Part I [Key Information](index=5&type=section&id=Item%203.%20Key%20Information) The company presents historical financial data and outlines significant risks from customer concentration and its VIE structure [Selected Financial Data](index=5&type=section&id=A.%20Selected%20Financial%20Data) The company shows revenue growth from FY2017-2019 but recorded a net loss in FY2019 after two years of profitability Selected Financial Data (All amounts in U.S. dollars) | Statement of Operations Data | FY 2019 | FY 2018 | FY 2017 | | :--- | :--- | :--- | :--- | | Revenues | $30,841,875 | $29,819,088 | $26,665,601 | | Gross profit | $5,422,124 | $5,067,615 | $4,524,722 | | Income from operations | $3,035,613 | $3,077,928 | $3,469,229 | | Net income (loss) | $(311,004) | $3,229,266 | $3,270,346 | | Earnings (loss) per share, basic and diluted | $(0.03) | $0.29 | $0.33 | | Balance Sheet Data (As of Sep 30) | 2019 | 2018 | 2017 | | :--- | :--- | :--- | :--- | | Total assets | $30,482,631 | $22,075,997 | $13,843,929 | | Total liabilities | $8,145,080 | $2,862,355 | $3,191,015 | | Total stockholders' equity | $21,498,503 | $18,338,270 | $9,756,338 | [Risk Factors](index=6&type=section&id=D.%20Risk%20Factors) The company faces significant risks from customer concentration, China operations, its VIE structure, and internal controls - The company has a **high concentration of customers**, with China Forest accounting for a significant portion of total revenue over the past three fiscal years[19](index=19&type=chunk)[21](index=21&type=chunk) Customer and Supplier Concentration | Concentration | FY 2019 | FY 2018 | FY 2017 | | :--- | :--- | :--- | :--- | | **Top Customer (China Forest)** | 64.30% | 67.72% | 75.77% | | **Largest Supplier** | 50.08% | 54.03% | 60.32% | - The company's e-commerce business is conducted through a **Variable Interest Entity (VIE)**, Nongyuan Network, due to PRC restrictions on foreign investment in telecommunications[92](index=92&type=chunk)[94](index=94&type=chunk)[95](index=95&type=chunk) - The company has identified **material weaknesses in its internal control** over financial reporting, specifically a lack of sufficient personnel with U.S. GAAP knowledge[157](index=157&type=chunk) - As a **'foreign private issuer' and 'emerging growth company'**, Farmmi is exempt from certain U.S. reporting and governance requirements, which may result in less information available to investors[146](index=146&type=chunk)[150](index=150&type=chunk)[152](index=152&type=chunk) [Information on the Company](index=30&type=section&id=Item%204.%20Information%20on%20the%20Company) Details the company's history as a holding company, its business of selling edible fungi, and its complex VIE structure [History and Development of the Company](index=30&type=section&id=A.%20History%20and%20Development%20of%20the%20Company) The company was spun off from Forasen Group in 2015 and completed its NASDAQ IPO in February 2018 - The company was established in July 2015 to spin off the edible fungi business from **Forasen Group**, which is controlled by CEO Yefang Zhang and her husband, director Zhengyu Wang[180](index=180&type=chunk)[182](index=182&type=chunk) - Completed its **Initial Public Offering (IPO)** on NASDAQ under the symbol 'FAMI' in February 2018, raising approximately **$6 million** in net proceeds[186](index=186&type=chunk) - In November 2018, FMI completed a **$7.5 million private placement** of senior convertible notes and warrants with an institutional investor[188](index=188&type=chunk) [Business Overview](index=32&type=section&id=B.%20Business%20Overview) The company primarily processes and sells edible fungi, with sales concentrated in China and a growing e-commerce segment - The company's primary business is processing and selling edible fungi, mainly **Shiitake and Mu Er mushrooms**[193](index=193&type=chunk)[213](index=213&type=chunk) Revenue by Geographic Market (FY2019) | Market | Revenue Percentage | | :--- | :--- | | Domestic (China) | 93.17% | | International | 6.83% | - The company is expanding its e-commerce business, which accounted for **20.05% of total sales in FY2019**, up from 11.32% in FY2018[211](index=211&type=chunk)[270](index=270&type=chunk) - Key competitive advantages include a sophisticated quality control system (HACCP, BRC certified), established supplier relationships, and a favorable location in Lishui[289](index=289&type=chunk)[293](index=293&type=chunk)[295](index=295&type=chunk) [Organizational Structure](index=67&type=section&id=C.%20Organizational%20Structure) The company is a Cayman holding company using a VIE structure to operate its e-commerce business in the PRC - The company utilizes a complex structure with a **Cayman Islands parent**, a Hong Kong holding company, and multiple PRC subsidiaries (WFOEs)[359](index=359&type=chunk)[360](index=360&type=chunk)[361](index=361&type=chunk) - Due to PRC restrictions on foreign ownership, the company's e-commerce business is operated through a **VIE, Nongyuan Network**, which is controlled contractually[367](index=367&type=chunk)[322](index=322&type=chunk) - Control over the VIE is established through several key agreements: an **Exclusive Management Consulting and Technology Service Agreement, a Proxy Agreement, an Exclusive Call Option Agreement, and an Equity Pledge Agreement**[370](index=370&type=chunk)[371](index=371&type=chunk)[374](index=374&type=chunk)[377](index=377&type=chunk) [Property, Plants and Equipment](index=73&type=section&id=D.%20Property,%20Plants%20and%20Equipment) The company leases its main processing facilities from a related party and owns minimal fixed assets - The company **leases its two main factory properties** in Lishui from Forasen Group, a related party[391](index=391&type=chunk) - Fixed assets consist of office equipment, vehicles, machinery, and leasehold improvements, with a net book value of **$139,468** as of September 30, 2019[393](index=393&type=chunk)[555](index=555&type=chunk) [Operating and Financial Review and Prospects](index=76&type=section&id=Item%205.%20Operating%20and%20Financial%20Review%20and%20Prospects) Details a 3.4% revenue increase in FY2019 but a net loss of $0.3 million due to significant financing costs [Results of Operations (FY2019 vs. FY2018)](index=90&type=section&id=Results%20of%20Operations%20for%20the%20Years%20Ended%20September%2030,%202019%20and%202018) Revenue grew 3.4% in FY2019, but a net loss was recorded due to over $3.3 million in convertible note expenses Financial Performance Summary (FY2019 vs. FY2018) | Metric | FY 2019 | FY 2018 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenues | $30,841,875 | $29,819,088 | +3.43% | | Gross Profit | $5,422,124 | $5,067,615 | +7.00% | | Income from Operations | $3,035,613 | $3,077,928 | -1.37% | | Net (Loss) Income | $(311,004) | $3,229,266 | -109.63% | - The **net loss in FY2019** was primarily driven by expenses related to the senior convertible notes issued in November 2018, including **$1,197,317 in interest expense** and **$2,113,492 in amortization of debt issuance costs**[466](index=466&type=chunk)[467](index=467&type=chunk)[472](index=472&type=chunk) Revenue by Product (FY2019 vs. FY2018) | Product Category | FY 2019 Revenue | FY 2018 Revenue | Change (%) | | :--- | :--- | :--- | :--- | | Shiitake | $17,893,893 | $16,753,076 | +6.81% | | Mu Er | $11,659,409 | $12,190,340 | -4.36% | | Other | $1,288,573 | $875,672 | +47.15% | [Results of Operations (FY2018 vs. FY2017)](index=95&type=section&id=Results%20of%20Operations%20for%20the%20Years%20Ended%20September%2030,%202018%20and%202017) Revenue grew 11.8% in FY2018 driven by Mu Er sales, while net income remained flat due to higher operating costs Financial Performance Summary (FY2018 vs. FY2017) | Metric | FY 2018 | FY 2017 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenues | $29,819,088 | $26,665,601 | +11.83% | | Gross Profit | $5,067,615 | $4,524,722 | +12.00% | | Income from Operations | $3,077,928 | $3,469,229 | -11.28% | | Net Income | $3,229,266 | $3,270,346 | -1.26% | - The **11.83% revenue growth in FY2018** was largely due to a **31.93% increase in sales of Mu Er mushrooms**, driven by increased orders from major customer China Forest[475](index=475&type=chunk)[479](index=479&type=chunk) - Operating expenses rose sharply in FY2018, with **selling and distribution expenses up 291%** and **general and administrative expenses up 58%**, primarily due to IPO-related costs[487](index=487&type=chunk)[488](index=488&type=chunk) [Liquidity and Capital Resources](index=100&type=section&id=Liquidity%20and%20Capital%20Resources) Cash decreased significantly to $135,125 in FY2019 due to a $10.8 million negative operating cash flow Cash Flow Summary | Cash Flow Activity | FY 2019 | FY 2018 | | :--- | :--- | :--- | | Net cash used in operating activities | $(10,773,287) | $(2,725,010) | | Net cash used in investing activities | $(94,905) | $(64,715) | | Net cash provided by financing activities | $6,056,040 | $6,127,320 | - **Cash significantly decreased to $135,125** at FYE 2019 from $4,925,165 at FYE 2018, mainly due to a **$10.8 million cash outflow from operations**[499](index=499&type=chunk)[509](index=509&type=chunk) - The large cash use in operations was driven by an increase of **$5.8 million in accounts receivable** and an **$8.7 million increase in advances to suppliers**[509](index=509&type=chunk) - Financing activities in FY2019 provided **$6.1 million in cash**, primarily from the $7.5 million convertible note issuance, offset by debt repayments and financing costs[511](index=511&type=chunk) [Directors, Senior Management and Employees](index=104&type=section&id=Item%206.%20Directors,%20Senior%20Management%20and%20Employees) The company is led by its CEO and controlling shareholder, with a five-member board and 101 employees as of FY2019 - The company is led by **CEO and Chairwoman Yefang Zhang**. Her husband, Zhengyu Wang, is a director. The Board of Directors consists of five members, including three independent directors[518](index=518&type=chunk)[519](index=519&type=chunk)[520](index=520&type=chunk) Executive Compensation (FY2019) | Name | Position | Total Compensation ($) | | :--- | :--- | :--- | | Yefang Zhang | CEO | 176,646.98 | | Jun Zhou | CFO | 75,818.98 | | Liang Han | COO | 46,244.78 | - As of September 30, 2019, the company had **101 full-time employees**, down from 122 in 2018. The production department is the largest, with 52 employees[567](index=567&type=chunk) - The company has established an incentive pool of **1,168,000 Ordinary Shares** (10% of post-IPO shares) for employee stock and option grants[571](index=571&type=chunk) [Major Shareholders and Related Party Transactions](index=114&type=section&id=Item%207.%20Major%20Shareholders%20and%20Related%20Party%20Transactions) Ownership is highly concentrated with the CEO and her husband, and the company engages in significant related party leases - **CEO Yefang Zhang and her husband, director Zhengyu Wang**, are the controlling shareholders, beneficially owning approximately **66.0%** of the company's shares as of December 31, 2019[576](index=576&type=chunk) Related Party Balances (as of Sep 30, 2019) | Related Party | Relationship | Due to Related Party ($) | | :--- | :--- | :--- | | Yefang Zhang | CEO | 2,652,882 | | Forasen Group | Owned by CEO/Director | 0 | - The company **leases its main factory buildings from Forasen Group**, a related party owned by the CEO and her husband[583](index=583&type=chunk) [Financial Information](index=117&type=section&id=Item%208.%20Financial%20Information) The company has no material legal proceedings and does not plan to pay dividends, retaining earnings for growth - The company is not currently a party to any **material legal or administrative proceedings**[590](index=590&type=chunk) - The company has **never declared or paid cash dividends** and does not expect to in the foreseeable future, intending to retain earnings for business growth[591](index=591&type=chunk) - Dividend payments are also restricted by PRC regulations, which require PRC subsidiaries to set aside **statutory reserves** from after-tax profits before distributing dividends[593](index=593&type=chunk) [The Offer and Listing](index=118&type=section&id=Item%209.%20The%20Offer%20and%20Listing) The company's shares have traded on NASDAQ under 'FAMI' since February 2018, showing significant price volatility - The company's Ordinary Shares are listed on the **NASDAQ Capital Market** under the symbol 'FAMI'[599](index=599&type=chunk) Annual Stock Price Range | Fiscal Year Ended Sep 30 | High ($) | Low ($) | | :--- | :--- | :--- | | 2018 | 10.3234 | 2.68 | | 2019 | 5.87 | 1.12 | [Additional Information](index=120&type=section&id=Item%2010.%20Additional%20Information) Outlines material contracts, PRC exchange controls, and the potential classification as a PFIC for U.S. tax purposes - In November 2018, the company completed a **$7.5 million private placement**, issuing senior convertible notes due April 2020 and warrants to an institutional investor[602](index=602&type=chunk) - The company's operations are subject to **PRC foreign exchange controls**, which require government approval for capital account transactions and dividend distributions[607](index=607&type=chunk) - For U.S. investors, there is a risk that the company could be classified as a **Passive Foreign Investment Company (PFIC)**, which would result in adverse U.S. federal income tax consequences[632](index=632&type=chunk)[635](index=635&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=130&type=section&id=Item%2011.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to interest rate, foreign exchange (RMB/USD), and commodity price risks - The company is exposed to **interest rate risk** on its bank loans; a 1 percentage point change in interest rates would affect profit by approximately **$14,008**[649](index=649&type=chunk) - The company faces **foreign exchange risk** as its functional currency is the Chinese Renminbi (RMB), while its financial statements are presented in U.S. dollars[653](index=653&type=chunk)[655](index=655&type=chunk) - The company is exposed to **commodity risk** from potential price increases in raw edible fungi, which is its primary input[656](index=656&type=chunk) Part II [Material Modifications to the Rights of Securities Holders and Use of Proceeds](index=132&type=section&id=Item%2014.%20Material%20Modifications%20to%20the%20Rights%20of%20Securities%20Holders%20and%20Use%20of%20Proceeds) Details the use of approximately $4.9 million of its $6 million in IPO proceeds, primarily for securing farm supplies Use of IPO Proceeds | Use | Estimated Amount of Net Proceeds to be Spent | Approximate Amount Spent | | :--- | :--- | :--- | | Product Development | 16.67% | $225,238 | | Family Farms | 16.67% | $4,122,012 | | Farmmi Liangpin Market | 66.66% | $574,137 | | **Total** | **100.00%** | **$4,921,387** | [Controls and Procedures](index=132&type=section&id=Item%2015.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal controls were ineffective due to a material weakness in accounting expertise - Management concluded that as of September 30, 2019, the company's **disclosure controls and procedures were ineffective**[664](index=664&type=chunk) - A **material weakness in internal control** over financial reporting was identified due to a lack of sufficient personnel with adequate knowledge of U.S. GAAP[666](index=666&type=chunk) - The company is in the process of implementing **remedial actions**, including improving review processes and enhancing documentation[667](index=667&type=chunk) [Corporate Governance and Other Matters](index=133&type=section&id=Item%2016.%20Corporate%20Governance%20and%20Other%20Matters) The company follows home country governance practices and has an audit committee financial expert on its board - The Board of Directors has identified Yunhao Chen as an **'audit committee financial expert'**[668](index=668&type=chunk) Principal Accountant Fees (Friedman LLP) | Fee Type | FY 2019 | FY 2018 | | :--- | :--- | :--- | | Audit Fees | $200,000 | $185,000 | - As a **foreign private issuer**, the company is exempt from certain NASDAQ corporate governance rules and may follow its home country (Cayman Islands) practices[676](index=676&type=chunk)[678](index=678&type=chunk) Part III [Financial Statements](index=135&type=section&id=Item%2018.%20Financial%20Statements) Presents the audited consolidated financial statements for FY2017-2019, prepared in accordance with U.S. GAAP Consolidated Balance Sheet (as of Sep 30, 2019) | Account | Amount (USD) | | :--- | :--- | | **Total Assets** | **$30,482,631** | | Current Assets | $29,705,028 | | Cash | $135,125 | | Accounts Receivable, net | $13,827,591 | | Advances to Suppliers | $14,034,379 | | **Total Liabilities** | **$8,145,080** | | Current Liabilities | $8,145,080 | | Convertible notes payable | $2,926,361 | | **Total Equity** | **$22,337,551** | Consolidated Statement of Operations (for year ended Sep 30, 2019) | Account | Amount (USD) | | :--- | :--- | | Total Revenues | $30,841,875 | | Gross Profit | $5,422,124 | | Income from Operations | $3,035,613 | | **Net (Loss) Income** | **$(311,004)** | | Basic and Diluted (Loss) per Share | $(0.03) | - The financial statements consolidate the company's subsidiaries and its **Variable Interest Entity (VIE)**, Nongyuan Network, which generated **$6.2 million in sales** in FY2019[708](index=708&type=chunk)[709](index=709&type=chunk) - Notes to the financial statements provide detailed breakdowns of accounts, significant accounting policies, **related party transactions**, debt instruments, and segment reporting[706](index=706&type=chunk)[774](index=774&type=chunk)[767](index=767&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Ordinary Shares, $0.001 par value per share NASDAQ Capital Market FORM 20-F (Mark One) ¨ REGISTRATION STATEMENT PURSUANT TO SECTION 12(B) OR 12(G) OF THE SECURITIES EXCHANGE ACT OF 1934 OR x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended September 30, 2018 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ¨ SHELL COMPANY REPORT ...