EXHIBIT 99.1
FARMMI, INC.
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2025 AND SEPTEMBER 30, 2024 AND
FOR THE SIX MONTHS ENDED MARCH 31, 2025 AND 2024
F-1 |
FARMMI, INC.
TABLE OF CONTENTS
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| F-1 |
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Condensed Consolidated Balance Sheets as of March 31, 2025 (Unaudited) and September 30, 2024 |
| F-3 |
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| F-4 |
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| F-5 |
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| F-6 |
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Notes to Unaudited Condensed Consolidated Financial Statements |
| F-7 |
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| F-2 |
| Table of Contents |
Farmmi, Inc.
Condensed Consolidated Balance Sheets
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| March 31 |
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| September 30, |
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| 2025 |
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| 2024 |
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Assets |
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Current Assets |
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Cash |
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Accounts receivable, net |
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Advances to suppliers, net |
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Inventories, net |
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Other current assets |
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Due from a related party |
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Total current assets |
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Long-term investments, net |
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Biological assets, net |
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Right-of-use assets, net |
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Property and equipment, net |
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Total non-current assets |
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Total Assets |
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Liabilities and Shareholders’ Equity |
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Current Liabilities |
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Long-term loans – current portion |
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Acquisition consideration payable |
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Promissory notes |
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Accounts payable |
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Due to related parties |
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Operating lease liabilities – current |
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Other current liabilities |
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Total current liabilities |
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Long-term loans – non-current portion |
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Operating lease liabilities – non-current |
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Total non-current liabilities |
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Total Liabilities |
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Commitment and contingencies |
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Shareholders’ Equity |
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Ordinary share, $ |
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Additional paid-in capital |
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Statutory reserve |
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Retained earnings |
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Accumulated other comprehensive loss |
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Total Farmmi, Inc.’s shareholders’ equity |
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Noncontrolling interest |
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Total Shareholders’ Equity |
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Total Liabilities and Shareholders’ Equity |
| $ |
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| $ |
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* Adjusted for the effect of 1-for-12 reverse share split on March 17, 2025, see Note 12 for details.
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| F-3 |
| Table of Contents |
Farmmi, Inc.
Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income
(Unaudited)
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| For the Six Months Ended March 31, |
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| 2025 |
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| 2024 |
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Sales to third parties |
| $ |
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Sales to related parties |
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Revenues |
| $ |
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Cost of revenues |
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Gross profit |
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Operating expenses |
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Reversal of (allowance for) doubtful accounts |
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Selling and distribution expenses |
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General and administrative expenses |
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Total operating expenses |
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(Loss) income from operations |
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Other income (expenses) |
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Interest income |
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Interest expense |
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Amortization of debt issuance costs |
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Loss from equity method investments |
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Other income, net |
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Gain on disposal of subsidiaries |
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Total other income (expenses), net |
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(Loss) income before income taxes |
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Income tax benefits |
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Net (loss) income |
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Net loss attributable to noncontrolling interest |
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Net (loss) income attributable to Farmmi, Inc. |
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Comprehensive (loss) income |
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Net (loss) income |
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Foreign currency translation |
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Comprehensive (loss) income attributable to Farmmi, Inc. |
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Weighted average number of ordinary shares* |
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Basic |
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Diluted |
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(Loss) earnings per ordinary share |
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Basic |
| $ | ( | ) |
| $ |
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Diluted |
| $ | ( | ) |
| $ |
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* Adjusted for the effect of 1-for-12 reverse share split on March 17, 2025, see Note 12 for details.
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| F-4 |
| Table of Contents |
Farmmi, Inc.
Condensed Consolidated Statements of Changes in Shareholders’ Equity
For the Six Months Ended March 31, 2025 and 2024
(Unaudited)
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| Accumulated |
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| Additional |
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| Other |
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| Ordinary shares |
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| Paid in |
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| Statutory |
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| Retained |
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| Comprehensive |
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| Shareholders’ |
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| Noncontrolling |
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| Total |
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| Shares* |
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| Amount |
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| Capital |
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| Reserve |
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| Earnings |
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| Income (loss) |
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| Equity |
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| Interest |
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Balance as of September 30, 2023 |
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| $ |
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Issuance of ordinary shares for promissory notes redemption |
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Reverse share-split adjustment |
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Foreign currency translation gain |
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Disposal of subsidiaries |
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Net income for the period |
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Balance as of March 31, 2024 |
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| $ |
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Balance as of September 30, 2024 |
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| $ |
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Issuance of ordinary shares for promissory notes redemption |
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Issuance of ordinary shares for warrants exercised |
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Reverse share-split adjustment |
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Foreign currency translation loss |
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Disposal of subsidiaries |
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Net loss for the period |
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Balance as of March 31, 2025 |
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| $ |
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| $ |
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| $ |
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| $ | ( | ) |
| $ |
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| $ | ( | ) |
| $ |
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* Adjusted for the effect of 1-for-12 reverse share split on March 17, 2025, see Note 12 for details.
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| F-5 |
| Table of Contents |
Farmmi, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
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| For the Six Months Ended March 31, |
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| 2025 |
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| 2024 |
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Cash flows from operating activities |
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Net (loss) income |
| $ | ( | ) |
| $ |
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Adjustments to reconcile net income to net cash provided by (used in) operating activities: |
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Changes in allowances - accounts receivable |
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Changes in allowances - advances to suppliers |
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Changes in allowances - inventories |
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Depreciation |
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Amortization of operating lease right-of-use assets |
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Loss on equity investment |
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Gain from disposal of subsidiaries |
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Amortization of debt issuance costs |
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Interest expenses |
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Depreciation of biological assets |
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Changes in operating assets and liabilities: |
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Accounts receivable, net |
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Advances to suppliers, net |
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Inventories, net |
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Other current assets |
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Accounts payable |
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Operating lease liabilities |
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Other current liabilities |
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Net cash provided by (used in) operating activities |
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Cash flows from investing activities |
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Purchase of property, plant and equipment |
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Purchase of long-term investment |
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Disposal of subsidiaries (net of cash disposed) net of cash received |
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Net cash (used in) provided by investing activities |
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Cash flows from financing activities |
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Repayment of promissory notes |
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Borrowings from a third-party long-term loan |
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Repayment of a third-party long-term loan |
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Issuance of ordinary shares for warrants exercised |
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Repayments of bank loans |
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Repayment of advances from related parties |
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Interest provided to related parties |
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Proceeds from advances from related parties |
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Net cash provided by (used in) financing activities |
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Effect of exchange rate changes on cash |
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Net increase (decrease) in cash |
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Cash, beginning of period |
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Cash, end of period |
| $ |
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Supplemental disclosure information: |
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Income taxes paid |
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Interest paid |
| $ |
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| $ |
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Non-cash financing activities |
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Acquisition of long-term in the form of accounts receivable |
| $ | |
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Issuance of ordinary shares for promissory notes redemption |
| $ |
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| $ |
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Accrued interest for promissory notes |
| $ |
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| $ |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| F-6 |
| Table of Contents |
FARMMI, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 — Organization and nature of business
Farmmi, Inc. (“FAMI” or the “Company”) is a holding company incorporated under the laws of the Cayman Islands on July 28, 2015. FAMI owns
Farmmi Enterprise owns 100% equity interest in Zhejiang Farmmi Ecological Agriculture Technology Co., Ltd (“Farmmi Eco Agri”). Farmmi Eco Agri owns
Farmmi Supply Chain owns
Farmmi Health Development owns
On July 13, 2022, Farmmi Canada Inc. (Farmmi Canada) was established under the laws of Canada. Farmmi Inc. owns
On July 23, 2024, SuppChains Group Inc (“SuppChains”) was established under the laws of the State of California. Farmmi USA owns
On October 31, 2024, Suppchains Transport Inc (“Suppchains Transport”) was established under the laws of the State of California. SuppChains owns
On November 4, 2024, Zhejiang Famimi Biotechnology Co., Ltd (“Famimi Biotech”) was established under the laws of PRC, where Zhejiang Suyuan Agricultural owns
In March 2025, the Company internally reorganized its subsidiaries. After reorganization, Yitang Mediservice owns 100% interest in Jiangxi Xiangbo, Guoning Zhonghao and Ningbo Farmmi Trade.
On March 31, 2025, an agreement was signed to divest
| F-7 |
| Table of Contents |
FARMMI, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 — Organization and nature of business (continued)
As of March 31, 2025, details of the subsidiaries of FAMI are set out below:
Name of Entity | Date of Incorporation | Place of Incorporation | % of Ownership | Principal activities | ||
FAMI | Parent | |||||
Farmmi International | ||||||
Farmmi Enterprise | ||||||
Farmmi Health Development | ||||||
Zhejiang Suyuan Agricultural | ||||||
Farmmi E-Commerce | ||||||
Farmmi Biotech | ||||||
Farmmi Healthcare | ||||||
Jiangxi Xiangbo | ||||||
Yudu Yada | ||||||
Guoning Zhonghao | ||||||
Yitang Mediservice | ||||||
Yiting Meditech | ||||||
Farmmi Eco Agri | ||||||
Ningbo Farmmi Trade | ||||||
Farmmi USA | ||||||
SuppChains | ||||||
| SuppChains Transport | ||||||
Famimi Biotech | ||||||
| F-8 |
| Table of Contents |
FARMMI, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 2 — Summary of significant accounting policies
Basis of presentation and principles of consolidation
The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) and have been consistently applied. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These financial statements should be read in conjunction with the audited financial statements and notes thereto for the fiscal years ended September 30, 2024 and 2023. Operating results for the six months ended March 31, 2025 are not necessarily indicative of the results that may be expected for the year ending September 30, 2025.
The unaudited condensed consolidated financial statements of the Company reflect the principal activities of the Company’s main operating subsidiaries. All intercompany transactions and balances have been eliminated upon consolidation.
| F-9 |
| Table of Contents |
FARMMI, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 2 — Summary of significant accounting policies (continued)
Use of estimates
In preparing the unaudited condensed consolidated financial statements in conformity with U.S. GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the unaudited condensed consolidated financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. Significant items subject to such estimates and assumptions include allowance for doubtful accounts and advances to suppliers, the valuation of inventories, the useful lives of property and equipment, and the valuation of deferred tax assets. Actual results could differ from those estimates.
Cash
Cash includes currency on hand and deposits held by banks that can be added or withdrawn without limitation. All cash balances are in bank accounts in the PRC. Cash maintained in banks within the PRC of less than RMB0.5 million (approximately $
Accounts receivable, net
Accounts receivable are presented net of an allowance for doubtful accounts. The Company maintains an allowance for doubtful accounts for estimated losses. The Company reviews its accounts receivable on a periodic basis and makes general and specific allowances when there is doubt as to the collectability of individual balances. In evaluating the collectability of individual receivable balances, the Company considers many factors, including the age of the balance, customer’s payment history and current credit-worthiness, and current economic trends. Accounts are written off after efforts at collection prove unsuccessful.
Advances to suppliers, net
Advances to suppliers represent prepayments made to ensure continuous high-quality supplies and favorable purchase prices for premium quality. These advances are directly related to the purchases of raw materials used to fulfill sales orders. The Company is required from time to time to make cash advances when placing its purchase orders. These advances are settled upon suppliers delivering raw materials to the Company when the transfer of ownership occurs. The Company reviews its advances to suppliers on a periodic basis and makes general and specific allowances when there is doubt as to the ability of a supplier to provide supplies to the Company or refund an advance.
| F-10 |
| Table of Contents |
FARMMI, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 2 — Summary of significant accounting policies (continued)
Inventories, net
The Company values its inventories at the lower of cost, determined on a weighted average basis, or net realizable value. The Company reviews its inventories periodically to determine if any reserves are necessary for potential obsolescence or if the carrying value exceeds net realizable value.
Biological assets
Biological assets mainly consist of bamboo forests managed for future bamboo harvest and sales, of which the Company owned 82 forest right certificates with expiry dates ranging from December 30, 2026 to December 9, 2070 and with an area of 9.6 km2. The forest types are mixed mature forests which can be harvested for commercial purposes. The forests mainly consist of bamboo, fir trees, and other trees.
Depreciation expense was approximately $
Long-term investments
The Company’s long-term investments consist of equity investment and equity securities without readily determinable fair value.
Equity investment accounted for using the equity method
In accordance with ASC 323, “Investments – Equity Method and Joint Ventures”, the Company accounts for the investment using the equity method, because the Company has significant influence but does not own a majority equity interest or otherwise control over the equity investee.
Under the equity method, the Company initially records its investment at cost. The Company subsequently adjusts the carrying amount of the investment to recognize the Company’s proportionate share of the equity method investee’s net income or loss into earnings after the date of investment. When the Company’s share of losses in the equity investee equals or exceeds its interest in the equity investee, the Company does not recognize further losses, unless the Company has incurred obligations or made payments or guarantees on behalf of the equity investee.
The Company continuously reviews its investment in the equity investee to determine whether a decline in fair value below the carrying value is other-than-temporary. The primary factors the Company considers in its determination include the financial condition, operating performance and the prospects of the equity investee; other company-specific information such as recent financing rounds; the geographic region, market and industry in which the equity investee operates; and the length of time that the fair value of the investment is below the carrying value and the Company’s intent and ability to retain the investment until the recovery of its cost. If the decline in fair value is deemed to be other-than-temporary, the carrying value of the equity investee is written down to fair value.
Equity investment without readily determinable fair value measured at Measurement Alternative
The Company adopted Accounting Standards Codification (“ASC”) Topic 321, Investments-Equity Securities (“ASC 321”) from September 1, 2018. Pursuant to ASC 321, for equity securities measured at fair value with changes in fair value record in earnings, the Company does not assess whether those investments are impaired. For those equity securities that the Company selects to use the measurement alternative, the Company uses the measurement alternative to measure those investments at cost, minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. The Company makes a qualitative assessment of whether the investment is impaired at each reporting date. If a qualitative assessment indicates that the investment is impaired, the Company has to estimate the investment’s fair value in accordance with ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”). If the fair value is less than the investment’s carrying value, the Company recognizes an impairment loss in net income equal to the difference between the carrying value and fair value.
As of March 31, 2025 and September 30, 2024, the Company evaluated its investments, taking into consideration, including, but not limited to, the duration, degree and causes of the decline in financial results, its intent and ability to hold the investment and the invested companies’ financial performance and near-term prospects. Based on the evaluation, the company’s long-term investments are not impaired.
The Company invests from time to time in equity securities of private companies. If the Company determines that the Company has control over these companies, the Company includes them in the consolidated financial statements. If the Company determines that the Company does not have control over these companies, the Company then determines if the Company has an ability to exercise significant influence via voting interests, board representation, or other business relationships.
The Company accounts for the investments where the Company exercises significant influence using either an equity method of accounting or at fair value by electing the fair value option under ASC Topic 825, Financial Instruments. If the fair value option is applied to an investment that would otherwise be accounted for under the equity method, the Company applies it to all its financial interests in the same entity (equity and debt, including guarantees) that are eligible items. All gains and losses from fair value changes, unrealized and realized, are presented as changes in fair values of equity and long-term investments, net on the consolidated statements of income.
If the Company concludes that it does not have an ability to exercise significant influence over an investee, the Company may elect to account for the security without a readily determinable fair value using the measurement alternative under ASC Topic 312, Investments – Equity Securities. This measurement alternative allows the Company to measure the equity investment at its cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer.
The Company’s long-term investments are equity method investments. Investee companies over which the Company has the ability to exercise significant influence but does not have a controlling interest through investment in common shares or in-substance common shares are accounted for using the equity method. Significant influence is generally considered to exist when the Company has an ownership interest in the voting stock of the investee between 20% and 50%, and other factors, such as representation on the investee’s board of directors, voting rights and the impact of commercial arrangements, are also considered in determining whether the equity method of accounting is appropriate.
Under the equity method, the Company initially records its investment at cost and subsequently recognizes the Company’s proportionate share of each equity investee’s net income or loss after the date of investment into net loss and accordingly adjusts the carrying amount of the investment. The Company reviews its equity method investments for impairment whenever an event or circumstance indicates that any other-than-temporary impairment has occurred. The Company considers available quantitative and qualitative evidence in evaluating potential impairment of its equity method investment.
An impairment charge is recorded when the carrying amount of the investment exceeds its fair value and this condition is determined to be other-than-temporary. As of March 31, 2025 and September 30, 2024, impairment for long-term investments was approximately $
| F-11 |
| Table of Contents |
FARMMI, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 2 — Summary of significant accounting policies (continued)
Property and equipment, net
Property and equipment are stated at cost less accumulated depreciation. The cost of an asset comprises its purchase price and any directly attributable costs of bringing the asset to its present working condition and location for its intended use.
Depreciation is computed on a straight-line basis over the estimated useful lives of the related assets. The estimated useful lives for significant property and equipment are as follows:
Machinery and equipment |
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Office equipment |
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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 which substantially extend the useful life of assets are capitalized.
| F-12 |
| Table of Contents |
FARMMI, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 2 — Summary of significant accounting policies (continued)
Impairment of long-lived assets
The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.
Revenue recognition
The Company follows ASU 2014-09 Revenue from Contracts with Customers (“ASC Topic 606”). In accordance with ASC 606, to determine revenue recognition for contracts with customers, the Company performs the following five steps: (i) identify the contract(s) 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.
The Company recognizes revenue when it transfers its goods and services to customers in an amount that reflects the consideration to which the Company expects to be entitled in such exchange. All of the Company’s contracts have a single performance obligation satisfied at a point in time and the transaction price is stated in the contract, usually as a price per ton.
The Company’s contract liabilities primarily include advances from customers. As of March 31, 2025 and September 30, 2024, the contract liabilities are $
Cost of revenues
Cost of revenues includes cost of raw materials purchased, inbound freight cost, cost of direct labor, depreciation expense, and other overhead.
| F-13 |
| Table of Contents |
FARMMI, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 2 — Summary of significant accounting policies (continued)
Earnings (loss) per share
The Company computes earnings (loss) 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 ordinary shares outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential ordinary shares (e.g., convertible securities, and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential ordinary 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.
The components of basic and diluted EPS were as follows:
Six months ended March 31, |
| 2025 |
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| 2024 |
| ||
Net (loss) income available for ordinary shareholders (A) |
| $ | ( |
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| $ |
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Weighted average outstanding ordinary shares (B) |
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- basic |
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- diluted |
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(Loss) earnings per ordinary share - basic (A/B) |
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(Loss) earnings per ordinary share - diluted (A/B) |
| $ | ( |
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| $ |
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Securities that could potentially dilute earnings per share in the future that were not included in the computation of diluted earnings per share for the six months ended March 31, 2025, and 2024 are as follows:
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| As of |
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| As of |
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| March 31 |
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| March 31 |
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| 2025 |
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| 2024 |
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| (unaudited) |
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Warrants to purchase ordinary shares |
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| - |
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| F-14 |
| Table of Contents |
FARMMI, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 2 — Summary of significant accounting policies (continued)
Fair value of financial instruments
The FASB ASC Topic 820, Fair Value Measurements, defines fair value, establishes a three-level valuation hierarchy for fair value measurements, and enhances disclosure requirements.
The three levels are defined 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, accounts receivable, advances to suppliers, due from a related party, other current assets, acquisition payable, promissory notes, accounts payable, due to related parties, operating lease liabilities –current and other current liabilities) approximate their recorded values due to their short-term nature. The fair value of longer-term operating lease liabilities approximate their recorded values as their stated interest rates approximate the rates currently available.
| F-15 |
| Table of Contents |
FARMMI, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 2 — Summary of significant accounting policies (continued)
Concentrations of credit risk
Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash, accounts receivable, and advances to suppliers. As of March 31, 2025 and September 30, 2024, approximately $
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 U.S. GAAP are recorded as an element of stockholders’ equity but are excluded from net income (loss). Other comprehensive income (loss) consists of foreign currency translation adjustment from the Company not using the U.S. dollar as its functional currency.
Leases
The Company adopted ASU 2016-02, Leases on October 1, 2019 and used the alternative transition approach which permits the effects of adoption to be applied at the effective date. The new standard provides a number of optional practical expedients in transition. The Company elected the “package of practical expedients”, which permits the Company to not reassess under the new standard our prior conclusions about lease identification, lease classification, and initial direct costs. The Company also elected the short-term lease exemption and combining the lease and non-lease components practical expedients. The Company has not elected the practical expedient to use hindsight to determine the lease term for its leases at transition. The most significant impact upon adoption relates to the recognition of new Right-of-use (“ROU”) assets and lease liabilities on the Company’s consolidated balance sheets for office space operating leases.
| F-16 |
| Table of Contents |
FARMMI, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 2 — Summary of significant accounting policies (continued)
Foreign currency translation
The Company’s financial information is presented in U.S. dollars (“USD”). The functional currency of the Company is the Chinese Yuan Renminbi (“RMB”), the currency of the PRC. Any transactions which are denominated in currencies other than RMB are translated into RMB at the exchange rate quoted by the People’s Bank of China prevailing at the dates of the transactions, and exchange gains and losses are included in the statements of operations as foreign currency transaction gain or loss. The unaudited condensed consolidated financial statements of the Company have been translated into U.S. dollars in accordance with ASC 830, Foreign Currency Matters. The financial information is first prepared in RMB and then translated into U.S. dollars at period-end exchange rates for assets and liabilities and average exchange rates for revenue and expenses. Capital accounts are translated at their historical exchange rates when the capital transactions occurred. The effects of foreign currency translation adjustments are included as a component of accumulated other comprehensive income (loss) in stockholders’ equity. Cash flows from the Company’s operations are calculated based upon the local currencies using the average translation rate. 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.
The exchange rates in effect as of March 31, 2025 and September 30, 2024 were US$1 for RMB
Shipping and handling expenses
All shipping and handling costs are expensed as incurred and included in selling expenses. Total shipping and handling expenses were $
| F-17 |
| Table of Contents |
FARMMI, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 2 — Summary of significant accounting policies (continued)
Value added tax
The Company is generally subject to the value added tax (“VAT”) for selling merchandise. Before May 1, 2018, the applicable VAT rate was
Income taxes
The Company is subject to the income tax laws of the PRC; a subsidiary in Canada is subject to income tax laws of Canada; and a subsidiary in the United States of America is subject to income tax laws of the United States of America. The Company accounts for income taxes in accordance with ASC 740, Income Taxes. ASC 740 requires an asset and liability approach for financial accounting and reporting for income taxes and allows recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits or not be deductible in the future.
ASC 740-10-25 prescribes a more-likely-than-not threshold for financial statement recognition and measurement of a tax position taken (or expected to be taken) in a tax return. It also provides guidance on the recognition of income tax assets and liabilities, classification accounting for interest and penalties associated with tax positions, years open for tax examination, accounting for income taxes in interim periods, and income tax disclosures. There were no material uncertain tax positions as of March 31, 2025 and September 30, 2024. As of March 31, 2025, the tax years ended December 31, 2015 through December 31, 2024 for the Company’s subsidiaries remain open for statutory examination by PRC and USA tax authorities.
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-18 |
| Table of Contents |
FARMMI, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 2 — Summary of significant accounting policies (continued)
Risks and uncertainties
The operations of the Company are located in the PRC and U.S. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by the political, economic, and legal environments in the PRC, in addition to the general state of the PRC and U.S. economies. The Company’s results may be adversely affected by changes in the political and social conditions in the PRC and U.S. and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.
The Company’s sales, purchases, and expense transactions are denominated in RMB, and a substantial part of the Company’s assets and liabilities are also denominated in RMB. RMB is not freely convertible into foreign currencies under the current law. In China, 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, the central bank of China. Remittances in currencies other than RMB may require certain supporting documentation in order to effect the remittance.
The Company’s operating entities do not carry any business interruption insurance, product liability insurance, or any other insurance policy except for a limited property insurance policy. As a result, the Company may incur uninsured losses, increasing the possibility that investors would lose their entire investment in the Company.
The Company’s business, financial condition, and results of operations may also be negatively impacted by risks related to natural disasters, extreme weather conditions, health epidemics, and other catastrophic incidents, which could significantly disrupt the Company’s operations.
| F-19 |
| Table of Contents |
FARMMI, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 2 — Summary of significant accounting policies (continued)
Recent accounting pronouncements
The Company considers the applicability and impact of all ASUs. Management periodically reviews new accounting standards that are issued.
In November 2024, the FASB issued ASU 2024-03, Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires that public business entities disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods. This ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. This ASU may be applied either on a prospective or retrospective basis. We are currently evaluating the impact of this standard on our disclosures.
In November 2024, the FASB issued ASU 2024-04, Debt – Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments, which clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. This ASU is effective for fiscal years beginning after December 15, 2025 and interim reporting periods within those annual reporting periods, with early adoption permitted. We are currently evaluating the impact of this standard on our disclosures.
In January 2025, the FASB issued ASU 2025-01, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40)，which clarifies that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption of Update 2024-03 is permitted.
In May 2025, the FASB issued ASU 2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810), Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity, which revised current guidance for determining the accounting acquirer for a transaction effected primarily by exchanging equity interests in which the legal acquiree is a VIE that meets the definition of a business. The amendments require that an entity consider the same factors that are currently required for determining which entity is the accounting acquirer in other acquisition transactions. The amendments in this Update require an entity involved in an acquisition transaction effected primarily by exchanging equity interests when the legal acquiree is a VIE that meets the definition of a business to consider the factors in paragraphs 805-10-55-12 through 55-15 to determine which entity is the accounting acquirer. The amendments in this Update are effective for all entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. The amendments in this Update require that an entity apply the new guidance prospectively to any acquisition transaction that occurs after the initial application date. Early adoption is permitted as of the beginning of an interim or annual reporting period.
In May 2025, the FASB issued ASU 2025-04, Compensation – Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606), Clarifications to Share-Based Consideration Payable to a Customer, which revised the Master Glossary definition of the term performance condition for share-based consideration payable to a customer. The revised definition incorporates conditions (such as vesting conditions) that are based on the volume or monetary amount of a customer’s purchases (or potential purchases) of goods or services from the grantor (including over a specified period of time). The revised definition also incorporates performance targets based on purchases made by other parties that purchase the grantor’s goods or services from the grantor’s customers. The revised definition of the term performance condition cannot be applied by analogy to awards granted to employees and nonemployees in exchange for goods or services to be used or consumed in the grantor’s own operations. Although it is expected that entities will conclude that fewer awards contain service conditions, for those that are determined to have service conditions, the amendments in this Update eliminate the policy election permitting a grantor to account for forfeitures as they occur. Therefore, when measuring share-based consideration payable to a customer that has a service condition, the grantor is required to estimate the number of forfeitures expected to occur. Separate policy elections for forfeitures remain available for share-based payment awards with service conditions granted to employees and nonemployees in exchange for goods or services to be used or consumed in the grantor’s own operations. The amendments in this Update clarify that share-based consideration encompasses the same instruments as share-based payment arrangements but the grantee does not need to be a supplier of goods or services to the grantor. Finally, the amendments in this Update clarify that a grantor should not apply the guidance in Topic 606 on constraining estimates of variable consideration to share-based consideration payable to a customer. Therefore, a grantor is required to assess the probability that an award will vest using only the guidance in Topic 718. Collectively, these changes improve the decision usefulness of a grantor’s financial statements, improve the operability of the guidance, and reduce diversity in practice for accounting for share-based consideration payable to a customer. Under the amendments in this Update, revenue recognition will no longer be delayed when an entity grants awards that are not expected to vest. This is expected to result in estimates of the transaction price that better reflect the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer and, therefore, more decision-useful financial reporting.
The amendments in this Update are effective for all entities for annual reporting periods (including interim reporting periods within annual reporting periods) beginning after December 15, 2026. Early adoption is permitted for all entities. The amendments in this Update permit a grantor to apply the new guidance on either a modified retrospective or a retrospective basis. When applying the amendments in this Update on a modified retrospective basis, a grantor should recognize a cumulative-effect adjustment to the opening balance of retained earnings (or other appropriate components of 4 equity or net assets in the statement of financial position) as of the beginning of the period of adoption and should not recast any financial statement information before the period of adoption. A grantor should apply the amendments as of the date of initial application to all share-based consideration payable to a customer. When applying the amendments in this Update on a retrospective basis, a grantor should recast comparative periods and recognize a cumulative-effect adjustment to the opening balance of retained earnings (or other appropriate components of equity or net assets in the statement of financial position) as of the beginning of the earliest period presented. Additionally, an entity that elects to apply the guidance retrospectively should use the actual outcome, if known, of a performance condition or service condition as of the beginning of the annual reporting period of adoption for all prior-period estimates. If actual outcomes are unknown as of the beginning of the annual reporting period of adoption, an entity should use its estimate of the probability of achieving a service condition or performance condition as of the beginning of the annual reporting period of adoption for all prior-period estimates.
The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the Company’s combined financial position, statements of operations, cash flows, and disclosures.
| F-20 |
| Table of Contents |
FARMMI, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 3 — Accounts receivable, net
Accounts receivable consisted of the following:
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| As of |
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| As of |
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| March 31, |
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| September 30, |
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| 2025 |
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| 2024 |
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| (unaudited) |
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Accounts receivable |
| $ |
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| $ |
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Less: Allowance for doubtful accounts |
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| ( | ) |
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| ( | ) |
Accounts receivable, net |
| $ |
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| $ |
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Allowance for doubtful accounts of $
Note 4 — Advances to suppliers, net
Advances to suppliers consisted of the following:
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| As of |
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| 2025 |
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| 2024 |
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Advances to suppliers: |
| (unaudited) |
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Lishui Zhelin Trading Co., Ltd |
| $ |
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| $ |
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Jingning Liannong Trading Co., Ltd |
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Zhongjin Boda (Hangzhou) Industrial Co., Ltd |
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Qingyuan Nongbang Mushroom Industry Co., Ltd |
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Ningbo Runcai Supply Chain Management Co., Ltd |
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Others |
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Total |
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Less: Allowance for doubtful accounts |
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Advances to suppliers, net |
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On April 1, 2016, the Company entered into two separate framework supply agreements (“Framework Agreements”) with two co-operatives, Jingning Liannong Trading Co., Ltd (“JLT”) and Qingyuan Nongbang Mushroom Industry Co., Ltd (“QNMI”). These two Framework Agreements were renewed for another three years in April 2019 upon expiration and were further renewed for another three years in June 2021. Jingning County and Qingyuan County, where JLT and QNMI are located, produce premium Shiitake and Mu Er.
On April 1, 2020, the Company signed a framework cooperation agreement with Lishui Zhelin Trading Co., Ltd. (“Zhelin Trade”), which is valid for four years. Zhelin Trade is located in the agricultural product distribution center in Liandu District - Southwest Zhejiang Agricultural Trade City, which has convenient logistics and timely agricultural product information. Therefore, the cooperation agreement stipulates that Zhelin Trade will process and deliver edible mushroom products on behalf of Zhelin Trade, and the Company is required to make advance payment to ensure the timeliness of goods supply and delivery.
On August 5, 2023, the Company signed an agricultural product framework agreement with Zhongjin Boda (Hangzhou) Industrial Co., Ltd (“Zhongjin Boda”), mainly for the purchase of agricultural products such as corn, cotton, and soybeans. The agreement was signed for a period of two years. Zhongjin Boda used to be a large supplier of the company and had sufficient capacity to supply goods.
On August 25, 2023, the Company signed an agricultural product framework agreement with Ningbo Runcai Supply Chain Management Co., Ltd (“Ningbo Runcai”), mainly for the purchase of agricultural products such as red dates and corn. The agreement was signed for a period of two years. Ningbo Runcai is located in Ningbo, the largest port city in Zhejiang Province, and has abundant sources of goods that can meet the company’s procurement needs for supply.
The Company has signed agreements with these two suppliers mainly as a reserve supplier of bulk agricultural products.
| F-21 |
| Table of Contents |
FARMMI, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 4 — Advances to suppliers, net (continued)
Many competitors of the Company and other large buyers go to family farms and co-operatives to source their supplies. Family farms and co-operatives traditionally request advance payments to secure supplies. By making advance payments to these suppliers, the Company is also able to lock in a more favorable price for premium quality than would be available in the open market.
The Framework Agreements only provide general guidelines. Actual prices are negotiated and agreed upon in individual purchase orders and are typically set at market prices based on the quality grade and quantities determined and agreed with the suppliers. Prices may vary based on market demand, crop condition, etc. The Company can generally secure the premium quality raw material supplies at prices slightly higher than the typical market prices for average quality raw materials. The quality of supplies must meet standardized specifications of both the mushroom industry and standards set by the Company.
The Company advances certain initial payments based on its estimated purchase plan from these suppliers and additional advances based on individual purchase orders placed. The Company pays advances solely to secure an adequate supply of dried mushrooms to meet its sales demands. The Company’s purchase orders require that the advances shall be refunded by suppliers if they fail to produce the contracted volume of dried mushrooms or fail to deliver supplies to the Company timely.
Advances to suppliers are carried at cost and evaluated for recoverability. The realizability evaluation process is similar to that of the lower of cost or net realizable value evaluation process for inventories. The Company periodically evaluates its advances for recoverability by monitoring suppliers’ ability to deliver a sufficient supply of mushrooms as well as current crop and market condition. This includes analyzing historical quantity and quality of production with monitoring of crop information provided by the Company’s field personnel related to weather or disaster or any other reason. If for any reason the Company believes that it will not receive supplies of the contracted volumes, the Company will assess its advances for any likelihood of recoverability and adjust advances on its financial statements at the lower of cost or estimated recoverable amounts. The advances are made primarily to these suppliers, which are co-operatives formed by many family farms, with which the Company has had long-term relationships over the years. If any of these family farms fail to deliver supplies, the Company would expect to receive a refund of the advances through these suppliers. The Company accrues for any allowance for possible loss on advances when there is doubt as to the collectability of the refund.
In December 2024, the Company signed termination contracts with two major agricultural product suppliers, Ningbo Runcai and Zhongjin Boda, agreeing that the advances to suppliers can be gradually recovered before May 31, 2025. As of September 30, 2024, advances to Ningbo Runcai and Zhongjin Boda were $
Allowance for doubtful accounts of nil and nil was made for certain advances to suppliers as of March 31, 2025 and September 30, 2024, respectively.
| F-22 |
| Table of Contents |
FARMMI, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 5 — Inventories, net
Inventories, net, consisted of the following:
|
| As of |
|
| As of |
| ||
|
| March 31, |
|
| September 30, |
| ||
|
| 2025 |
|
| 2024 |
| ||
|
| (unaudited) |
|
|
| |||
Raw materials |
| $ |
|
| $ |
| ||
Packaging materials |
|
|
|
|
|
| ||
Finished goods |
|
|
|
|
|
| ||
Inventory |
|
|
|
|
|
| ||
Less: Allowance for inventory reserve |
|
|
|
|
| ( | ) | |
Inventory, net |
| $ |
|
| $ |
| ||
As of March 31, 2025 and September 30, 2024, allowance for inventory reserve was nil and $
Note 6 – Biological assets, net
Biological assets, initially measured at cost and subsequently amortized on a straight-line basis over the terms of the forest right certificates
|
| As of |
|
| As of |
| ||
|
| March 31, |
|
| September 30, |
| ||
|
| 2025 |
|
| 2024 |
| ||
|
| (unaudited) |
|
|
| |||
Biological assets |
| $ |
|
| $ |
| ||
Accumulated depreciation |
|
| ( | ) |
|
| ( | ) |
Total |
| $ |
|
| $ |
| ||
Depreciation expense was approximately $
Note 7 – Long-term investments, net
As of March 31, 2025 and September 30, 2024, long-term investments consisted of the following:
|
| As of |
|
| As of |
| ||
|
| March 31, |
|
| September 30, |
| ||
|
| 2025 |
|
| 2024 |
| ||
|
| (unaudited) |
|
|
| |||
Equity investment accounted for using the equity method (a) |
| $ |
|
|
|
| ||
Equity investment without readily determinable fair value measured at Measurement Alternative (b) |
|
|
|
|
|
| ||
Long-term investments, net |
| $ |
|
| $ |
| ||
(a) For the six months ended March 31, 2025 and 2024, the movement of equity investment accounted for using the equity method consisted of the following:
|
| March 31, |
|
| March 31, |
| ||
|
| 2025 |
|
| 2024 |
| ||
|
| (unaudited) |
|
| (unaudited) |
| ||
Balance at beginning of the period |
|
|
|
|
|
| ||
Investment in Ewayforest Group Limited |
| $ |
|
|
|
| ||
Loss from equity method investments |
|
| ( | ) |
|
|
| |
Balance at end of the period |
| $ |
|
|
|
| ||
On February 28, 2025, Farmmi International Limited (“Farmmi International” or the “Buyer”), a wholly-owned subsidiary of Farmmi, Inc. (the “Company”), entered into an equity transfer agreement with Malong Limited, a Hong Kong company (the “Seller”) to acquire a
Pursuant to the agreement, Farmmi International would pay a total purchase price of RMB723,324,150 ($
For the six months ended March 31, 2025 and 2024, equity investment loss of $431,180 and nil, respectively, and was recognized in the condensed consolidated statements of operations and comprehensive (loss) income.
(b) Long-term investments of the Company relate to investment of RMB50 million (approximately $
Long-term investments, net of allowance, are as follows:
|
| As of |
|
| As of |
| ||
|
| March 31, |
|
| September 30, |
| ||
|
| 2025 |
|
| 2024 |
| ||
|
| (unaudited) |
|
|
| |||
Long-term investments |
| $ |
|
| $ |
| ||
Less: Impairment |
|
| ( | ) |
|
| ( | ) |
Total |
| $ |
|
| $ |
| ||
An impairment charge is recorded when the carrying amount of the investment exceeds its fair value and this condition is determined to be other-than-temporary. As of March 31, 2025 and September 30, 2024, impairment for long-term investments was $
Note 8 — Property and equipment, net
Property and equipment, stated at cost less accumulated depreciation, consisted of the following:
|
| As of |
|
| As of |
| ||
|
| March 31, |
|
| September 30, |
| ||
|
| 2025 |
|
| 2024 |
| ||
|
| (unaudited) |
|
|
| |||
Machinery and equipment |
| $ |
|
| $ |
| ||
Transportation equipment |
|
|
|
|
|
| ||
Office equipment |
|
|
|
|
|
| ||
Subtotal |
|
|
|
|
|
| ||
Accumulated depreciation |
|
| ( | ) |
|
| ( | ) |
Total |
| $ |
|
| $ |
| ||
Depreciation expense was $
| F-23 |
| Table of Contents |
FARMMI, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 9 – Acquisition consideration payable
On February 28, 2025, Farmmi International Limited (“Farmmi International” or the “Buyer”), a wholly-owned subsidiary of Farmmi, Inc. (the “Company”), entered into an equity transfer agreement with Malong Limited, a Hong Kong company (the “Seller”) to acquire a
Pursuant to the agreement, Farmmi International would pay a total purchase price of RMB723,324,150 ($
As of March 31, 2025, Farmmi International paid $
| F-24 |
| Table of Contents |
FARMMI, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 10 - Promissory note
On July 30, 2024, the Company entered into a note purchase agreement (the “Purchase Agreement”) with Atlas Sciences, LLC, a Utah limited liability company (the “Investor”), pursuant to which
The Note bears interest at a rate of
The foregoing descriptions of the Purchase Agreement and the Note are summaries of the material terms of such agreements and do not purport to be complete and are qualified in their entirety by reference to the form of the Purchase Agreement and the Note.
For the six months ended March 31, 2025,
For the six months ended March 31, 2025 and 2024, the interest expense of the Note was $
Note 11 — Long-term loans
|
| As of |
|
| As of |
| ||
|
| March 31, |
|
| September 30, |
| ||
|
| 2025 |
|
| 2024 |
| ||
Long-term loan, non-current portion |
| (unaudited) |
|
|
| |||
Xinmao Group Co., Ltd. |
| $ |
|
| $ |
| ||
Total long-term loan, non-current portion |
| $ |
|
| $ |
| ||
The following table summarizes the loan commencement date, loan maturity date, and the effective annual interest rate of the unsecured long-term loan:
|
| Loan |
| Loan |
| Effective |
|
|
| |||
|
| commencement |
| maturity |
| interest |
|
|
| |||
Long-term loans, non-current portion |
| date |
| date |
| rate |
|
| Note |
| ||
Xinmao Group Co., Ltd. |
| |
|
|
| % |
|
| 1 |
| ||
1. | On January 1, 2024, the Company entered into a revolving loan of $ |
For the six months ended March 31, 2025 and 2024, the interest expense was $
| F-25 |
| Table of Contents |
FARMMI, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 12 — Shareholders’ equity
Ordinary shares
On March 17, 2025, the
During the six months ended March 31, 2025,
Statutory reserve
The Company is required to make appropriations to reserve funds, comprising the statutory surplus reserve and 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
Warrants
On August 22, 2024, Farmmi and certain institutional purchasers entered into a securities purchase agreement, pursuant to which the Company agreed to sell to such purchasers an aggregate of
| F-26 |
| Table of Contents |
FARMMI, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 13 — Concentration of major customers and suppliers
For the six months ended March 31, 2025, two major customers accounted for approximately
As of March 31, 2025, one major customer accounted for approximately
For the six months ended March 31, 2025, three major suppliers accounted for approximately
As of March 31, 2025, five major suppliers accounted for approximately
Note 14 — Leases
The Company rents its factories in Lishui City, Zhejiang Province for processing dried edible fungi and a floor in an office building in Hangzhou City, Zhejiang Province from a related party, Zhejiang Tantech Bamboo Technology Co., Ltd., and a warehouse in Chino, California from a third party.
As of March 31, 2025 and September 30, 2024, the remaining average lease term was an average of
| F-27 |
| Table of Contents |
FARMMI, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 14 - Leases (continued)
Supplemental balance sheet information related to operating leases was as follows:
|
| As of |
|
| As of |
| ||
|
| March 31, |
|
| September 30, |
| ||
|
| 2025 |
|
| 2024 |
| ||
|
| (unaudited) |
|
|
| |||
Right-of-use assets under operating leases |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Operating lease liabilities, current |
|
|
|
|
|
| ||
Operating lease liabilities, non-current |
|
|
|
|
|
| ||
Total operating lease liabilities |
| $ |
|
| $ |
| ||
|
| As of |
| |
|
| March 31, |
| |
For the years ending September 30, |
| 2025 |
| |
For the remaining months of fiscal 2025 |
| $ |
| |
2026 |
|
|
| |
2027 |
|
|
| |
2028 |
|
|
| |
2029 |
|
|
| |
Thereafter |
|
|
| |
Total future minimum lease payments |
|
|
| |
Less: Imputed interest |
|
| ( | ) |
Total |
| $ |
| |
Note 15 — Segment reporting
ASC 280, Segment Reporting, establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organizational structure as well as information about geographical areas, business segments, and major customers in financial statements for details on the Company’s business segments.
The Company uses the “management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s reportable segments. The Company currently has three main products from which revenue is earned and expenses are incurred: Shiitake Mushroom, Mu Er Mushroom, and other edible fungi and other agricultural products. The operations of these product categories have similar economic characteristics. In particular, the Company uses the same or similar production processes, sells to the same or similar type of customers, and uses the same or similar methods to distribute these products. The resources required by these products share high similarity. Switching cost between different products is minimal. Production is primarily determined by sales orders received and market trends. Therefore, management, including the chief operating decision maker, primarily relies on the revenue data of different products in allocating resources and assessing performance. Based on management’s assessment, the Company has determined that it has only one operating segment and therefore one reportable segment as defined by ASC.
| F-28 |
| Table of Contents |
FARMMI, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 15 — Segment reporting (continued)
The following table presents revenue by major product categories (from third parties and related parties) from the Company’s continuing operations for the six months ended March 31, 2025 and 2024, respectively:
|
| For the Six Months Ended March 31, |
| |||||
|
| 2025 |
|
| 2024 |
| ||
Shiitake |
| $ |
|
| $ |
| ||
Mu Er |
|
|
|
|
|
| ||
Logistic services |
|
|
|
|
|
| ||
Corn |
|
|
|
|
|
| ||
Other edible fungi |
|
|
|
|
|
| ||
Red dates |
|
|
|
|
|
| ||
Total |
| $ |
|
| $ |
| ||
Revenue by geographical segment for the six months ended March 31, 2025:
|
| For the Six Months Ended March 31, |
| |||||
|
| 2025 |
|
| 2024 |
| ||
PRC |
| $ |
|
| $ |
| ||
United States of America |
|
|
|
|
| - |
| |
Total |
| $ |
|
| $ |
| ||
Note 16 — Related party transactions
The relationship and the nature of related party transactions are summarized as follow:
Name of related party | Relationship to the Company | Nature of transactions |
Zhejiang Yili Yuncang Technology Group Co., Ltd | 10% equity interest owned by the Company | Payment of expenses by the Company. |
Yefang Zhang | Chief Executive Officer of the Company | Payment of expenses for the Company. |
Zhang Bin | Zhang Bin serves as the supervisor of Farmmi Food. | Sales from the Company. |
|
|
|
Lu Zhimin | Chief Financial Officer of the Company | Payment of expenses by the Company. |
Wu Zhenwei | Wu Zhenwei serves as the executive director and general manager of Farmmi E-Commerce, Zhejiang Suyuan Agricultural, and Farmmi Biotech. | Imprest from the Company |
| F-29 |
| Table of Contents |
FARMMI, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 16 — Related party transactions (continued)
Due from related parties consisted of the following:
|
|
| As of |
|
| As of |
| |||
|
|
| March 31, |
|
| September 30, |
| |||
|
|
| 2025 |
|
| 2024 |
| |||
Due from related parties |
| Name of related parties |
| (unaudited) |
|
|
| |||
Other receivables |
| Dehong Zhang |
|
|
|
| $ |
| ||
Other receivables |
| Zhejiang Yili Yuncang Holding Group Co., Ltd |
| $ |
|
|
|
| ||
Other receivables |
| FarmNet |
|
|
|
|
|
| ||
Other receivables |
| Epakia Canada Inc |
|
|
|
|
|
| ||
Trade receivables |
| Forasen Group Co., Ltd |
|
|
|
|
|
| ||
Trade receivables |
| Zhang Bin |
|
|
|
|
|
| ||
Other receivables |
| Lu Zhimin |
|
|
|
|
|
| ||
Other receivables |
| Wu Zhenwei |
|
|
|
|
|
| ||
Total |
|
|
| $ |
|
| $ |
| ||
Amount due from Zhejiang Yili Yuncang Holding Group Co., Ltd and Lu Zhimin was mainly related to payment of expenses by the Company. Amount due from Wu Zhenwei was related to imprest provided by the Company which was fully recovered in April 2025.
Amounts due from FarmNet Limited, Epakia Canada Inc, Forasen Group Co., Ltd, Zhang Bin, and Dehong Zhang were mainly related to expenses paid by the Company which were recovered from these related parties.
Due to related parties consisted of the following:
|
|
| As of |
|
| As of |
| |||
|
|
| March 31, |
|
| September 30, |
| |||
|
|
| 2025 |
|
| 2024 |
| |||
Due to related parties |
| Name of related parties |
| (unaudited) |
|
|
| |||
Other payable |
| Yefang Zhang |
| $ |
|
| $ |
| ||
Other payable |
| Zhejiang Tantech Bamboo Technology Co., Ltd. |
|
|
|
|
|
| ||
Total |
|
|
| $ |
|
| $ |
| ||
Amount due to Zhejiang Tantech Bamboo Technology Co., Ltd. was related to lease, water and electricity expenses for offices leased to the Company.
Amount due to Yefang Zhang was related to payment of expenses by related parties for the Company. Amounts were due on demand and non-interest bearing.
| F-30 |
| Table of Contents |
FARMMI, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 16 — Related party transactions (continued)
The Company and Forasen Group signed a Non-Competition Agreement which provides that Forasen Group should not engage in any business that the Company engages in, except purchasing products from us. In addition, Mr. Wang and Ms. Zhang signed a Non-Competition Agreement with the Company and Tantech which provides that Mr. Wang and Ms. Zhang shall not vote in favor or otherwise cause Tantech to engage in the business that the Company conducts.
| F-31 |
| Table of Contents |
FARMMI, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 17 – Disposal of subsidiaries
On March 31, 2025, an agreement was signed to divest
The following is a reconciliation of the carrying amounts of major classes of assets and liabilities in the consolidated balance sheets as of March 31, 2025 and September 30, 2024.
|
| As of |
|
| As of |
| ||
|
| March 31, |
|
| September 30, |
| ||
|
| 2025 |
|
| 2024 |
| ||
Carrying amounts of major classes of assets |
| (unaudited) |
|
| (unaudited) |
| ||
Cash |
| $ |
|
| $ |
| ||
Accounts receivable, net |
|
|
|
|
|
| ||
Advances to suppliers |
|
|
|
|
|
| ||
Inventories, net |
|
|
|
|
|
| ||
Due from related parties |
|
|
|
|
|
| ||
Other current assets |
|
|
|
|
|
| ||
Right-of-use assets, net |
|
|
|
|
|
| ||
Property and equipment |
|
|
|
|
|
| ||
Total assets of disposed entities |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Carrying amounts of major classes of liabilities |
|
|
|
|
|
|
|
|
Bank loans |
| $ |
|
| $ |
| ||
Accounts payable |
|
|
|
|
|
| ||
Operating lease liabilities |
|
|
|
|
|
| ||
Due to related parties |
|
|
|
|
|
|
| |
Other current liabilities |
|
|
|
|
|
| ||
Total liabilities of disposed entities |
| $ |
|
| $ |
| ||
The following is a reconciliation of the amounts of major classes of operations of disposed entities in the consolidated statements of income (loss) and comprehensive income (loss) for the six months ended March 31, 2025 and 2024.
|
| For the Years Ended September 30, |
| |||||
|
| 2025 |
|
| 2024 |
| ||
|
| (unaudited) |
|
| (unaudited) |
| ||
Revenue |
| $ |
|
| $ |
| ||
Cost of revenues |
|
| ( | ) |
|
| ( | ) |
Gross profit |
|
|
|
|
|
| ||
Operating expenses |
|
| ( | ) |
|
| ( | ) |
Loss from operations |
|
| ( | ) |
|
| ( | ) |
Other (expenses) income |
|
| ( | ) |
|
|
| |
(Loss) income before income taxes |
|
| ( | ) |
|
|
| |
Income tax expenses |
|
|
|
|
|
| ||
Net (loss) income |
| $ | ( | ) |
| $ |
| |
Note 18 – Subsequent events
On June 11, 2025, Zhejiang Yitang Medical Services Co., Ltd. (“Yitang Medical”), a wholly owned subsidiary of the Registrant, entered into a share transfer agreement with Lishui Chida Logistics Co., Ltd, an unrelated third party. Pursuant to the agreement, Yitang Medical agreed to sell 100% of the equities of Guoning Zhonghao (Ningbo) Trade Co., Ltd. and Ningbo Farmmi Baitong Trade Co., Ltd., its wholly owned subsidiaries, to the buyer for RMB10,000.00 (approximately $
On June 13, 2025, Zhejiang Farmmi Ecological Agricultural Technology Co., Ltd. (“Farmmi Ecological Agricultural”), a wholly owned subsidiary of the Registrant, entered into a share transfer agreement with Lishui Damushan Tea Co., Ltd., an unrelated third party. Pursuant to the agreement, Farmmi Ecological Agricultural agreed to sell 100% of the equity of Zhejiang Farmmi Biotechnology Co., Ltd., its wholly owned subsidiary, to the buyer for RMB10,000.00 (approximately $
On the agreement date, each of the transferred subsidiaries did not conduct any substantial business. The sales of the subsidiaries were intended to reduce costs associated with maintaining those corporate entities.
On June 27, 2025, Zhejiang Famimi Biotechnology Co., Ltd. (“Famimi”), a wholly owned subsidiary of the Registrant, dissolved through deregistration with the relevant governmental authority. Prior to its deregistration, Famimi had not conducted substantial business. The subsidiary deregistration was implemented as part of the company’s cost reduction measures.
| F-32 |