the "Company") as of
    June 30, 2021, and the related consolidated statements of comprehensive income (loss), changes in stockholders' equity and
    cash flows for the year ended June 30, 2021, and related notes (collectively referred to as the financial statements). In our opinion,
    the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2021, and
    the results of its operations and its cash flows the year ended June 30, 2021, in conformity with accounting principles generally
    accepted in the United States of America.
Basis
    for Opinion
These
    financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the
    Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting
    Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.
    federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We
    conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to
    obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
    The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As
    part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose
    of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express
    no such opinion.
Our
    audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error
    or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding
    the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant
    estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits
    provide a reasonable basis for our opinion.
/s/
    Prager Metis CPAs, LLC
We
    have served as the Company's auditor from 2021 to 2022.
Hackensack,
    New Jersey
October
    29, 2021
PCAOB
    ID Number 273
F-
2
DOGNESS
(INTERNATIONAL) CORPORATION
CONSOLIDATED
BALANCE SHEETS
(All
amounts in USD)
As of June 30,
As of June 30,
2023
2022
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
4,483,308
$
16,605,872
Short-term investments
-
52,255
Accounts receivable from third-party customers, net
1,492,762
1,649,169
Accounts receivable from related parties
1,272,384
1,094,855
Inventories, net
2,679,275
3,369,885
Due from related parties
87,430
105,403
Prepayments and other current assets
3,748,955
477,237
Advances to supplier- related party
239,729
-
Total current assets
14,003,843
23,354,676
NON-CURRENT ASSETS
Property, plant and equipment, net
61,686,849
68,447,612
Operating lease right-of-use lease assets
17,537,096
4,589,678
Intangible assets, net
1,845,006
2,063,417
Long-term investments in equity investees
1,516,900
1,642,300
Deferred tax assets
1,281,634
699,039
Total non-current assets
83,867,485
77,442,046
TOTAL ASSETS
$
97,871,328
$
100,796,722
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term bank loans
$
887,000
$
564,000
Current portion of long term bank loans
2,959,918
1,386,160
Accounts payable
895,694
1,033,476
Accounts payable – related parties
-
393,625
Due to related parties
85,843
130,468
Advances from customers
121,687
151,462
Taxes payable
1,015,444
1,557,661
Accrued expenses and other current liabilities
1,026,218
1,083,469
Operating lease liabilities, current
2,326,162
184,700
Total current liabilities
9,317,966
6,485,021
NON-CURRENT LIABILITIES
Long term bank loans
1,595,549
4,934,374
Operating lease liabilities, non-current
10,612,508
901,351
Total non-current liabilities
12,208,057
5,835,725
TOTAL LIABILITIES
$
21,526,023
$
12,320,746
Commitments and Contingencies (Note 10)
EQUITY
Common shares, $
0.002
par value,
90,931,000
Class A shares and
19,069,000
Class B shares authorized,
31,055,259
class A shares and
30,205,259
class A shares issued and outstanding as of June 30, 2023 and 2022, respectively.
9,069,000
class B shares and
9,069,000
class B shares issued and outstanding as of June 30, 2023 and 2022, respectively.
Class A Common shares
62,110
60,410
Class B Common shares
18,138
18,138
Additional paid-in capital
85,654,468
84,096,866
Statutory reserve
291,443
291,443
Retained earnings
664,004
7,864,267
Accumulated other comprehensive loss
(
10,345,832
)
(
4,152,577
)
Equity attributable to owners of the Company
76,344,331
88,178,547
Non-controlling interest
974
297,429
Total equity
76,345,305
88,475,976
TOTAL LIABILITIES AND EQUITY
$
97,871,328
$
100,796,722
The
accompanying notes are an integral part of these consolidated financial statements.
F-
3
DOGNESS
(INTERNATIONAL) CORPORATION
STATEMENTS
OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)
(All
amounts in USD)
For the Years Ended June 30,
2023
2022
2021
Revenues- third party customers
$
15,884,281
$
24,882,618
$
23,112,435
Revenues – related parties
1,700,173
2,212,579
1,207,686
Total Revenues
17,584,454
27,095,197
24,320,121
Cost of revenues – third party customers
(
12,760,852
)
(
15,654,952
)
(
14,501,166
)
Cost of revenues – related parties
(
1,162,314
)
(
1,301,180
)
(
663,742
)
Total cost of revenues
(
13,923,166
)
(
16,956,132
)
(
15,164,908
)
Gross Profit
3,661,288
10,139,065
9,155,213
Operating expenses:
Selling expenses
2,478,163
2,077,174
1,815,771
General and administrative expenses
9,800,714
6,742,687
4,941,036
Research and development expenses
931,078
917,227
540,613
Loss from disposal of property, plant and equipment
15,306
327,921
-
Total operating expenses
13,225,261
10,065,009
7,297,420
(Loss) income from operations
(
9,563,973
)
74,056
1,857,793
Other income:
Interest expense, net
(
330,824
)
(
370,108
)
(
264,408
)
Foreign exchange transaction gain (loss)
800,403
246,211
(
228,260
)
Other income, net
112,109
115,016
215,233
Rental income from related parties, net
295,362
173,089
354,968
Gain from disposition of a subsidiary
-
-
5,162
Total other income
877,050
164,208
82,695
(Loss) income before income taxes
(
8,686,923
)
238,264
1,940,488
Income taxes (benefit) expense
(
1,227,449
)
(
2,777,868
)
641,460
Net (loss) income
(
7,459,474
)
3,016,132
1,299,028
Less: net loss attributable to non-controlling interest
(
259,211
)
(
219,427
)
(
213,336
)
Net (loss) income attributable to Dogness (International) Corporation
(
7,200,263
)
3,235,559
1,512,364
Other comprehensive (loss)income:
Foreign currency translation (loss) income
(
6,204,254
)
(
3,203,448
)
4,879,315
Comprehensive income (loss)
(
13,663,728
)
(
187,316
)
6,178,343
Less: comprehensive loss attributable to non-controlling interest
(
270,210
)
(
230,583
)
(
161,701
)
Comprehensive(loss) income attributable to Dogness (International) Corporation
$
(
13,393,518
)
$
43,267
$
6,340,044
Loss earnings per share
Basic
$
(
0.18
)
$
0.10
$
0.05
Diluted
$
(
0.18
)
$
0.10
$
0.05
Weighted Average Shares Outstanding
Basic
39,668,780
33,711,659
27,499,367
Diluted
39,668,780
34,013,634
27,554,811
The
accompanying notes are an integral part of these consolidated financial statements.
F-
4
DOGNESS
(INTERNATIONAL) CORPORATION
CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR
THE YEARS ENDED JUNE 30, 2023, 2022 AND 2021
(All
amounts in USD)
Common Stock
Additional
Paid in
Statutory
Retained
Accumulated
Other
Comprehensive
Non-
controlling
Class A
Amount
Class B
Amount
Capital
Reserves
Earnings
Loss
Interest
Total
Balance at June 30, 2020
16,844,631
$
33,689
9,069,000
$
18,138
$
53,221,610
$
191,716
$
3,216,071
$
(
5,787,965
)
$
614,669
$
51,507,928
Capital contribution made by non-controlling shareholders
-
-
-
-
-
-
-
-
104,190
104,190
Net income for the year
-
-
-
-
-
-
1,512,364
-
(
213,336
)
1,299,028
Disposition of a subsidiary
-
-
-
-
-
-
-
-
(
29,146
)
(
29,146
)
Issuance shares for private placement
3,455,130
6,910
-
-
6,604,522
-
-
-
-
6,611,432
Options granted for services
-
-
-
-
142,158
-
-
-
-
142,158
Issuance shares for services
250,000
500
-
-
387,000
-
-
-
-
387,500
Stock option exercised
6,053
12
-
-
(
12
)
-
-
-
-
-
Statutory reserve
-
-
-
-
-
99,727
(
99,727
)
-
-
-
Foreign currency translation gain
-
-
-
-
-
-
-
4,827,680
51,635
4,879,315
Balance at June 30, 2021
20,555,814
$
41,111
9,069,000
$
18,138
$
60,355,278
$
291,443
$
4,628,708
$
(
960,285
)
$
528,012
$
64,902,405
Issuance shares for Private placement
7,780,736
15,561
-
-
19,109,359
-
-
-
-
19,124,920
Exercise of warrants
1,645,959
3,292
-
-
4,440,844
-
-
-
-
4,444,136
Share option exercised
222,750
446
-
-
179,554
-
-
-
-
180,000
Options granted for services
-
-
-
-
11,831
-
-
-
-
11,831
Net income for the year
-
-
-
-
-
-
3,235,559
-
(
219,427
)
3,016,132
Foreign currency translation loss
-
-
-
-
-
-
-
(
3,192,292
)
(
11,156
)
(
3,203,448
)
Balance at June 30, 2022
30,205,259
$
60,410
9,069,000
$
18,138
$
84,096,866
$
291,443
$
7,864,267
$
(
4,152,577
)
$
297,429
$
88,475,976
Adjustment relating to non-controlling interest
-
-
-
-
-
-
-
-
(
26,245
)
(
26,245
)
Share-based compensation for services
850,000
1,700
-
-
1,557,602
-
-
-
-
1,559,302
Net loss for the year
-
-
-
-
-
(
7,200,263
)
-
(
259,211
)
(
7,459,474
)
Foreign currency translation loss
-
-
-
-
-
-
-
(
6,193,255
)
(
10,999
)
(
6,204,254
)
Balance at June 30, 2023
31,055,259
62,110
9,069,000
18,138
85,654,468
291,443
664,004
(
10,345,832
)
974
76,345,305
The
accompanying notes are an integral part of these consolidated financial statements.
F-
5
DOGNESS
(INTERNATIONAL) CORPORATION
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(All
amounts in USD)
For the Years Ended June 30,
2023
2022
2021
Cash flows from operating activities:
Net (loss) income
$
(
7,459,474
)
$
3,016,132
$
1,299,028
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Amortization of operating lease right-of-use lease assets
1,023,500
408,566
399,903
Depreciation and amortization
3,315,172
3,458,347
3,106,082
Loss (gain) from disposition of property, plant and equipment
15,306
327,921
(
85,899
)
Gain from disposition of a subsidiary
-
-
(
5,162
)
Share-based compensation for services
1,243,385
11,831
249,797
Change in inventory reserve
246,281
-
117,703
Change in bad debt allowance
160,254
(
16,776
)
-
Deferred tax benefit
(
658,595
)
(
118,424
)
(
478,316
)
Accrued interest income
-
(
1,320
)
-
Forgiveness of PPP loan
-
-
(
73,300
)
Unrealized foreign exchange loss
-
43,852
Changes in operating assets and liabilities:
Accounts receivables
(
109,090
)
683,119
(
319,598
)
Accounts receivables-related parties
(
272,301
)
(
620,728
)
(
206,774
)
Inventories
268,593
740,265
(
1,212,224
)
Prepayments and other current assets
(
3,113,841
)
1,173,662
246,898
Advances to supplier- related party
(
249,986
)
-
-
Accounts payables
(
62,237
)
224,676
75,740
Accounts payables-related parties
(
379,124
)
58,190
15,445
Advance from customers
(
18,989
)
(
52,365
)
43,622
Taxes payable
(
441,390
)
(
2,827,106
)
1,325,835
Accrued expenses and other liabilities
34,381
(
137,457
)
(
619,179
)
Operating lease liabilities
(
2,444,110
)
(
168,075
)
(
171,221
)
Net cash (used in) provided by operating activities
(
8,902,265
)
6,160,458
3,752,232
Cash flows from investing activities:
Purchase of property, plant and equipment
(
1,520,556
)
(
15,259,272
)
(
777,762
)
Proceeds from disposition of property, plant and equipment
14,872
22,213
184,760
Capital expenditures on construction-in-progress
-
-
(
13,668,099
)
Long-term investments in equity investees
-
-
(
241,600
)
Proceeds upon maturity of short-term investments
50,330
495,680
3,257,070
Net cash used in investing activities
(
1,455,354
)
(
14,741,379
)
(
11,245,631
)
Cash flows from financing activities:
Net proceeds from private placement
-
19,124,920
6,611,432
Capital contribution made by non-controlling shareholders
-
-
104,190
Adjustment relating to non-controlling interest
(
26,245
)
-
-
Net Proceeds from exercise of warrants
-
4,444,136
-
Net Proceeds from exercise of options
-
180,000
-
Proceeds from short-term bank loans
483,000
804,000
349,771
Repayment of short-term bank loans
(
160,000
)
(
944,446
)
(
5,075,325
)
Proceeds from long-term bank loan
-
-
7,550,000
Repayment of long-term bank loans
(
1,337,323
)
(
796,416
)
(
381,133
)
(Repayment of) proceeds from related party loans
(
25,796
)
(
1,943,408
)
1,892,636
Net cash (used in) provided by financing activities
(
1,066,364
)
20,868,786
11,051,571
Effect of exchange rate changes on cash
(
698,581
)
(
617,747
)
110,709
Net (decrease) increase in cash
(
12,122,564
)
11,670,118
3,668,881
Cash and restricted cash, beginning of year
16,605,872
4,935,754
1,266,873
Cash and restricted cash, end of year
$
4,483,308
$
16,605,872
$
4,935,754
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid (refunded) for income tax
$
(
2,593
)
$
3,195
$
(
25,545
)
Cash paid for interest
$
396,517
$
471,443
$
460,905
Non-Cash Investing Activities
Transfer from construction-in-progress to fixed assets
$
-
$
597,594
34,984,435
(Reductions) additions to construction-in-progress through accounts payable and other payable
$
(
8,167
)
$
-
$
10,528,918
Prepaid share-based compensation for services
$
315,917
$
-
$
279,861
Transfer from accounts receivable to long-term investment
$
-
$
-
$
302,000
The
accompanying notes are an integral part of these consolidated financial statements.
F-
6
DOGNESS
(INTERNATIONAL) CORPORATION
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(All
amounts in USD)
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 (Hong Kong) Pet's Products
Co., Limited ("HK Dogness"), Jiasheng Enterprise (Hong Kong) Co., Limited ("HK Jiasheng"), and Dongguan Jiasheng
Enterprise Co., Ltd. ("Dongguan Jiasheng"; collectively, the "Transferred Entities") from the Controlling Shareholder
to Dogness and Dongguan Dogness. Prior to the reorganization, the Transferred Entities' equity interests were 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. 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
million ($
11.1
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 $
11.0
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. Due to the fact that Intelligence Guangzhou has no business
activities since the incorporation and Dongguan Jiasheng has not made any capital contribution, in August 2022, the Board approved to
sell the Company's
58
% ownership interest in Intelligence Guangzhou to a third party for a nominal price. The transaction was completed
on August 10, 2022.
Dogness
Pet Culture (Dongguan) Co., Ltd. ("Dogness Culture") was incorporated on December 14, 2018 with registered capital of RMB
10
million (approximately $
1.5
million). The capital was not paid by the original shareholder 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 a relative of Mr. Silong Chen, the Chief Executive Officer, to acquire
51.2
% ownership interest of Dogness Culture for
a nominal fee. The remaining equity interest of
48.8
% was also transferred to other two third parties for a nominal fee. Dongguan Dogness
thereafter contributed cash consideration of RMB
5.12
million (approximately $
0.79
million) on April 16, 2020 along with other two shareholders'
capital contributions of RMB
4.88
million (approximately $
0.76
million). Dogness Culture will mainly focus on developing and expanding
pet food market and pet related service in China. On July 19, 2023, the Board approved the liquidation, dissolution, and termination
of Dogness culture following the signing of a termination agreement among Dogness's Culture's shareholders on May 8, 2023.
F-
7
DOGNESS
(INTERNATIONAL) CORPORATION
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(All
amounts in USD)
NOTE
2 –
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation and Principles of Consolidation
The
accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the
United States of America ("US GAAP") and have been consistently applied.
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
    Pet Culture (Dongguan) Co. Ltd. ("Dogness Culture")
December
    14, 2018
Dongguan,
    China
51.2
%
Developing
    and expanding pet food market
*
Due to the fact
that Intelligence Guangzhou has no business activities since the incorporation and Dongguan Jiasheng has not made the capital contribution,
in August 2022, the Board approved to sell the Company's
58
%
ownership interest in Dogness Intelligence Technology Co., Ltd. to a third party for a nominal price. The transaction was completed on
August 10, 2022. Because Intelligence Guangzhou has not commenced any operation since inception, 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.
Non-controlling
interests
As
of June 30, 2023, non-controlling interests represent
48.8
% non-controlling shareholders' interests in Dogness Culture, respectively.
The non-controlling interests are presented in the consolidated balance sheets, separately from equity attributable to the shareholders
of the Company. Non-controlling interests in the operating results of the Company are presented on the face of the consolidated statements
of comprehensive income (loss) as an allocation of the total income or loss between non-controlling interest holders and the shareholders
of the Company.
F-
8
DOGNESS
(INTERNATIONAL) CORPORATION
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(All
amounts in USD)
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Use
of Estimates
In
preparing the consolidated financial statements in conformity with US GAAP, management makes estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting period. These estimates are based on information as of the date
of the consolidated financial statements. Significant estimates required to be made by management include, but are not limited to, the
valuation of accounts receivable, inventories, advances to suppliers, useful lives of property, plant, right-of-use assets (including
lease liabilities) and equipment, intangible assets, the recoverability of long-lived assets, provision necessary for contingent liabilities,
and realization of deferred tax assets. Actual results could differ from those estimates.
Cash
and Cash Equivalents
The
Company considers all highly liquid investment instruments with an original maturity of three months or less from the date of purchase
to be cash equivalents. The Company maintains most of its bank accounts in the PRC. Cash balances in bank accounts in PRC are not insured
by the Federal Deposit Insurance Corporation or other programs.
Short-term
Investments
The
Company's short-term investments consist of wealth management financial products purchased from PRC banks with maturities between
one month to twelve months. The banks invest the Company's fund in certain financial instruments including money market funds,
bonds or mutual funds, with rates of return on these investments ranging from
1.5
% to
3.8
% per annum. The carrying values of the Company's
short-term investments approximate fair value because of their short-term maturities. The interest earned is recognized in the consolidated
statements of comprehensive income (loss) over the contractual term of these investments.
The
Company had short-term investments of $
Nil
and $
52,255
as of June 30, 2023 and 2022, respectively. The Company recorded interest income
of $
13,190
, $
1,385
and $
48,058
for the years ended June 30, 2023, 2022 and 2021, 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. In June 2016, the FASB issued ASU No. 2016-13, "Financial
Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments," which requires the Company
to measure and recognize expected credit losses for financial assets held and not accounted for at fair value through net income. The
Company adopted this guidance effective January 1, 2023. The Company establishes a provision for doubtful receivables based on management's
best estimates of specific losses on individual exposures, as well as a provision on historical trends of collections. The provision
is recorded against accounts receivables balances, with a corresponding charge recorded in the consolidated statements of income and
comprehensive income. 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 $
160,026
and $
6,872
as of June 30,
2023 and 2022.
F-
9
DOGNESS
(INTERNATIONAL) CORPORATION
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(All
amounts in USD)
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
Prepayments
and other assets
Prepayments
and other assets primarily consist 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, prepaid service fee, security deposits.
These advances are interest free, unsecured and short-term in nature and are reviewed periodically to determine whether their carrying
value has become impaired.
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 or lease term
Machinery
    and equipment
5
-
10
years
Automobiles
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 consolidated
statements of other comprehensive income (loss) in other income or expenses.
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.
F-
10
DOGNESS
(INTERNATIONAL) CORPORATION
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(All
amounts in USD)
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Long-term
Investments in Equity Investees
On
July 1, 2018, the Company adopted Accounting Standards Codification ("ASC") 321 "Investments—Equity Securities"
("ASC 321"). In accordance with ASC 321, equity securities over which the Company has no significant influence (generally
less than a
20
% ownership interest) with readily determinable fair values are accounted for at fair value based on quoted market prices.
Equity securities without readily determinable fair values are accounted for either at fair value or using the measurement alternative.
Under the measurement alternative, the equity investments are measured at cost, less any impairment, if any, plus or minus changes resulting
from observable price changes in orderly transactions for the identical or a similar investment of the Company.
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 ($
172,375
) 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 ($
1,103,200
) for
10
% of the ownership interest in Dogness Network, with the remaining
90
% of the ownership
interest owned by an unrelated shareholder.
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 ($
413,700
) 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.
Due
to the fact that Nanjing Rootaya reported significant net loss and working capital deficit, and is unable to generate positive cash flow
in the foreseeable future. A full impairment loss has been applied against this investment in fiscal 2020. For the Company's investments
in Dogness Network and Linsun, no material impairment indicator was noted because their operation results indicated net income and cash
inflows.
As
of June 30, 2023 and 2022, the Company's long-term investments in equity investees amounted to $
1,516,900
and $
1,642,300
, respectively.
F-
11
DOGNESS
(INTERNATIONAL) CORPORATION
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(All
amounts in USD)
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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,
and other current assets, accounts payable, advance from customers, 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.
Long-lived
assets impairment
The
Company reviews long-lived assets, including definitive-lived intangible assets, for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. If the estimated cash flows from the use of the asset and its eventual
disposition are below the asset's carrying value, then the asset is deemed to be impaired and written down to its fair value.
No
impairment was recorded for the years ended June 30, 2023, 2022 and 2021.
Leases
The
Company is the lessee in a lease contract when the Company obtains the right to use the asset. Operating leases are included in the line
items right-of-use asset, lease liabilities, current, and lease liabilities, long-term in the consolidated balance sheet.
Right-of-use
("ROU") asset represents the Company's right to use an underlying asset for the lease term and lease obligations represent
the Company's obligations to make lease payments arising from the lease, both of which are recognized based on the present value
of the future minimum lease payments over the lease term at the commencement date. Leases with a lease term of 12 months or less at inception
are not recorded on the consolidated balance sheet and are expensed on a straight-line basis over the lease term in the consolidated
statement of operations and comprehensive loss. The Company determines the lease term by agreement with lessor. As the Company's
lease does not provide implicit interest rate, the Company uses the Company's incremental borrowing rate based on the information
available at commencement date in determining the present value of future payments. Refer to Note 7 for further discussion.
Rental
income
Rental
revenues are recognized as earned in accordance with the terms of the respective lease agreement on a straight-line basis. Promotional
discounts are recognized as a reduction to rental income over the promotional period. Late charges, administrative fees and other fees
are recognized as income when earned. Management reviews the tenant's payment history and financial condition periodically in determining,
in its judgment, whether any accrued rental income and unbilled rent receivable balances applicable to each specific property is collectable.
F-
12
DOGNESS
(INTERNATIONAL) CORPORATION
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(All
amounts in USD)
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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
occur, (iv) allocate the transaction
price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance
obligation.
Revenue
is recognized when obligations under the terms of a contract with the Company's customers are satisfied. Satisfaction of contract
terms occur with the transfer of title of the Company's products to the customers. Net sale is measured as the amount of consideration
the Company expects to receive in exchange for transferring the goods to the wholesaler and retailers.
The
amount of consideration the Company expects to receive consists of the sales price adjusted for any incentives if applicable. Such incentives
do not represent a standalone value and are accounted for as a reduction of revenue in accordance with ASC 606. For the years ended June
30, 2023, 2022 and 2021, 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.
The
Company also generates revenue by providing ribbon dyeing service and pet grooming services to customers. The Company utilizes its manufacturing
capability and color dyeing technology to provide dyeing solutions to customers and apply dyes or pigments on ribbons made of textile
materials such as fibers, yarns and fabrics to achieve customer desired color fastness and quality. The Company recognizes revenue at
the point when dyeing solutions and related services are rendered, products after dyeing are delivered and accepted by the customers.
The revenue from pet grooming services is recognized when the services are rendered.
Contract
Assets and Liabilities
Payment
terms are established on the Company's pre-established credit requirements based upon an evaluation of customers' credit
quality. 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 June 30, 2023 and 2022, 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.
F-
13
DOGNESS
(INTERNATIONAL) CORPORATION
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(All
amounts in USD)
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Revenue
Recognition
(continued)
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 years ended June 30, 2023, 2022 and 2021 are disclosed in Note 15 of this consolidated 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 June 30, 2023, the
years from fiscal 2021 to fiscal 2023 for the Company's PRC subsidiaries remain open for statutory examination by PRC Tax authorities.
For the Company's Hong Kong subsidiaries, and U.S subsidiary, all tax years 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 assessed.
Since
significant amount of the Company's products are exported to the U.S. and Europe, the Company is eligible for VAT refunds when
the Company completes all the required tax filing procedures. All of the VAT returns of the Company have been and remain subject to examination
by the tax authorities for five years from the date of filing.
(Loss)
Earnings 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 EPS presents the dilutive effect on a per share basis
of potential common shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the
periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income
per share or decrease loss per share) are excluded from the calculation of diluted EPS.
F-
14
DOGNESS
(INTERNATIONAL) CORPORATION
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(All
amounts in USD)
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Share-Based
compensation
The
Company follows the provisions of ASC 718, "Compensation - Stock Compensation," which establishes the accounting for employee
share-based awards. For employee share-based awards, share-based compensation cost is measured at the grant date based on the fair value
of the award and is recognized as expense with graded vesting on a straight-line basis over the requisite service period for the entire
award.
Foreign
Currency Translation
The
Company's principal country of operations is the PRC. The financial position and results of the operations of HK Dogness, HK Jiasheng,
Dongguan Dogness, Dongguan Jiasheng, Meijia, 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.
Transactions
denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing
at the dates of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange
rate prevailing at the consolidated balance sheet date. Non-monetary assets and liabilities are translated using the historical rate
on the date of the transaction. All exchange gains or losses arising from translation of these foreign currency transactions are included
in net income (loss) for the year.
The
Company's financial statements are reported using U.S. Dollars. The results of operations and the consolidated statements of cash
flows denominated in foreign currencies are translated at the average rate of exchange during the reporting period. Assets and liabilities
denominated in foreign currencies at the balance sheet date are translated at the applicable rates of exchange in effect at that date.
The equity denominated in the functional currency is translated at the historical rate of exchange at the time of capital contribution.
Because cash flows are translated based on the average translation rate, amounts related to assets and liabilities reported on the consolidated
statements of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheets. Translation
adjustments arising from the use of different exchange rates from period to period are included as a separate component of accumulated
other comprehensive income (loss) included in consolidated statements of changes in equity. Gains and losses from foreign currency transactions
are included in the consolidated statement of comprehensive income (loss).
The
following table outlines the currency exchange rates that were used in creating the consolidated financial statements:
June 30, 2023
June 30, 2022
June 30, 2021
Year-end spot rate
US$1=RMB
7.2513
US$1=RMB
6.6981
US$1=RMB
6.4566
US$1=JPY
111.1
Average rate
US$1=RMB
6.9536
US$1=RMB
6.4554
US$1=RMB
6.6221
US$1=JPY
106.6
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.
Related
party transactions
Parties
are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant
influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject
to common control or common significant influence. Related parties may be individuals or corporate entities. A transaction is considered
to be a related party transaction when there is a transfer of resources or obligations between related parties. Related party transactions
are measured at the amounts agreed upon by the parties.
Statement
of Cash Flows
In
accordance with ASC 230, "Statement of Cash Flows," cash flows from the Company's operations are formulated based upon
the local currencies. As a result, amounts related to assets and liabilities reported on the statements of cash flows will not necessarily
agree with changes in the corresponding balances on the balance sheets.
F-
15
DOGNESS
(INTERNATIONAL) CORPORATION
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(All
amounts in USD)
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Reclassifications
Certain
prior period amounts have been reclassified to conform to the current year presentation. These reclassifications had no effect on the
reported revenues, net income and cash flows.
Recent
Accounting Pronouncements
The
Company considers the applicability and impact of all accounting standards updates ("ASUs"). Management periodically reviews
new accounting standards that are issued.
In
December 2019, the FASB issued ASU No. 2019-12, "Income Taxes" (Topic 740): Simplifying the Accounting for Income Taxes ("ASU
2019-12"). ASU 2019-12 will simplify the accounting for income taxes by removing certain exceptions to the general principles in
Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending
existing guidance. For public business entities, the amendments in this Update are effective for fiscal years, and interim periods within
those fiscal years, beginning after December 15, 2020. For all other entities, the amendments are effective for fiscal years beginning
after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. The adoption of ASU 2019-12 does
not have a material impact on its consolidated 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 adoption of ASU 2019-12 does not have a material impact on its consolidated financial statements.
In
October 2021, the FASB issued ASU No. 2021-08, "'Business Combinations (Topic 805): Accounting for Contract Assets and Contract
Liabilities from Contracts with Customers" ("ASU 2021-08"). This ASU requires entities to apply Topic 606 to recognize
and measure contract assets and contract liabilities in a business combination. The amendments improve comparability after the business
combination by providing consistent recognition and measurement guidance for revenue contracts with customers acquired in a business
combination and revenue contracts with customers not acquired in a business combination. The amendments are effective for the Company
beginning after December 15, 2023, and are applied prospectively to business combinations that occur after the effective date. The Company
does not expect the adoption of ASU 2021-04 to have a material effect on the consolidated financial statements.
In
June 2022, the FASB issued ASU 2022-03 Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual
Sale Restrictions. The update clarifies that a contractual restriction on the sale of an equity security is not considered part of the
unit of account of the equity security and, therefore, is not considered in measuring fair value. The update also clarifies that an entity
cannot, as a separate unit of account, recognize and measure a contractual sale restriction. The update also requires certain additional
disclosures for equity securities subject to contractual sale restrictions. For public business entities, the amendments in this Update
are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. For all other entities,
the amendments are effective for fiscal years beginning after December 15, 2024, and interim periods within those fiscal years. Early
adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance.
As an emerging growth company, the standard is effective for the Company for the year ended December 31, 2025. The Company is in the
process of evaluating the impact of the new guidance on its consolidated financial statements.
Except
for the above-mentioned pronouncements, there are no new recent issued accounting standards that will have material impact on the consolidated
financial statements
F-
16
DOGNESS
(INTERNATIONAL) CORPORATION
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(All
amounts in USD)
NOTE
3 –
ACCOUNTS RECEIVABLE, NET
Accounts
receivable consisted of the following:
As of
June 30, 2023
As of
June 30, 2022
Accounts receivable from third-party customers
$
1,652,788
$
1,656,041
Less: allowance for doubtful accounts
(
160,026
)
(
6,872
)
Total accounts receivable from third-party customers, net
1,492,762
1,649,169
Add: accounts receivable - related parties
1,272,384
1,094,855
Total accounts receivable, net
$
2,765,146
$
2,744,024
Allowance
for doubtful accounts amounted to $
160,026
and $
6,872
as of June 30, 2023 and 2022, respectively.
Approximately
$
0.8
million (RMB
5.7
million) or
48
% of the accounts receivable balance as of June 30, 2023 from third-party customers has been collected
as of August 31, 2023.
In
connection with the Company's long-term investments in equity investees as disclosed in Note 2, the
Company
sold certain intelligent pet products to related parties Dogness Technology and Dogness Network. The outstanding accounts receivable
from these related parties amounted to $
1,272,384
as of June 30, 2023, of which $
164,807
has been collected subsequent to year end (See
Note 11).
Allowance
for doubtful accounts movement is as follows:
As of
June 30, 2023
As of
June 30, 2022
Beginning balance
$
6,872
$
26,272
Provision (recovery)
160,254
(
16,776
)
Write off
-
(
2,366
)
Foreign currency translation adjustments
(
7,100
)
(
258
)
Ending balance
$
160,026
$
6,872
NOTE
4 –
INVENTORIES, NET
Inventories
consisted of the following:
As of
As of
June 30, 2023
June 30, 2022
Raw materials
$
67,827
$
117,093
Work in process
265,386
876,021
Finished goods
2,727,827
2,523,455
3,061,040
3,516,569
Less: inventory allowance
(
381,765
)
(
146,684
)
Inventory, net
$
2,679,275
$
3,369,885
Inventory
includes raw materials, work in progress and finished goods. Finished goods include direct material costs, direct labor costs and manufacturing
overhead.
For
the years ended June 30, 2023, 2022 and 2021, the Company recorded inventory write down of $
246,281
, $
Nil
and $
117,703
, respectively.
F-
17
DOGNESS
(INTERNATIONAL) CORPORATION
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(All
amounts in USD)
NOTE
5 –
PROPERTY, PLANT AND EQUIPMENT, NET
Property,
plant and equipment stated at cost less accumulated depreciation consisted of the following:
As of
As of
June 30, 2023
June 30, 2022
Buildings
$
25,192,351
$
27,161,241
Machinery and equipment
6,847,546
5,848,505
Office equipment and furniture
928,429
1,042,408
Automobiles
779,065
837,276
Leasehold improvements
40,751,384
44,384,670
Total
74,498,775
79,274,100
Less: Accumulated depreciation
(
12,538,764
)
(
10,530,744
)
Impairment of property, plant and equipment
(
273,162
)
(
295,744
)
Property, plant and equipment, net
$
61,686,849
$
68,447,612
No
impairment was recorded for the years ended June 30, 2023, 2022 and 2021, respectively.
Depreciation
expense was $
3,251,711
, $
3,375,875
and $
3,025,686
for the years ended June 30, 2023, 2022 and 2021, respectively. In connection with
the approximately $
4.6
million long-term bank loans borrowed from Dongguan Rural Commercial Bank, the Company's subsidiary Meijia
pledged its fixed assets of approximately $
4.8
million as collateral to secure the loans. In addition, in connection with the Company's
approximately $
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 8).
The
Company's subsidiary Dongguan Jiasheng had a capital project to build new manufacturing and operating facilities, which include
warehouse, workshops, office building, security gate, employee apartment building, electrical transformer station and exhibition hall,
etc. The total budget is approximately RMB
263.5
million ($
36.3
million). As of June 30, 2022, the Company had completed this project
and transferred all of the related CIP to fixed assets. As of June 30, 2023, the Company has made total payments of approximately RMB
261.7
million ($
36.1
million) in connection to this project, which resulted in future minimum capital expenditure payments of approximately
RMB
1.8
million ($
0.3
million), the Company plan to pay remaining payments in twelve months after June 30, 2023.
The
Company's subsidiary Dogness Culture was also working on a project to decorate a pet themed retail store. Total decoration cost
is approximately RMB
2.2
million ($
0.3
million). This project was fully completed during year ended June 30, 2021. As of June 30, 2023,
the Company has fully paid for the project.
NOTE
6 –
INTANGIBLE ASSETS, NET
Net
intangible assets consisted of the following:
As of
As of
June 30, 2023
June 30, 2022
Software
$
207,218
$
224,349
Land use right
2,094,167
2,267,289
Less: accumulated amortization
(
456,379
)
(
428,221
)
Intangible assets, net
$
1,845,006
$
2,063,417
Amortization
expense was $
63,460
, $
82,472
, and $
80,396
, for the years ended June 30, 2023, 2022 and 2021, respectively. In connection with the $
4.6
million long-term loans borrowed from Dongguan Rural Commercial Bank, the Company's subsidiary Meijia pledged its land use right
with net book value of $
1.8
million as the collateral to secure the loans (See Note 8)
F-
18
DOGNESS
(INTERNATIONAL) CORPORATION
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(All
amounts in USD)
NOTE
6 – INTANGIBLE ASSETS, NET (continued)
Estimated
future amortization expense is as follows:
Twelve months ending June 30,
Amortization expense
2024
$
74,886
2025
57,277
2026
56,680
2027
56,680
Thereafter
1,599,483
Total
$
1,845,006
NOTE
7 –
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. Operating lease expenses were $
1,615,537
, $
477,268
and $
476,574
for the years ended June 30, 2023, 2022 and 2021, respectively. Short-term lease expenses were $
Nil
, $
Nil
and $
11,189
for the years ended
June 30, 2023, 2022 and 2021, respectively.
Supplemental
balance sheet information related to operating leases was as follows:
As of
June 30, 2023
As of
June 30, 2022
Operating lease right-of-use assets, net
$
17,537,096
$
4,589,678
Operating lease liabilities - current
$
2,326,162
$
184,700
Operating lease liabilities - non-current
10,612,508
901,351
Total operating lease liabilities
$
12,938,670
$
1,086,051
The
weighted average remaining lease terms and average discount rate was
14.23
years and
5.79
% as of June 30, 2023.
The
following is a schedule of maturities of lease liabilities are as follows:
Twelve months ending June 30,
2024
$
2,913,507
2025
207,990
2026
729,046
2027
1,226,060
2028
1,037,346
Thereafter
12,940,536
Total future minimum lease payments
19,054,485
Less: imputed interest
6,115,815
Total
$
12,938,670
F-
19
DOGNESS
(INTERNATIONAL) CORPORATION
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(All
amounts in USD)
NOTE
8 –
BANK LOANS
Short-term
loans consisted of the following:
As of
As of
June 30,2023
June 30, 2022
Cathay Bank
Effective interest rate at
4.25
%
$
887,000
$
564,000
Total
$
887,000
$
564,000
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, 2023, the outstanding balance was $
887,000
. The Company has extended the repayment date to February 2024 from the original
due date of February 2022. As of the date of this report, the Company made total payments of $
828,416
.
Long-term
loan consisted of the following:
As of
As of
June 30, 2023
June 30, 2022
Dongguan Rural Commercial Bank
Effective interest rate at
6.15
% and
6.55
%
$
4,555,467
$
6,320,534
Less: current portion of long-term loans
(
2,959,918
)
(
1,386,160
)
Long-term loans
$
1,595,549
$
4,934,374
On
July 17, 2020, the Company entered into multiple loan agreements with Dongguan Rural Commercial Bank to borrow an aggregate of $
6.9
million
(RMB
50
million) of loans to support the working capital needs and the construction of the Company's current CIP projects.
The loans
have tenure varying between three and eight years. 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
$
1.8
million and buildings of approximately $
4.8
million from Meijia as collateral to secure total loans of $
4.1
million (RMB
30
million).
Mr. Silong Chen, the CEO of the Company, pledged personal property as collateral to secure the remaining loans of $
2.8
million (RMB
20
million). Dongguan Dogness, Meijia and Mr. Silong Chen also provided guarantee for the loans. As of June 30, 2023, the outstanding balance
was $
4,555,467
. The Company further repaid $
2,702,960
(RMB
19,600,873
) and drew down $
2,620,100
(RMB
19,000,000
) subsequent to the period
end.
Interest
expenses for the above-mentioned loans amounted to $
396,517
, $
471,443
and $
460,905
for the years ended June 30, 2023, 2022 and 2021,
respectively.
The
Company capitalized interest of $
Nil
, $
90,775
and $
145,620
related to certain CIP projects expenditures for the years ended June 30,
2023, 2022 and 2021, respectively.
As
of June 30, 2023, the Company's short-term and long-term loans totaled approximately $
5.4
million. The repayment schedule for the
Company's bank loans are as follows:
Twelve months ending June 30,
Repayment
2024
$
3,846,918
2025
361,513
2026
384,284
2027
408,490
2028
434,197
2029
7,065
Total
$
5,442,467
F-
20
DOGNESS
(INTERNATIONAL) CORPORATION
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(All
amounts in USD)
NOTE
9 –
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% from 2015 to 2023.
The certificate 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 years ended June 30, 2023,
2022 and 2021were reported at a reduced rate of
15
% as a result of Dongguan Jiasheng being approved as HNTE. The impact of the tax holidays
noted above decreased foreign taxes by $
316,913
, $
100,210
and $
117,514
for the years ended June 30, 2023, 2022 and 2021, respectively.
The benefit of the tax holidays on net income (loss) per share (basic and diluted) was $
0.01
, $
0.00
and $
0.00
for the years ended June
30, 2023, 2022 and 2021, respectively. As of June 30, 2023 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
following table reconciles the statutory rate to the Company's effective tax:
For the Years Ended June 30,
2023
2022
2021
Income tax expense computed based on PRC statutory rate
$
(
2,171,731
)
$
59,567
$
485,121
Effect of rate differential for Hong Kong and other outside PRC entities
408,161
(
223,665
)
(
173,905
)
Effect of PRC preferential tax rate
316,913
100,210
(
117,514
)
Change in valuation allowance
872,870
444,323
(
223,729
)
Surcharge on unpaid income tax
-
-
669,650
Income tax payable reserved
(
567,342
)
(
3,163,806
)
-
Permanent difference
(
83,745
)
5,503
30,030
Refund of prior years' tax
(
2,575
)
-
(
28,193
)
Effective tax
$
(
1,227,449
)
$
(
2,777,868
)
$
641,460
The
provision for income tax consists of the following:
For the Years Ended June 30,
2023
2022
2021
Current income tax (benefit) expense
$
(
568,854
)
$
(
2,659,444
)
$
1,119,776
Deferred income tax benefit
(
658,595
)
(
118,424
)
(
478,316
)
Total income tax (benefit) expense
$
(
1,227,449
)
$
(
2,777,868
)
$
641,460
F-
21
DOGNESS
(INTERNATIONAL) CORPORATION
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(All
amounts in USD)
NOTE
9 – TAXES (continued)
The
Company's deferred tax assets consist of the following:
As of
June 30, 2023
As of
June 30, 2022
Deferred tax assets:
Net operating losses
$
3,086,012
$
1,828,369
Assets impairment reserve
493,981
451,538
Others
(
38,558
)
(
45,537
)
Valuation allowance
(
2,259,801
)
(
1,535,331
)
Deferred tax assets, net
$
1,281,634
$
699,039
(b)
Taxes Payable
The
Company's taxes payable consists of the following:
As of
June 30, 2023
As of
June 30, 2022
Corporate income tax payable
$
875,973
$
1,536,225
Other tax payable
139,471
21,436
Total taxes payable
$
1,015,444
$
1,557,661
The
Company may be subject to challenges from various PRC taxing authorities regarding the amounts of taxes due, although the Company's
management believes the Company has paid or accrued for all taxes owed by the Company. According to PRC taxation regulation and administrative
practice and procedures, the statute of limitation on tax authority's audit or examination of previously filed tax returns expires
three years from the date they were filed. The Company also obtained a written statement from the local tax authority that no additional
taxes are due as of June 30, 2023. Based on these facts, the Company reversed the accrued tax liabilities in the total amount of approximately
$
3.4
million (or RMB
24,370,181
) relating to the tax liabilities accrued for the period from fiscal 2016 to fiscal 2019, resulting in
the decrease of accrued income tax liabilities from approximately $
4.2
million to approximately $
0.9
million as of June 30, 2023. The
Company continues to discuss with the local tax authority to try to settle the remaining tax liabilities as soon as practicable, mostly
related to its unpaid income tax and business tax.
Due
to uncertainties associated with the status of examinations, including the protocols of finalizing audits by the relevant tax authorities,
there is a high degree of uncertainty regarding the future cash outflows associated with the interest and penalties on these unpaid tax
balances. The final outcome of this tax uncertainty is dependent upon various matters including tax examinations, interpretation of tax
laws or expiration of status of limitation.
NOTE
10 –
COMMITMENTS AND CONTINGENCIES
Contingencies
The
Company may be involved in various legal proceedings, claims and other disputes arising from the commercial operations, projects, employees
and other matters which, in general, are subject to uncertainties and in which the outcomes are not predictable. The Company determines
whether an estimated loss from a contingency should be accrued by assessing whether a loss is deemed probable and can be reasonably estimated.
Although the Company can give no assurances about the resolution of pending claims, litigation or other disputes and the effect such
outcomes may have on the Company, the Company believes that any ultimate liability resulting from the outcome of such proceedings, to
the extent not otherwise provided or covered by insurance, will not have a material adverse effect on the Company's consolidated
financial position or results of operations or liquidity
F-
22
DOGNESS
(INTERNATIONAL) CORPORATION
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(All
amounts in USD)
NOTE
10 – COMMITMENTS AND CONTINGENCIES (continued)
Capital
Investment Obligation
Zhangzhou
Meijia Metal Product Ltd.
Meijia
was incorporated under the laws of the People's Republic of China with a total registered capital of RMB
60.0
million ($
8.3
million).
As of June 30, 2022, RMB
42.7
million ($
5.9
million) capital contribution has been made. During the year ended June 30, 2023, the Company
made additional capital contribution RMB
1,930,000
($
0.3
million) in Meijia.
As
of the date of this report, pursuant to the articles of incorporation of Meijia, the Company is obligated to contribute the remaining
RMB
15,370,000
($
2.1
million) capital investment into Meijia before December 30, 2025 whenever the Company has available funds.
Capital
Expenditure Commitment
In
connection with the Company's construction projects on Dogness Culture and Dongguan Jiasheng, the future minimum capital expenditure
commitment on these projects was $
254,070
as of as of June 30, 2023. (see Note 5)
NOTE
11 –
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
Relative
    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
Dogness
    Technology Co., Ltd ("Dogness Technology")
The
    legal representative is Junqiang Chen, the relative of Mr. Silong Chen
(1)
Due from related parties
Due
from related parties consist of mainly rent receivables from the following:
As of
As of
June 30, 2023
June 30, 2022
Linsun
$
87,430
$
77,964
Dogness Network
-
7,340
Dogness Technology
-
20,099
Total
$
87,430
$
105,403
(2)
Due to related parties
Due
to related parties consist of the following:
As of
As of
June 30, 2023
June 30, 2022
Mr. Silong Chen
$
80,327
$
130,468
Dogness Technology
5,516
-
Total
$
85,843
$
130,468
Mr.
Silong Chen periodically provides working capital loans to support the Company's operations when needed. Such advances are non-interest
bearing and due on demand.
F-
23
DOGNESS
(INTERNATIONAL) CORPORATION
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(All
amounts in USD)
NOTE
11 – RELATED PARTY TRANSACTIONS (continued)
(3)
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 long-term bank loans. (See Note 8).
(4)
Sales to related parties
Revenue
from related parties consisted of the following:
For the Years Ended June 30,
Name
2023
2022
2021
Dogness Network
$
1,543,979
$
1,806,732
$
1,207,686
Dogness Technology
156,194
405,847
-
Total
$
1,700,173
$
2,212,579
$
1,207,686
Cost
of revenue associated with the sales to these related parties amounted to $
1,162,314
$
1,301,180
and $
663,742
for the years ended June
30, 2023, 2022 and 2021, respectively.
(5)
Accounts receivable from related parties
Accounts
receivable from related parties consisted of the following:
As of
As of
June 30, 2023
June 30, 2022
Accounts receivable - related parties:
Dogness Network
$
1,133,092
$
1,036,476
Dogness Technology
139,292
58,379
Total
$
1,272,384
$
1,094,855
As
of June 30, 2023, total accounts receivable from related parties amounted to $
1,272,384
, of which $
164,807
has been collected as of August
2023.
(6)
Advance to supplier- related party
Advance
to supplier from related party consisted of the following:
As of
As of
June 30, 2023
June 30, 2022
Advance to supplier - related party:
Linsun
$
239,729
$
-
Total
$
239,729
$
-
(7)
Accounts payable to related party
Accounts
payableto related party consisted of the following:
As of
As of
June 30, 2023
June 30, 2022
Accounts payable - related party
Linsun
$
-
$
393,625
Total
$
-
$
393,625
F-
24
DOGNESS
(INTERNATIONAL) CORPORATION
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(All
amounts in USD)
NOTE
11 – RELATED PARTY TRANSACTIONS (continued)
(8)
Purchase from related parties
During
the years ended June 30, 2023, 2022 and 2021, the Company purchased certain pet product components and parts, such as smart pet water
and food feeding devices, from Linsun. Total purchases from Linsun amounted to $
565,548
, $
3,199,833
and $
3,015,442
for the years ended
June 30, 2023, 2022 and 2021, respectively.
(9)
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
$
230,000
and is subject to
15
% increase every three years
. For the year ended June 30, 2023, 2022 and 2021, the Company recorded rent
income of $
434,625
, $
462,210
and $
300,511
as other income through leasing the manufacturing facilities to Linsun, respectively.
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
. This lease agreement was terminated in October, 2022.
For the years ended June 30, 2023, 2022 and 2021, the Company recorded rent income of $
10,952
, $
78,251
and $
52,796
as other income through
leasing the manufacturing facilities to Dogness Network.
On
August 1, 2020, Dongguan Jiasheng signed a lease agreement with Dogness Technology, which enabled Dogness Technology to lease part of
Dongguan Jiasheng's new production facilities of approximately
50
square meters for
ten years
. Annual lease payment from Dogness
Technology amounted to $
1,726
. For the years ended June 30, 2023, 2022 and 2021, the Company recorded rent income of $
1,584
, $
1,706
and
$
1,661
as other income through leasing the manufacturing facilities to Dogness Technology.
NOTE
12 –
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.
On
October 22, 2022, Shareholders of the Company held a meeting and approved a change to the maximum number of shares that the Company is
authorized to issue from
100,000,000
made up of two classes with a par value of $
0.002
each being
90,931,000
Class A Shares and
9,069,000
Class B Shares to
110,000,000
made up of two classes with a par value of $
0.002
each, being
90,931,000
Class A shares and
19,069,000
Class B shares
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."
F-
25
DOGNESS
(INTERNATIONAL) CORPORATION
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(All
amounts in USD)
NOTE
12 – EQUITY (continued)
Equity
Financing
January
2021 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.
July
2021 equity financing
On
July 19, 2021, the Company closed a securities purchase agreement with certain institutional investors for the sale of
2,178,120
Class
A common shares in a registered offering at the price of $
1.82
per common share. After payment of expenses, the Company received approximately
$
3.5
million in net proceeds from the sale of the common shares.
February
2022 equity financing
On
February 24, 2022, the Company closed a securities purchase agreement with certain institutional investors for the sale of
1,966,251
Class A common shares in a registered offering at the price of $
2.88
per common share. After payment of expenses, the Company received
approximately $
4.7
million in net proceeds from the sale of the common shares.
June
2022 equity financing
On
June 3, 2022, the Company closed a securities purchase agreement with certain institutional investors for the sale of
3,636,365
Class
A common shares in a registered offering at the price of $
3.30
per common share. After payment of expenses, the Company received approximately
$
10.9
million in net proceeds from the sale of the common shares.
Common
Shares Issued for Service
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
of the Company's Class A common shares within ten days upon signing the agreement.
On April 28, 2021, these shares were issued to Real Miracle. These shares were measured at $
387,500
which was based on the value of the
Company's Class A common shares at the agreement date and amortized over the service period.
On
December 15, 2022, 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 December 15, 2022. As the consideration for
the service, Real Miracle is entitled to receive
300,000
of the Company's Class A common shares within ten days upon signing the
agreement. On December 19, 2022, these shares were issued to Real Miracle. These shares were measured at $
334,500
which was based on
the value of the Company's Class A common shares at the agreement date and amortized over the service period.
On
January 26, 2023, the Board adopted resolutions to grant total
1,500,000
Class A common shares to Mr. Silong Chen, the Chief Executive
Officer of the Company as part of the annual salary. These shares shall be issued equally on January 26, 2023, 2024 and 2025. On January
26, 2023, the Company issued
500,000
Class A common shares to Mr. Silong Chen as the first tranche of the salary shares. These shares
were measured at $
1,455,000
which was based on the value of the Company's Class A common shares at the granted date and amortized
over the service period.
On
January 26, 2023, the Board adopted resolutions to grant
150,000
Class A common shares to Dr. Yunhao Chen, the Chief Financial Officer
of the Company as part of the annual salary. These shares shall be issued equally on January 26, 2023, 2024 and 2025. On January 26,
2023, the Company issued
50,000
Class A common shares to Dr. Yunhao Chen as the first tranche of the salary shares. These shares were
measured at $
145,500
which was based on the value of the Company's Class A common shares at the granted date and amortized over
the service period. The unissued shares were forfeited due to the resignation of Dr. Yunhao Chen as the Company's Chief Financial
Officer on August 1, 2023.
F-
26
DOGNESS
(INTERNATIONAL) CORPORATION
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(All
amounts in USD)
NOTE
12 – EQUITY (continued)
As
of June 30, 2023, the Company had an aggregate of
40,124,259
common shares outstanding, consisting of
31,055,259
Class A and
9,069,000
Class B common shares; respectively. As of June 30, 2022, the Company had an aggregate of
39,274,259
common shares outstanding, consisting
of
30,205,259
Class A and
9,069,000
Class B common shares; respectively.
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. These underwriter warrants
expired on December 18, 2020.
In
connection of January 2021 equity financing, warrants carry a term of thirty
(30) months after the issuance date
to purchase
an aggregate of
1,727,565
common shares for $
2.70
per share were issued to the investors and warrants
carrying a term of thirty (30) months commencing six months after the issuance date 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. These warrants were recorded at their
fair value on the date of grant as a component of shareholders' equity.
1,727,565
warrants to the investors were exercised during
year ended June 30, 2022.
No
warrants were exercised during year ended June
30, 2023.
In
connection of July 2021 equity financing, the Company also issued warrants to purchase
174,249
common shares to the placement agent exercisable
at $
1.82
per share with expiration date on July 15, 2024.
No
warrants were exercised during year ended June 30, 2023.
In
connection of June 2022 equity financing, the Company also issued warrants to purchase
2,181,81
common shares to the investors at $
4.20
per share with expiration date on
June 3, 2024
.
No
warrants were exercised during year ended June 30, 2023.
Management
determined that these warrants meet the requirements for equity classification under ASC 815-40 because they are indexed to its own shares.
The warrants were recorded at their fair value on the date of grant as a component of shareholders' equity. As of June 30, 2023,
2,632,478
warrants in connection with three equity financings as mentioned above were outstanding, with weighted average exercise price
of $
3.88
and weighted average remaining life of
1.72
years.
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 $
Nil
, $
Nil
and $
99,727
to statutory reserves during the years ended June 30, 2023, 2022 and 2021 in accordance with PRC regulations,
respectively. The restricted amounts as determined by the PRC statutory laws both totaled $
291,443
as of June 30, 2023 and 2022, respectively.
F-
27
DOGNESS
(INTERNATIONAL) CORPORATION
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(All
amounts in USD)
NOTE
13 –
(LOSS) EARNINGS PER SHARE
For
the year ended June 30, 2023, potential shares of common stock from the unexercised options and unexercised options are excluded from
diluted net loss per share as such amounts are anti-dilutive.
For
the years ended June 30, 2022, 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. As a result, a total of
301,975
unexercised options were included in
the computation of diluted earnings per share for the years ended June 30, 2022.
For
the years ended June 30, 2021, 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. As a result, a total of
55,444
unexercised options were included in
the computation of diluted earnings per share for the years ended June 30, 2021.
The
following table presents a reconciliation of basic and diluted net (loss) income per share:
For the Years Ended June 30,
2023
2022
2021
Net income (loss) attributable to the Company
$
(
7,200,263
)
$
3,235,559
$
1,512,364
Weighted average number of common shares outstanding - Basic
39,668,780
33,711,659
27,499,367
Dilutive securities -unexercised warrants and options
-
301,975
55,444
Weighted average number of common shares outstanding – diluted
39,668,780
34,013,634
27,554,811
Earnings (loss) per share - Basic
$
(
0.18
)
$
0.10
$
0.05
Earnings (loss) per share – Diluted
$
(
0.18
)
$
0.10
$
0.05
NOTE
14 –
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 options to purchase
160,000
of the Company's Class A common shares. 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 share-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 options to purchase
160,000
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 Class A common shares
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
.
F-
28
DOGNESS
(INTERNATIONAL) CORPORATION
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(All
amounts in USD)
NOTE
14 – OPTIONS (continued)
Pursuant
to the consulting agreement signed between TJ Capital and the Company, 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. During the year ended June 30, 2022, TJ Capital further
opted to exercise
60,000
,
60,000
and
10,000
share options on a cashless basis, respectively. On November 4, 2021, December 1, 2021 and
January 3, 2022, the Company issued
36,440
,
41,928
and
24,382
common shares to TJ Capital, respectively.
On
May 28, 2017, the Company signed an employment agreement with Dr. Yunhao Chen, the Chief Financial Officer of the Company. As 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 Class A common shares of $
5.00
; 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
.
On January 18, Dr. Yunhao Chen opted to exercise
120,000
shares options at the exercise price of $
1.50
and the Company issued
120,000
common shares to Dr. Yunhao Chen.
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 Class A common shares of $
5.00
; 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
.
These options
were expired
.
On
January 26, 2023, the Board adopted resolutions to issue incentive stock options of total
1,500,000
to Mr. Silong Chen under the Company's
2018 Stock Incentive Plan as part of compensations. These options shall be vested equally on January 26, 2023, 2024 and 2025 with exercise
price of $
1
per share.
The
aggregate fair value of the options granted to Mr. Silong Chen was $
941,813
. The fair value has been estimated using the
Black-Scholes
pricing model
with the following weighted-average assumptions: market value of underlying Class A common shares of $
0.97
; risk free rate
of
4.17
% based upon the PRC's Company's bank lending rate; expected term of
5
years; exercise price of the options of $
1.00
;
volatility of
128.8
% based upon the Company's historical stock price; and expected future dividends of $
Nil
. These options expire
on January 26, 2028.
On
January 26, 2023, the Board adopted resolutions to issue incentive stock options of total
150,000
to Dr. Yunhao Chen under the Company's
2018 Stock Incentive Plan as part of compensations. These options shall be vested equally on January 26, 2023, 2024 and 2025 with exercise
price of $
1
per share.
The
aggregate fair value of the options granted to Dr. Yunhao Chen was $
94,181
.
The fair value has been estimated using the
Black-Scholes
pricing model
with the
following weighted-average assumptions: market value of underlying Class A common shares of $
0.97
;
risk free rate of
4.17
%;
expected term of
10
years; exercise price
of the options of $
1.00
;
volatility of
128.8
%;
and expected future dividends of $
Nil
.
50,000
options vested on January 26, 2023, and the unvested options were forfeited  due to the resignation of Dr. Yunhao Chen as the
Company's Chief Financial Officer on August 1, 2023. There is no unrecognized compensation associated with these options.
The
Company recorded $
1,243,385
,
$
11,831
and
$
529,658
stock-based compensation expense for the years ended June 30, 2023, 2022 and 2021, respectively.
F-
29
DOGNESS
(INTERNATIONAL) CORPORATION
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(All
amounts in USD)
NOTE
14 – OPTIONS (continued)
The
following table summarized the Company's share option activity:
Number of
Options
Weighted Average
Exercise Price
Weighted Average Remaining
Life in Years
Outstanding June 30, 2020
500,000
$
1.50
0.35
Exercisable, June 30, 2020
413,337
$
1.50
0.19
Granted
-
-
-
Cancelled
-
-
-
Exercised
(
10,000
)
-
-
Outstanding June 30, 2021
490,000
$
1.50
0.03
Exercisable, June 30, 2021
483,341
$
1.50
0.03
Granted
-
-
-
Cancelled
-
-
-
Exercised
(
270,000
)
-
-
Outstanding June 30, 2022
220,000
$
1.50
-
Exercisable, June 30, 2022
220,000
$
1.50
-
Granted
1,650,000
1.00
-
Cancelled
-
-
-
Exercised
-
-
-
Outstanding June 30, 2023
1,870,000
1.00
5.03
Exercisable, June 30, 2023
550,000
1.00
5.03
NOTE
15 –
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.
The Company also provides dyeing services to external customers, as well as pet grooming service. The dyeing service is to utilize the
existing production capacity and the pet grooming service is immaterial. Therefore, the Company concludes that essentially the Company's
products and services have similar economic characteristics with respect to raw materials, vendors, marketing and promotions, customers
and methods of distribution, hence the Company has only one reporting segment.
Revenue
by products and services
The
summary of total revenues by product and service categories consisted of the following
For the Years Ended June 30,
Product sales
2023
2022
2021
Traditional pet products
$
8,302,299
$
11,433,159
$
14,331,492
Intelligent pet products
7,404,407
13,492,076
7,801,070
Climbing hooks and others
1,806,369
1,761,341
1,340,686
Total revenue from product sales
17,513,075
26,686,576
23,473,248
Services:
Dyeing services
-
342,561
817,145
Other services
71,379
66,060
29,728
Total revenue from services
71,379
408,621
846,873
Total revenue
$
17,584,454
$
27,095,197
$
24,320,121
F-
30
DOGNESS
(INTERNATIONAL) CORPORATION
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(All
amounts in USD)
NOTE
15 – SEGMENT (continued)
Revenue
by geographic area
Geographic
information about the revenues, which are classified based on customers, is set out as follows:
For the Years Ended June 30,
Geographic location
2023
2022
2021
Sales to international markets
$
11,253,079
$
14,542,323
$
10,627,253
Sales to China domestic markets
6,331,375
12,552,874
13,692,868
Total revenue
$
17,584,454
$
27,095,197
$
24,320,121
NOTE
16 –
CONCENTRATIONS AND CREDIT RISK
A
majority of the Company's expense transactions are denominated in RMB and a significant portion of the Company and its subsidiaries'
assets and liabilities are denominated in RMB. RMB is not freely convertible into foreign currencies. In the PRC, certain foreign exchange
transactions are required by law to be transacted only by authorized financial institutions at exchange rates set by the People's
Bank of China ("PBOC"). Remittances in currencies other than RMB by the Company in China must be processed through the PBOC
or other China foreign exchange regulatory bodies which require certain supporting documentation in order to effect the remittance.
As
of June 30, 2023 and 2022, $
271,636
and $
423,172
of the Company's cash and cash equivalents was on deposit at financial institutions
in mainland China 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 June 30, 2023, two customers aggregately accounted for
54.6
% of the Company's total accounts receivable, with related party
customer, Dogness Network accounted for
38.7
%, and one third party customer accounted for
15.9
% of the Company's total accounts
receivable, respectively. As of June 30, 2022, two customers aggregately accounted for
57.4
% of the Company's total accounts receivable,
with related party customer, Dogness Network accounted for
37.7
%, and one third party customer accounted for
19.7
% of the Company's
total accounts receivable, respectively.
As
of June 30, 2023, two third party suppliers accounted for
13.7
and
11.2
% of the Company's total account payable. As of June 30,
2022, one related party supplier, Linsun, accounted for
27.6
% of the Company's total account payable, respectively.
For
the years ended June 30, 2023, 2022 and 2021, sales to the customers outside of China accounted for
64.0
%,
53.7
% and
43.7
% of the Company's
total revenue, respectively. For the year ended June 30, 2023, four customers accounted for
15.4
%,
11.6
%,
8.8
% and
5.3
% of the Company's
total revenue, respectively. For the year ended June 30, 2022, four customers accounted for
23.4
%,
6.7
%,
6.7
% and
5.7
% of the Company's
total revenue, respectively. For the year ended June 30, 2021, three customers accounted for
32.0
%,
9.1
% and
6.9
% of the Company's
total revenue, respectively
For
the year ended June 30, 2023, one third party accounted for
34.1
% of the Company's total raw materials purchases. For the year
ended June 30, 2022, one related party Linsun accounted for
30.9
% of the Company's total raw materials purchases. For the year
ended June 30, 2021, one related party Linsun accounted for
26.9
% of the Company's total raw materials purchases.
NOTE
17 –
SUBSEQUENT EVENTS
The
Company has evaluated the impact of events that have occurred subsequent to June 30, 2023, through the issuance date of the consolidated
financial statements, and concluded that no subsequent events have occurred that would require recognition in the consolidated financial
statements or disclosure in the notes to the consolidated financial statements.
F-
31