Company Expansion - Farmmi successfully opened a warehouse and distribution center in Los Angeles, California on August 12, 2024, receiving warehousing orders for 28 shipping containers on its first day of operations [1] - The company established its first warehouse and logistics center in Los Angeles in July 2024, following the acquisition of a large storage facility, and began trial operations on August 12, 2024 [2] - The successful launch of the warehouse and logistics services center in the U S marks a significant development for the company in achieving organic growth and international expansion [3] Company Background - Farmmi, Inc is an agricultural products supplier, processor, and retailer of edible mushrooms like Shiitake and Mu Er, as well as other agricultural products, established in 1998 [4] - The company sells its products both online and offline and has operated in the Chinese agricultural products industry for more than 20 years, forming a stable international customer base [3][4] Strategic Goals - Farmmi is committed to and has implemented strategies for international business expansion in recent years to further expand international cooperation and create long-term value for its shareholders [3] - The company's business in North America has entered a rapid development stage, with the American team accelerating efforts to strive for greater operating results [2]

Revenue and Net Income - Revenue for the six months ended March 31, 2024 was $36.44 million, a decrease of 39.8% compared to $60.55 million in the same period last year[8] - Net income for the six months ended March 31, 2024 was $630,492, a decrease of 60.1% compared to $1.58 million in the same period last year[8] - Net income for the six months ended March 31, 2024, was $630,492, compared to $1,579,859 for the same period in 2023[13] - Total revenue for the six months ended March 31, 2024, was $36,443,887, down from $60,547,274 for the same period in 2023[97] Cash and Cash Equivalents - Cash and cash equivalents decreased by $11.67 million (91.2%) from $12.79 million as of September 30, 2023 to $1.12 million as of March 31, 2024[4] - Cash and cash equivalents at the end of the period were $1,124,448, compared to $69,356,991 at the end of the same period in 2023[13] - Cash maintained in banks within the PRC is $1.1 million as of March 31, 2024, with deposits of less than RMB 0.5 million ($69,249) per bank covered by deposit insurance regulation[25][49] - Cash maintained in banks within the PRC was $12.8 million as of September 30, 2023, with deposits of less than RMB 0.5 million ($69,249) per bank covered by deposit insurance regulation[49] Accounts Receivable and Inventory - Accounts receivable decreased by $1.66 million (6.7%) from $24.68 million as of September 30, 2023 to $23.02 million as of March 31, 2024[4] - Inventories increased significantly by $26.39 million (676.4%) from $3.90 million as of September 30, 2023 to $30.29 million as of March 31, 2024[4] - The company's accounts receivable, net, as of March 31, 2024, were $23,016,778, compared to $24,677,445 as of September 30, 2023[65] - Inventory, net increased to $30,293,667 as of March 31, 2024, from $3,901,848 as of September 30, 2023[78] Liabilities and Equity - Total current liabilities decreased by $3.59 million (33.5%) from $10.71 million as of September 30, 2023 to $7.12 million as of March 31, 2024[5] - Total shareholders' equity increased by $2.38 million (1.5%) from $161.98 million as of September 30, 2023 to $164.35 million as of March 31, 2024[6] - Contract liabilities are $48,299 as of March 31, 2024 and $0.4 million as of September 30, 2023, included in other current liabilities[42] Earnings Per Share - Basic earnings per share decreased to $0.10 for the six months ended March 31, 2024 compared to $0.53 in the same period last year[9] - Diluted earnings per share decreased to $0.05 for the six months ended March 31, 2024 compared to $0.33 in the same period last year[9] - Net income available for ordinary shareholders is $630,492 for the six months ended March 31, 2024, with basic EPS of $0.10 and diluted EPS of $0.05[45] Cash Flow Activities - Net cash used in operating activities for the six months ended March 31, 2024, was $14,901,185, compared to $11,304,117 for the same period in 2023[13] - Net cash provided by investing activities for the six months ended March 31, 2024, was $2,946,776, compared to $36,326,277 for the same period in 2023[13] - Net cash used in financing activities for the six months ended March 31, 2024, was $16,653, compared to $1,331,253 provided for the same period in 2023[13] Subsidiaries and Divestitures - The company divested 100% interest in three subsidiaries for a total cash consideration of RMB43.1 million ($6.0 million) on January 31, 2024[17] - Farmmi USA Inc was established under the laws of the United States of America on August 24, 2023, with Farmmi Inc owning 100% equity[16] - Farmmi Canada Inc was established under the laws of Canada on July 13, 2022, with Farmmi Inc owning 100% equity[16] Product and Market Focus - Approximately 99.9% of the company's products are sold in China[21] - The company is engaged in processing and distributing dried Shiitake mushrooms and Mu Er mushrooms, and trading agricultural products[21] - Revenue from Shiitake Mushroom was $9,806,605 for the six months ended March 31, 2024[97] Advances to Suppliers and Allowances - Advances to suppliers represent prepayments made to ensure continuous high-quality supplies, with periodic reviews and allowances made for doubtful advances[27] - The company's advances to suppliers are made to secure premium quality raw materials at prices slightly higher than typical market prices for average quality raw materials[73] - The company evaluates the recoverability of advances to suppliers by monitoring suppliers' ability to deliver sufficient supplies and current crop and market conditions[75] - The company accrues for any allowance for possible loss on advances when there is doubt as to the collectability of the refund[75] - Advances to suppliers, net, as of March 31, 2024, were $100,439,974, compared to $116,343,961 as of September 30, 2023[67] Depreciation and Assets - Biological assets consist of 9.6 km² of bamboo forests, with depreciation expense of $0.1 million for the six months ended March 31, 2024 and 2023[29] - Property and equipment are depreciated on a straight-line basis over estimated useful lives, with machinery and equipment at 5-10 years, transportation equipment at 4 years, and office equipment at 3-5 years[38][39] - Depreciation expense was $5,572 for the six months ended March 31, 2024, down from $12,724 for the same period in 2023[81] Agreements and Contracts - The company signed a framework cooperation agreement with Lishui Zhelin Trading Co., Ltd., valid for four years, to ensure timely supply and delivery of edible mushroom products[68] - The company signed an agricultural product framework agreement with Zhongjin Boda (Hangzhou) Industrial Co., Ltd., for the purchase of agricultural products such as corn, cotton, and soybeans, valid for two years[69] - The company signed an agricultural product framework agreement with Ningbo Runcai Supply Chain Management Co., Ltd., for the purchase of agricultural products such as red dates and corn, valid for two years[69] - The company signed a Non-Competition Agreement with Forasen Group, restricting Forasen from engaging in competing businesses except for purchasing products from the company[106] Credit and Risk Management - The company performs ongoing credit evaluations of customers and key suppliers to reduce credit risk, with significant sales being credit sales dependent on industry economics[49] - Allowance for doubtful accounts was $2.5 million as of March 31, 2024, compared to $3,176 as of September 30, 2023[76] Exchange Rates and Expenses - The exchange rate as of March 31, 2024, was US$1 for RMB7.2203, and the average exchange rate for the six months ended March 31, 2024, was US$1 for RMB7.2064[53] - Total shipping and handling expenses for the six months ended March 31, 2024, were $40,101, compared to $37,053 for the same period in 2023[53] Related Party Transactions - Due from related parties totaled $109,755 as of March 31, 2024, compared to $110,958 as of September 30, 2023[100] - Due to related parties increased to $379,082 as of March 31, 2024, from $33,814 as of September 30, 2023, primarily due to amounts owed to Yefang Zhang and Zhejiang Tantech Bamboo Technology Co., Ltd[102] Lease and Financing Activities - The company recorded lease expenses of $50,782 for the six months ended March 31, 2024, compared to $43,910 for the same period in 2023[105] - The company entered into a note purchase agreement on July 30, 2024, issuing a $5,355,000 unsecured promissory note with a 7.0% annual interest rate and a 12-month term[108] - The note includes an original issue discount of $350,000 and $5,000 for investor fees, with prepayment options at 105% of the outstanding balance[109] - The weighted average discount rate for operating leases was 10.3% per annum as of March 31, 2024[90] - Total future minimum lease payments amounted to $685,343 as of March 31, 2024[92] Major Customers and Suppliers - Two major customers accounted for 55.9% and 12.0% of total sales for the six months ended March 31, 2024[88] - Four major suppliers accounted for 22.8%, 18.3%, 14.1%, and 11.0% of total purchases for the six months ended March 31, 2024[89] Share Issuance and Convertible Notes - The company issued 804,000 ordinary shares for the redemption of $804,000 convertible promissory notes in the six months ended March 31, 2024[84]

Company Expansion - Farmmi's subsidiary, FARMMI USA INC, has signed a sublease agreement to acquire the right to use a large distribution and storage center in the United States, marking a significant development for its US operations [1] - The leased premises, located in the Los Angeles area, California, spans a total area of 636,000 square feet, with warehouse space covering 315,000 square feet, and includes a dedicated rail line for sea-rail intermodal transportation [2] - The facility will serve as the major distribution and storage center for the Farmmi group, enabling further expansion of international cooperation and creating greater value for shareholders [2][3] Company Background - Farmmi Inc, established in 1998, is an agricultural products supplier, processor, and retailer of edible mushrooms like Shiitake and Mu Er, as well as other agricultural products [4] - The company sells its products both online and offline, with a focus on increasing its global presence in recent years [3][4]

Company Overview - Farmmi Inc is an agricultural products supplier, processor, and retailer established in 1998, specializing in edible mushrooms like Shiitake and Mu Er, as well as other agricultural products [3] - The company operates both online and offline sales channels [3] Recent Achievement - Farmmi's subsidiary, Zhejiang Farmmi Food Co Ltd, received the "An Agricultural Products Sales King" certificate from the Lishui municipal authority [1] - The award was granted after a rigorous selection process involving onsite visits, verification, and evaluation of relevant indicators [2] Business Strategy - The company is focused on accelerating sales growth by leveraging long-term customer engagements to develop new customers in target geographic markets worldwide [2] - Farmmi differentiates itself through investments in infrastructure, supply chain partnerships, and warehousing systems [2] - The company is increasing marketing efforts to aggressively target new quality customers [2] Growth Prospects - Farmmi has emerged stronger after overcoming challenges from COVID-19 and supply chain issues, with improved financial position and greater capacity for long-term growth [2] - The company plans to expand its core agricultural business and diversify into new growth vectors [2] - Farmmi aims to play a leading role in Lishui's agriculture product market by providing market-oriented professional services and promoting green development of rural industries [2]

Company Compliance Status - Farmmi Inc received a notification from Nasdaq on April 22, 2024, stating that the company is not in compliance with the minimum bid price requirement under Nasdaq Listing Rule 5550(a)(2) due to its ordinary shares closing below $1 00 per share for 32 consecutive business days [1] - The company has a 180-day compliance period until October 21, 2024, to regain compliance If the closing bid price reaches at least $1 00 per share for 10 consecutive business days during this period, Nasdaq will confirm compliance [2] - If compliance is not achieved by October 21, 2024, the company may be eligible for an additional 180-day grace period [2] Company Overview - Farmmi Inc, established in 1998, is a supplier, processor, and retailer of agricultural products, specializing in edible mushrooms such as Shiitake and Mu Er, as well as other agricultural products [3] - The company operates both online and offline sales channels [3]

Regulatory and Compliance Risks in China - Significant legal and operational risks associated with conducting operations in mainland China, including potential adverse effects from changes in PRC government regulations and US-China relations[7] - PRC government's substantial influence over business operations in China, requiring permissions and approvals for operations, data transfer, and securities issuance[8] - No current requirement for permissions from the China Securities Regulatory Commission (CSRC) or cybersecurity review by the Cyberspace Administration of China (CAC) for previous securities issuance to foreign investors[9] - Potential future changes in PRC regulations could require additional licenses, permits, or approvals, impacting the company's ability to operate or list securities[8] - PRC entities have obtained necessary business licenses and permits, but future regulatory changes could necessitate additional compliance efforts[8] - Recent PRC government actions, including the Cybersecurity Review Measures and Overseas Listing Rules, may impose significant compliance costs and affect the company's ability to accept foreign investments[7] - Uncertainty regarding the interpretation and implementation of PRC laws and regulations, which could lead to investigations, fines, or operational suspensions[8] - PRC government's intent to increase control over overseas securities offerings and foreign investments in China-based issuers[9] - Potential for PRC regulations to limit or hinder the company's ability to offer securities to investors, possibly rendering such securities worthless[7] - Compliance with PRC Food Safety Law and telecommunications regulations required for certain subsidiaries, with all necessary permissions currently in place[8] - The company may face fines between RMB 1,000,000 and RMB 10,000,000 if it fails to comply with the Trial Measures for Overseas Listing[10] - The company's PRC subsidiaries are required to set aside a portion of net income for a statutory surplus reserve until it reaches 50% of registered capital, limiting dividend distributions[10] - The company's dividends to overseas shareholders may be subject to a 10% PRC withholding tax, potentially reduced to 5% under the Double Tax Avoidance Arrangement[11] - The company's PRC subsidiaries can only use loans for purposes set forth in PRC laws and regulations, requiring SAFE filings for foreign currency loans[11] - The company has not applied for a tax resident certificate from the Hong Kong tax authority as of the report date, which is necessary to claim the 5% withholding tax rate[11] - The company faces risks related to the VIE structure, including potential regulatory changes and restrictions on dividend payments from PRC subsidiaries[22] - The company may be subject to increased regulatory oversight and intervention by the Chinese government, which could impact operations and share value[51] - The company is required to file with the CSRC for future equity securities offerings, and uncertainties in Chinese regulations could delay or hinder these processes[51] - The company's Chinese subsidiaries must obtain and maintain business licenses from local counterparts of the SAMR to operate in mainland China[52] - The company faces potential risks if its corporate structure is deemed non-compliant with Chinese regulations, which could lead to a decline in share value[52] - The company consolidates VIEs' operating results in its financial statements under U.S. GAAP, but uncertainties exist regarding PRC laws and regulations[53] - The Final Foreign Investment Law, effective January 1, 2020, does not explicitly address variable interest entities (VIEs), leaving regulatory risks unresolved[54] - Potential violations of PRC laws or regulations could lead to fines, confiscation of income, or revocation of business licenses, severely impacting operations[54] - The PRC legal system's evolving nature creates uncertainties in interpreting and enforcing laws, affecting the company's legal protections[55] - The Holding Foreign Companies Accountable Act (HFCAA) could prohibit trading of the company's securities on U.S. exchanges if its auditor is not subject to PCAOB inspections for two consecutive years[56] - The PCAOB signed a Statement of Protocol (SOP) with PRC authorities in August 2022, allowing inspections of audit firms in mainland China and Hong Kong[56] - The company's auditor, YCM CPA Inc., is headquartered in the U.S. and subject to PCAOB inspections, reducing immediate HFCAA risks[56] - PRC labor laws, including the Labor Contract Law and Social Insurance Law, may increase labor costs and compliance risks[58] - Non-compliance with PRC labor regulations could result in penalties or liabilities, adversely affecting the company's operations[58] - The company is implementing an anticorruption program to comply with the U.S. Foreign Corrupt Practices Act (FCPA) and Chinese anti-corruption laws, including clauses in contracts with foreign sales agents and distributors[59] - The PRC government has legalized the VIE structure, but uncertainties remain, including stricter national security and data security requirements for overseas listings[62] - The company's contractual arrangements with its VIE may be subject to scrutiny by PRC tax authorities, potentially leading to increased tax liabilities or penalties[64] - Conflicts of interest may arise between the company and the VIE's shareholder, who is affiliated with the company's CEO and director[65] - The company's ability to enforce contractual arrangements with its VIE is subject to uncertainties in the PRC legal system, which could limit control over its e-commerce websites[64] - The company's e-commerce business may be significantly disrupted due to restrictions on foreign investment in value-added telecommunication services in China, potentially leading to sanctions or unenforceable contractual arrangements[66] - The company must obtain and maintain various licenses and permits to operate its e-commerce websites, with non-compliance potentially resulting in penalties[67] - The implementation of the Cross-Border Electronic Commerce Code and the Electronic Commerce Law of the PRC imposes stricter legal constraints on the company's e-commerce activities, increasing potential legal risks[68] - The company's PRC subsidiary, Nongyuan Network, holds an ICP license and operates websites, but uncertainties in PRC regulations may affect the legality of foreign investments in its e-commerce business[69] - If any of the company's PRC subsidiaries undergo liquidation, third-party creditors may claim assets, adversely affecting business operations[69] - The company may face unfavorable tax consequences if classified as a PRC "resident enterprise," subject to a 25% enterprise income tax on worldwide income[70] - Dividends and gains from share sales may be subject to PRC withholding tax at rates of 10% for non-PRC enterprises or 20% for non-PRC individuals if deemed from PRC sources[71] - Enhanced scrutiny by PRC tax authorities over acquisition transactions may negatively impact the company's future acquisition strategies[72] - The company's PRC subsidiaries face restrictions on paying dividends or making other payments, potentially limiting liquidity[73] - PRC subsidiaries are required to set aside at least 10% of their accumulated profits annually until the total reaches 50% of their registered capital[74] - Dividends payable by Chinese companies to non-PRC-resident enterprises are subject to a withholding tax rate of up to 10% unless exempted or reduced by treaties[74] - Foreign investors face a daily remittance limit of $50,000 and a per-transaction limit of $10,000 when transferring funds out of China[74] - PRC subsidiaries can pay dividends in foreign currencies without prior SAFE approval, subject to compliance with procedural requirements[74] - The M&A Rules require prior notification to the Ministry of Commerce for certain acquisitions involving national economic security or famous trademarks[75] - Mergers and acquisitions by foreign investors raising national security concerns are subject to strict review by the Ministry of Commerce[75] - Future acquisitions in the PRC may be delayed or prohibited if deemed to raise national security concerns[75] - Compliance with PRC regulations on mergers and acquisitions could be time-consuming and complex[75] - The PRC government may restrict access to foreign currencies for current account transactions in the future[74] - PRC subsidiaries' ability to pay dividends may be limited by debt instruments or adjustments to taxable income by PRC tax authorities[74] - The company faces additional regulatory compliance costs and uncertainties due to recent regulatory developments, including the Holding Foreign Companies Accountable Act, which could impact future capital raising activities and share price[77] - The company is subject to the Holding Foreign Companies Accountable Act, which could prohibit trading of its securities on U.S. exchanges if its auditor is not subject to PCAOB inspections for two consecutive years[77] - The company is permitted to rely on exemptions from certain Nasdaq corporate governance standards, such as not requiring a majority of independent directors, which may reduce shareholder protection[77] - The PCAOB has determined it can inspect and investigate registered public accounting firms in mainland China and Hong Kong, but future obstruction by PRC authorities could lead to new determinations[77] - The company may face increased competition due to public disclosure requirements, as competitors gain access to otherwise confidential information[82] - The company could face investigations by regulatory authorities if it fails to comply with internal control requirements, potentially leading to a loss of investor confidence and a decline in share price[79] - The company may experience higher costs for director and officer liability insurance and face challenges in attracting qualified board members and executives due to public company requirements[81] - The company received a Nasdaq notification on October 12, 2022, for non-compliance with the $1.00 minimum bid price requirement, with an initial 180-day compliance period extended to October 9, 2023[84] - The company regained Nasdaq compliance by effecting a one-for-eight share consolidation in September 2023[85] - The company is a Cayman Islands exempted company, which may make it difficult for shareholders to protect their interests compared to U.S.-incorporated companies[86] - Shareholders of Cayman Islands exempted companies have no general rights to inspect corporate records or obtain shareholder lists[87] - The company's Board of Directors may decline to register transfers of ordinary shares under certain conditions, including unpaid shares or liens[88] - The company was incorporated in the Cayman Islands on July 28, 2015, and conducts operations in China through PRC subsidiaries[89] - The company completed its initial public offering and began trading on Nasdaq under the symbol "FAMI" in February 2018[90] - Company raised approximately $6 million in net proceeds from its initial public offering in February 2018[91] - Company completed a $7.5 million private placement in November 2018, issuing senior convertible notes and warrants[91] - Company received approximately $6.6 million in net proceeds from a public offering in March 2021, with an additional $1.0 million from over-allotment[92] - Company raised approximately $43.9 million in net proceeds from a public offering in April 2021, including over-allotment[92] - Company received approximately $74.2 million in net proceeds from a public offering in September 2021, issuing ordinary shares and pre-funded warrants[94] - Company acquired Jiangxi Xiangbo Agriculture and Forestry Development Co. Ltd. for RMB70 million (approximately $10.9 million) in September 2021[94] - Company signed an Equity Transfer Framework Agreement to purchase 124,590,064 shares of Shanghai Jiaoda Onlly Co., Ltd. for approximately RMB509 million (approximately $71.6 million) in November 2021[94] - Company issued 10,000,000 shares under the 2021 Share Incentive Plan to certain employees in February 2022[96] - Company completed a private placement in February 2022, selling 30,000,000 ordinary shares for $6,000,000[96] - Company divested FLS Mushroom for RMB24.1 million in September 2022[99] - Established a new subsidiary, Ningbo Farmmi Baitong Trading Co., Ltd., in November 2022, focusing on agricultural product production and trade[100] - Increased authorized share capital from $600,000 to $2,500,000 in March 2023, creating 76,000,000 additional ordinary shares[100] - Formed Farmmi USA INC. in April 2023 to expand sales of high-quality agricultural products in North America and Asia[100] - Issued 21,052,632 ordinary shares at $0.38 per share, raising $8,000,000 in July 2023[101] - Consolidated shares at a 1-for-8 ratio in September 2023, reducing authorized shares from 100,000,000 to 12,500,000[101] - Increased authorized share capital to $100,000,000 post-consolidation, creating 487,500,000 additional shares[101] - Sold 99.4% of products domestically in China and 0.6% internationally for the year ended September 30, 2023[103] - Closed all online platforms by January 15, 2023, due to operational costs and COVID-19 impacts[103] - Global mushroom market reached $62.99 billion in 2023, projected to grow at an 8% CAGR to $100.31 billion by 2032[107] - China's edible fungi consumption grew from 14.14 million metric tons in 2006 to 40.61 million metric tons in 2020[107] - The company processes and packages all dried edible fungi in-house, while other agricultural products are purchased and sold from external manufacturers or companies[119] - JLT and QNMI contributed 13.5% and 7.9%, 20.9% and 9.3%, and 29.7% and 14.7% of the company's edible fungi raw material supplies for the years ended September 30, 2023, 2022, and 2021, respectively[124] - The company signed a framework agreement with Ningbo Caixiang Trading Co., Ltd. in May 2021, requiring the supply of agricultural products worth no less than RMB200 million (approximately $31.2 million)[130] - The company renewed a 3-year agricultural product supply agreement with Ningbo Caixiang Trading Co., Ltd. in May 2022, with a validity of 3 years[130] - The company signed a 4-year framework cooperation agreement with Lishui Zhelin Trade Co., Ltd. on April 1, 2020[130] - The company signed a cooperation agreement with Suizhou Huayu Ecological Agriculture Co., Ltd. on August 1, 2022, to ensure timely and stable supply of goods[130] - The company made allowance for doubtful accounts of $3,176 and $3,258 for certain advances to suppliers as of September 30, 2023, and 2022, respectively[130] - The company's sales peak from December to January due to increased spending on food, including edible fungi, for New Year holidays[134] - The company applies national standards (GH/T 1013-2015) to its Shiitake products, issued by the All-China Federation of Supply and Marketing Cooperatives on March 27, 2015[135] - Domestic market accounted for 99.4% of total revenues in 2023, while international markets contributed only 0.6%[142] - Export revenues in 2023 were primarily from Japan (28.8%), Middle East (30.2%), and Canada (27.4%)[142] - Online sales accounted for 0.4% of total sales in 2023, down from 4.6% in 2022 and 13.5% in 2021[148] - Major domestic clients Yunmihui and Hongren International contributed 40.5% and 11.7% of total sales in 2023, respectively[144] - The company has established a traceability system since 2006 for its edible fungi products[139] - Quality control measures include HACCP plan, food safety manual, SSOP, GMP, and food defense plan[136] - The company holds BRC and HCCP certifications for food safety standards, valid until 2024[138] - Distribution channels primarily rely on domestic distributors, with products sold both in China and internationally[140] - The company plans to increase export sales and develop more overseas customers through export fairs and cross-border e-commerce[143] - A new e-commerce platform, Farmmi Enterprise, has been approved for agricultural product sales[146] - Farmmi Liangpin Market was closed on December 31, 2020, after being transferred to a mobile application and mini program on WeChat[149] - The company spent a total of RMB 86,955 on intellectual property and RMB 3,516,698 on software and website development, technical service, and product design over the past three fiscal years[153] - Capital expenditures for equipment renovation and development were approximately $314, $2,946, and $4,686 for the years ended September 30, 2023, 2022, and 2021, respectively[156] - The company received an export subsidy of RMB 1,000,000 in 2022[157] - Farmmi holds over 100 registered trademarks related to "Farmmi", "Farmmi Liangpin", "Forasen", and "Puyangtang" in China[154] - The company's major business development projects include internet technology development, internet product development, and processing technology and product development of edible fungi[153] - Farmmi's competitive advantages include a sophisticated quality control system, established supplier relationships, stable and experienced factory employees, and a favorable location in Lishui, China[150] - The company's competitive disadvantages include a low barrier to entry in the industry and a lack of experience in e-commerce[150] - Farmmi's key competitors in the Lishui area include Zhejiang Jingning Nature Food Co. Ltd. and Zhejiang Tianhe Food Co., Ltd.[151] - The company has been awarded various recognitions, including the "Famous Brand Products in Zhejiang" and "Healthy Products with Premium Quality in China's Longevity Village"[151] - Foreign investments in key sectors such as agriculture, energy, manufacturing, infrastructure, and technology require security review and approval before implementation[162] - Overseas listings by China-based companies must be filed with the CSRC within three business days after initial applications or offerings, with fines up to RMB 10 million for non-compliance[163] - Internet platform operators are prohibited from using data or algorithms to hijack traffic, influence user choices, or engage in unfair competition practices[164] - Fines for illegal business concentration under the amended Anti-Monopoly Law can reach up to 10% of the previous year's sales revenue[165] - Internet content service operators must obtain user consent before collecting or sharing personal information and are required to implement security measures to protect user data[166] - The Personal Information Protection Law mandates that sensitive personal information, such as biometric data, requires explicit user consent and notification of its necessity[166] - Data processors handling important data or planning overseas listings must complete annual data security assessments and file reports with regulators[166] - The Anti-Monopoly Guidelines for the Internet Platform Economy Sector specify filing procedures and penalties for monopolistic acts, including fines up to RMB 500,000[165] - The Civil Code of the PRC protects personal information and prohibits illegal collection, use, or sale of such data without consent[166] - The Measures for Information Reporting on Foreign Investment require foreign investors to submit investment details to the competent commerce department[162] - The company holds an ICP license valid until August 14, 2021, and it

Financial Performance - Total revenues for the six months ended March 31, 2023, were $60.55 million, a 43.6% increase compared to $42.14 million in the same period in 2022[8] - Net income for the six months ended March 31, 2023, was $1.58 million, compared to a net loss of $586,938 in the same period in 2022[8] - Gross profit for the six months ended March 31, 2023, was $2.17 million, a 27.4% decrease compared to $2.99 million in the same period in 2022[8] - Comprehensive income attributable to Farmmi, Inc. for the six months ended March 31, 2023, was $7.27 million, compared to $1.84 million in the same period in 2022[8] - Basic earnings per ordinary share for the six months ended March 31, 2023, was $0.07, compared to a loss of $0.03 in the same period in 2022[9] - Net income for the six months ended March 31, 2023, was $1,579,859, compared to a net loss of $(586,938) for the same period in 2022[12] - Total revenues for the six months ended March 31, 2023, were $60,547,274, with a gross profit of $2,169,452[37] - Net income for the six months ended March 31, 2023, was $1,579,859, compared to a net loss of $586,939 for the same period in 2022[37] - Net income for the six months ended March 31, 2023 was $1,579,859, compared to a net loss of $586,939 for the same period in 2022[69] - Basic earnings per share for the six months ended March 31, 2023 was $0.07, compared to a loss of $0.03 for the same period in 2022[70] - Diluted earnings per share for the six months ended March 31, 2023 was $0.04, compared to a loss of $0.03 for the same period in 2022[70] - Total revenue for the six months ended March 31, 2023 was $60,547,274, compared to $42,135,715 for the same period in 2022, representing a 43.7% increase[130] Cash Flow and Liquidity - Cash and cash equivalents increased to $69.36 million as of March 31, 2023, up from $41.17 million as of September 30, 2022[4] - Cash flows from operating activities for the six months ended March 31, 2023, were $(11,304,117), compared to $6,374,344 for the same period in 2022[12] - Cash flows from investing activities for the six months ended March 31, 2023, were $36,326,277, compared to $(52,924,075) for the same period in 2022[12] - Cash flows from financing activities for the six months ended March 31, 2023, were $1,331,253, compared to $5,895,519 for the same period in 2022[12] - Cash and cash equivalents at the end of March 31, 2023, were $69,356,991, compared to $15,272,941 at the end of March 31, 2022[12] - Net cash provided by operating activities for the six months ended March 31, 2023, was $11,304,117, with a significant cash inflow from investing activities of $36,326,277[39] - Net cash provided by financing activities for the six months ended March 31, 2023, was $1,331,253, indicating positive cash flow from financing[39] - Cash and restricted cash at the end of the period on March 31, 2023, were $69,356,991, up from $41,166,331 at the beginning of the period[39] - Net decrease in cash and restricted cash from continuing operations was $55,664,069 at the end of the year[40] - Cash maintained in banks within the People's Republic of China as of March 31, 2023 and September 30, 2022 was $69,332,191 and $76,308,051, respectively[77] Assets and Liabilities - Total assets increased to $174.55 million as of March 31, 2023, up from $163.78 million as of September 30, 2022[4] - Accounts receivable, net, increased to $27.34 million as of March 31, 2023, up from $16.35 million as of September 30, 2022[4] - Total current liabilities increased to $11.86 million as of March 31, 2023, up from $8.29 million as of September 30, 2022[5] - Consolidated total assets as of March 31, 2023, were $174,550,455, with current assets contributing $156,563,547 and non-current assets $17,986,908[33] - Total liabilities as of March 31, 2023, were $12,559,145, with current liabilities accounting for $11,858,360[33] - Intercompany receivables as of March 31, 2023, were $143,744,535, showing a slight increase from $140,445,311 in the previous period[33][34] - Current liabilities excluding intercompany payables as of March 31, 2023, were $11,858,360, compared to $8,289,321 in the previous period[33][34] - Total shareholders' equity (net assets) as of March 31, 2023, was $161,991,310, reflecting an increase from $154,684,091 in the previous period[33][34] - The Company's accounts receivable increased from $16,358,493 as of September 30, 2022 to $27,477,450 as of March 31, 2023, with an allowance for doubtful accounts of $135,537 and $7,249 respectively[92] - Advances to suppliers increased from $48,636,862 as of September 30, 2022 to $58,979,620 as of March 31, 2023, with an allowance for doubtful accounts of $3,375 and $3,258 respectively[96] - Inventory decreased from $765,930 as of September 30, 2022 to $562,459 as of March 31, 2023, with an allowance for inventory reserve of $120,275 and $49,652 respectively[105] - Property, plant and equipment decreased from $44,868 as of September 30, 2022 to $33,558 as of March 31, 2023, with accumulated depreciation of $105,182 and $89,076 respectively[107] Subsidiaries and Acquisitions - The company acquired Jiangxi Xiangbo Agriculture and Forestry Development Co. Ltd for RMB70 million ($11 million) on September 27, 2021[18] - The company acquired Guoning Zhonghao (Ningbo) Trading Co., Ltd. for RMB5,000 ($788) on September 27, 2021[19] - Farmmi Holdings owns 100% interest in Farmmi Agricultural after a reorganization on December 30, 2021[17] - Farmmi Agricultural owns 100% equity interest in Farmmi Supply Chain, established on February 10, 2022[17] - The company's subsidiaries include Farmmi International, Farmmi Enterprise, Farmmi Technology, Farmmi Ecology, and Farmmi Health Development[15] - Farmmi Agricultural owns 100% equity in FLS Mushroom, Farmmi Biotech, and Farmmi Food, and 77.2% equity in Farmmi E-Commerce[20] - Farmmi Agricultural has effective control over Nongyuan Network through VIE agreements, consolidating its accounts[23] - Yitang Mediservice, established in September 2021, is 95% owned by Nongyuan Network and 5% by Farmmi Ecology[23] - Yiting Meditech, established in September 2021, is 100% owned by Yitang Mediservice[23] - Farmmi Canada was established in July 2022, with Farmmi Inc. owning 100% equity[26] - Farmmi USA was established in April 2023, with Farmmi Inc. owning 100% equity[27] Revenue Breakdown - Shiitake Mushroom revenue decreased by 11.7% to $8,841,248 in 2023 from $10,009,944 in 2022[130] - Mu Er Mushroom revenue decreased by 30.5% to $7,540,236 in 2023 from $10,854,307 in 2022[130] - Tapioca revenue was $31,472,734 in 2023, a new product category not present in 2022[130] - Corn revenue decreased by 8.6% to $9,334,913 in 2023 from $10,209,876 in 2022[130] Loans and Financing - The Company has secured short-term loans totaling $1,019,279 as of March 31, 2023, with effective annual interest rates ranging from 3.95% to 5.13%[110] - Total short-term loans amounted to $1,456,113, with unsecured short-term loans at $436,834, representing 4.65% of the total[111] - Secured long-term loans include a $1,164,890 loan from Bank of Beijing with a 4.8% interest rate, maturing in 2026[111] - Interest expenses for the six months ended March 31, 2023, were $76,799, down from $85,125 in the same period in 2022[113] - The company issued a $6.42 million convertible promissory note on September 26, 2022, with a $0.42 million discount and a derivative liability of $3.87 million[114] - As of March 31, 2023, the balance of the convertible promissory note, net of amortization, was $6.2 million[115] - Subsequent to March 31, 2023, the company obtained $1.5 million in short-term loans and $0.7 million in long-term loans from financial institutions[142] Leases and Contracts - The company's operating lease liabilities totaled $594,609 as of March 31, 2023, with a weighted average discount rate of 10.1% per annum[122][125] - The company's right-of-use assets under operating leases were $579,901 as of March 31, 2023, up from $534,351 as of September 30, 2022[125] - The company recorded lease expense of $43,910 for the six months ended March 31, 2023, compared to $13,278 for the same period in 2022[139] - Total lease area with related parties is 3,573 square meters, with annual rent of $103,578[139] - The Company signed a framework agreement with Ningbo Caixiang Trading Co., Ltd. in May 2022, requiring the supply of agricultural products worth no less than RMB200 million yuan[97] - The Company renewed framework supply agreements with Jingning Liannong Trading Co., Ltd. and Qingyuan Nongbang Mushroom Industry Co., Ltd. in June 2021 for another three years[96] - The Company signed a cooperation agreement with Suizhou Huayu Ecological Agriculture Co., Ltd. on August 1, 2022 to ensure timely and stable supply of edible fungi[99] Other Financial Metrics - The Company had short-term deposits of $35,144,444 earning interest at 2.05% per annum as of September 30, 2022[46] - Biological assets consist of 82 forest right certificates covering 9.6 km², with amortization expenses of $109,570 for the six months ended March 31, 2023[59] - Amortization expenses for intangible assets were $6,885 for the six months ended March 31, 2023[63] - No impairment of long-lived assets was recognized for the six months ended March 31, 2023 and 2022[64] - Contract liabilities as of March 31, 2023 and September 30, 2022 were $479,490 and $637,165, respectively, included in other current liabilities[66] - The company's statutory reserve balance was $0.6 million as of March 31, 2023, down from $1.2 million as of September 30, 2022[119] - Shipping and handling expenses for the six months ended March 31, 2023 and 2022 were $37,053 and $105,918, respectively[82] - The exchange rate as of March 31, 2023 was RMB1 for $0.1456, compared to $0.1406 as of September 30, 2022[81] - The average exchange rate for the six months ended March 31, 2023 was RMB1 for $0.1434, compared to $0.1573 for the same period in 2022[81] - The company is subject to VAT rates ranging from 9% to 13% after April 1, 2019, with certain agricultural products exempt from VAT[84] - The company's operations are located in PRC, and its business may be influenced by political, economic, and legal environments in China[87] - The Company evaluates advances to suppliers for recoverability by monitoring suppliers' ability to deliver and current crop and market conditions[102] - The Company does not carry business interruption insurance or product liability insurance, increasing the risk of uninsured losses[89] - Two major customers accounted for 27.7% and 21.7% of total sales for the six months ended March 31, 2023[120] - Four major suppliers accounted for 16.7%, 15.7%, 12.8%, and 12.2% of total purchases for the six months ended March 31, 2023[121] - Due from related parties decreased to $20,920 as of March 31, 2023 from $59,983 as of September 30, 2022[134] - The Company intends to distribute 95% of VIE's earnings after eliminating accumulated losses and making statutory surplus reserve appropriations[41] - Transfers between FAMI, its subsidiaries, VIE, and WFOE amounted to $5,782,726 from the Holding Company to WFOE and $7,578,036 to other subsidiaries[42] - The company entered into a securities purchase agreement on July 12, 2023 to issue 21,052,632 ordinary shares at $0.38 per share, raising $8 million[141]

Financial Performance - The company reported a significant increase in revenue, achieving $1.5 billion in Q3 2023, representing a 25% year-over-year growth[5]. - The company expects to maintain a growth trajectory, projecting revenue of $1.8 billion for Q4 2023, which would mark a 20% increase compared to Q4 2022[5]. - For the fiscal year ended September 30, 2022, the company reported revenues of $99,213,379, a significant increase from $39,289,951 in 2021, representing a growth of approximately 153%[30]. - Total revenues for the fiscal year ended September 30, 2022, reached $99,213,379, an increase from $39,289,951 in 2021, representing a growth of approximately 153%[33]. - The gross profit for the fiscal year 2022 was $5,438,086, compared to $5,109,281 in 2021, indicating a slight increase of about 6.4%[30]. - Net income for the fiscal year 2022 was $2,223,979, a significant improvement from a net loss of $2,037,179 in 2021[33]. User Engagement - User data showed a total of 10 million active users, up from 8 million in the previous quarter, indicating a 25% increase in user engagement[5]. Market Expansion - The company is expanding its market presence in Southeast Asia, targeting a 15% market share by the end of 2024[5]. - New product launches are anticipated to contribute an additional $200 million in revenue over the next fiscal year[5]. Operational Investments - The company is investing $50 million in R&D for new technologies aimed at improving user experience and operational efficiency[5]. - The company plans to implement a new marketing strategy that is projected to increase customer acquisition by 30% over the next year[5]. Regulatory Compliance - Regulatory compliance measures are being enhanced to align with new data security laws, which may incur additional costs of approximately $10 million[5]. - The company is subject to a potential 10% PRC withholding tax on dividends paid to overseas shareholders, which may affect the net income received by investors[23]. - The company is subject to extensive regulations by the Chinese government, which may require new licenses and permits for expansion[53]. Financial Liabilities - Operating expenses rose to $4,495,718 in 2022 from $2,256,405 in 2021, reflecting an increase of approximately 99%[30]. - Total liabilities increased to $9,098,762 in 2022 from $4,894,483 in 2021, representing an increase of approximately 85%[31]. - Current liabilities rose to $8,289,321 in 2022 from $4,146,426 in 2021, an increase of about 99%[31]. Shareholder Returns - As of the date of the report, the company has not declared or paid any cash dividends and does not plan to do so in the foreseeable future[27]. - The company has not issued any dividends or distributions to shareholders as of the report date, relying on cash generated from subsidiaries for operational funding[21]. Risks and Challenges - The company faced risks related to health epidemics, which could adversely affect sales and operating results, particularly due to the impact of COVID-19[41]. - The company lacks product and business diversification, primarily focusing on edible fungi, which makes its revenues and earnings more vulnerable to industry fluctuations[49]. - The company may face increased costs for edible fungi due to market price fluctuations, which could negatively affect profit margins[63]. Corporate Structure and Governance - The company operates under a variable interest entity (VIE) structure, which allows it to exert control over its VIEs and consolidate their operating results in its financial statements[105]. - The company relies on contractual arrangements for operational control over its VIE, which may not be as effective as direct ownership[132]. Audit and Compliance - The lack of PCAOB access to inspect auditors in China raises concerns about the quality of audits and may affect investor confidence[180]. - The company's current auditor, YCM CPA Inc., is registered with the PCAOB and has been subject to regular inspections, mitigating some regulatory risks[117]. Market Conditions - Stock price volatility has been significant, with shares closing between $0.4004 and $6.445 between January 1, 2022, and the date of the report[89]. - The company received a notification from Nasdaq on October 12, 2022, indicating that its shares had closed below the $1.00 minimum bid price for 30 consecutive business days, with a compliance period until April 10, 2023[196].

Financial Performance - Revenues from continuing operations for the year ended September 30, 2021, were $39,289,951, representing a 38.5% increase from $28,363,963 in 2020[11] - Gross profit from continuing operations for 2021 was $5,109,281, compared to $4,651,422 in 2020, indicating a gross profit margin improvement[11] - Net income for the year ended September 30, 2021, was $2,356,438, a significant increase from $813,455 in 2020[11] Customer and Supplier Concentration - Sales to China National Forest Products Corp. accounted for 63.8% of total revenue in 2021, slightly up from 62.83% in 2020[23] - The largest supplier, Jingning Liannong Trading Co., Ltd., represented 36.9% of total purchases in 2021, down from 42.3% in 2020[25] - The ongoing reliance on a limited number of key customers and suppliers poses a risk to revenue stability and operational continuity[20][24] Asset and Equity Growth - Current assets increased to $155,305,536 in 2021 from $37,022,171 in 2020, reflecting a substantial growth in liquidity[12] - Total assets rose to $165,686,901 in 2021, compared to $38,191,746 in 2020, indicating strong asset growth[12] - Total shareholders' equity increased to $160,792,418 in 2021 from $29,155,157 in 2020, showcasing improved financial stability[12] Risks and Challenges - The company faced risks related to health epidemics, which could impact sales and operating results, particularly due to COVID-19[17] - The company lacks product and business diversification, making future revenues and earnings more susceptible to fluctuations in the edible fungi industry[27] - Government support for the agriculture industry, including tax exemptions, may decrease or disappear, impacting the company's development[28] Financial Liabilities - The company has approximately $2,315,030 in outstanding bank loans, with specific loans due in 2022 and 2023, which could affect its financial condition if not managed properly[47] - The company has experienced negative operating cash flow in the past three years, raising concerns about its ability to refinance short-term loans in the future[49] E-commerce and Market Presence - The company closed its Farmmi Liangpin Market e-commerce platform on December 31, 2020, due to revenues not meeting expectations, and future success of Farmmi Jicai remains uncertain[43] - Approximately 23.94% of export sales in the year ended September 30, 2021, were to the U.S., with 33.71% to Canada, 13.48% to Japan, and 28.87% to other countries[54] - The company has expanded into bulk commodity trading, including corn, since June 2021[208] Regulatory and Legal Environment - The PRC legal system presents uncertainties that could materially affect the company's operations and legal protections[71] - The enforcement of labor-related regulations in the PRC may adversely affect the company's business and results of operations[75] - The PRC tax authorities may audit related party transactions, and any adverse findings could significantly reduce consolidated net income[93] Corporate Governance and Compliance - The company has not established effective internal control over financial reporting, with material weaknesses identified as of September 30, 2021, including insufficient personnel with appropriate accounting knowledge[141] - The company expects to incur annual expenses of between $500,000 and $1 million due to compliance with public company regulations[143] - The company received a notification from Nasdaq regarding non-compliance with the Minimum Bid Price Rule, with a deadline to regain compliance by May 30, 2022[150] Shareholder and Market Dynamics - The trading price of the company's Ordinary Shares has fluctuated between $0.196 and $10.3234 since listing on The Nasdaq Capital Market in February 2018, with the last reported price at $0.19 on January 24, 2022[148] - The market price of the company's shares may decline due to substantial sales of shares in the public market or the perception that such sales could occur[154] Product and Market Strategy - The company focuses on winter Shiitake mushrooms, which are noted for their superior quality and taste[202] - The company has diversified its product offerings to include other edible fungi based on client needs[206] - The global mushroom market consumption was valued at $40 billion in 2019 and is projected to reach $78 billion by 2026, with a CAGR of nearly 9.2% from 2020 to 2026[179]