Origin(US:SEED)2024-02-14 16:00Compensation and Equity Awards - The aggregate cash compensation paid to directors and executive officers was RMB nil (US$ nil) for the twelve months ended September 30, 2023[333]. - The 2014 Performance Equity Plan allows for the issuance of equity awards for up to 5,000,000 ordinary shares, with 224,700 awards outstanding as of September 30, 2023[334]. - The 2021 Performance Equity Plan permits the issuance of equity awards for up to 1,000,000 ordinary shares, with 36,000 options outstanding and 886,320 shares available for future grants as of September 30, 2023[335]. - The outstanding awards under the 2014 Performance Equity Plan are zero for future grants, indicating a complete allocation of available shares[334]. - The company plans to expand equity awards to a broader range of employees to align incentives with stock performance[334]. Board and Governance - The board of directors consists of five members, including one female and four male directors, with a diversity matrix indicating four Asian and one White director[341]. - The Audit Committee is composed of independent directors Fei Wang, Michael Trimble, and Min Lin, ensuring compliance with Nasdaq and SEC independence criteria[343]. - Ms. Fei Wang qualifies as an "audit committee financial expert" due to her educational background and extensive experience in financial reporting[345]. - The company has established an Audit Committee charter responsible for reviewing financial statements and overseeing the relationship with independent auditors[346]. - The company has a "clawback" policy adopted in June 2023, compliant with Nasdaq regulations[356]. - The company is not required to hold an annual meeting of shareholders under BVI laws, following its home country practice instead[354]. - The company has been granted exemptions from certain Nasdaq listing standards as a foreign private issuer[443]. Employment and Internal Controls - Dr. Gengchen Han has an employment agreement with a term of three years starting January 1, 2024, with benefits including five weeks' vacation and a car[342]. - Management identified a material weakness in internal control over financial reporting as of September 30, 2023, due to insufficient qualified personnel and separation of duties[427]. - The positions of CEO and CFO are currently held by the same individual, which contributes to the identified weaknesses in internal controls[427]. - Management's internal control system is designed to provide reasonable assurance regarding the reliability of financial reporting, but inherent limitations exist[426]. - The lack of timely gathering of financial information and preparation of required reports was noted as a material weakness in internal controls[427]. - The company plans to recruit a new CFO and expand its accounting staff to address internal control issues, although staffing remains challenging due to the Covid-19 pandemic[429]. Financial Performance - Revenues for Q3 2023 reached RMB 93,307,000, a significant increase of 77.5% compared to RMB 52,580,000 in Q3 2022[473]. - Gross profit for Q3 2023 was RMB 17,247,000, representing a gross margin of approximately 18.5%[473]. - Net income for Q3 2023 was RMB 62,669,000, a substantial recovery from a net loss of RMB 127,081,000 in Q3 2021[473]. - The company reported a comprehensive income of RMB 62,455,000 for Q3 2023, compared to a comprehensive loss of RMB 127,897,000 in Q3 2021[473]. - Basic and diluted net income per share for Q3 2023 was RMB 8.45 and RMB 8.43, respectively, a significant improvement from losses of RMB 16.29 in Q3 2021[473]. - The company reported a net income of RMB 62.7 million for the year ended September 30, 2023, compared to a net income of RMB 2.3 million in 2022[500]. Assets and Liabilities - As of September 30, 2023, total assets increased to RMB 238,506,000 from RMB 135,955,000 in 2022, representing a growth of approximately 75.5%[468]. - Current liabilities rose to RMB 313,461,000 in 2023, up from RMB 292,865,000 in 2022, indicating an increase of about 7%[468]. - The accumulated deficit decreased from RMB 656,898,000 in 2022 to RMB 601,566,000 in 2023, reflecting an improvement of approximately 8.4%[469]. - Cash and cash equivalents increased to RMB 23,708,000 in 2023, compared to RMB 17,669,000 in 2022, marking a growth of about 34.2%[468]. - The company's total liabilities, including amounts of consolidated VIEs, were RMB 319,766,000 as of September 30, 2023, compared to RMB 308,597,000 in 2022, showing a rise of about 3.8%[468]. - Total shareholders' equity improved from a deficit of RMB 172,642,000 in 2022 to a deficit of RMB 81,260,000 in 2023, indicating a reduction of approximately 53%[469]. Legal and Regulatory Environment - The company is subject to various legal proceedings, including a pending lawsuit with a corn dealer regarding a supply contract[366]. - The company has filed documentation with Nasdaq exempting it from certain provisions of Nasdaq regulations that BVI law does not require compliance with[355]. - The company is subject to U.S. federal income tax laws, which may affect the tax treatment of dividends and capital gains for U.S. Holders[404]. - The M&A Rules require prior notification to MOFCOM for foreign investors acquiring control of PRC domestic enterprises, making M&A activities more complex[390]. - The EIT Law imposes a standard income tax rate of 25% on PRC enterprises, with dividends from PRC subsidiaries typically subject to a 10% withholding tax[394]. Foreign Exchange and Economic Conditions - The company recorded a foreign exchange loss of RMB0.78 million (US$0.11 million) for the twelve months ended September 30, 2023, due to currency fluctuations[421]. - The company has not engaged in any hedging activities, which may lead to economic losses from foreign currency exchange rate fluctuations[421]. - The company believes its exposure to foreign exchange risks should be limited, although the value of shares may be affected by the exchange rate between U.S. dollars and Renminbi[420]. - The PRC government may readjust the current exchange rate regime, which could impact foreign currency transactions[421]. - The inflation rate in China was -0.1% in October 2023, with a producer price index decrease of 3.7% year-over-year[422]. - The overall national inflation rate in China was approximately 2.4%, 1.07%, and 2.8% for the fiscal years ended September 30, 2021, 2022, and 2023, respectively[422]. Business Operations and Strategy - The company is engaged in hybrid crop seed development, production, and distribution, with a focus on expanding its market presence in the agricultural sector[483]. - The company is developing new hybrids and nutrition-enhanced corn for animal feed, which is expected to boost revenue significantly[500]. - The company is exploring additional funding sources, including licensing core seed traits and applying for government grants[501]. - The company has a 100% ownership in its subsidiary Beijing Origin State Harvest Biotechnology Limited, which focuses on hybrid seed technology development[483]. - The company derives most of its revenue from hybrid corn seed, indicating a focus on agricultural products[514]. - The company has not incurred any advertising costs for the years ended September 30, 2021, 2022, and 2023, suggesting a potential strategy of organic growth without significant marketing expenses[519].