Business Context and Reporting Period
Company: Farmmi, Inc. (FAMI)
Filing Type: Form 20-F (Annual Report)
Reporting Period: Fiscal year ended September 30, 2025
Jurisdiction: Cayman Islands holding company with primary operations in the People's Republic of China (PRC) and expanding logistics operations in the United States.
Business Overview: Farmmi processes, distributes, and trades dried edible fungi (Shiitake, Mu Er) and bulk agricultural commodities (corn, cotton). In fiscal 2025, the company significantly expanded its U.S. logistics and warehousing footprint, launching "one-piece shipping" services.
Key Financial Metrics (Fiscal Year 2025)
| Metric | 2025 | 2024 | 2023 |
|---|---|---|---|
| Revenue | $27.97 million | $64.13 million | $110.36 million |
| Gross Profit | $0.80 million | $3.87 million | $4.29 million |
| Gross Margin | 2.9% | 6.0% | 3.9% |
| Net Loss | $(53.39) million | $(4.63) million | $2.54 million (Income) |
| Operating Loss | $(56.12) million | $0.80 million (Income) | $2.04 million (Income) |
| EPS (Basic) | $(28.92) | $(7.88) | $8.41 |
| Total Assets | $147.03 million | $186.73 million | $174.80 million |
| Total Liabilities | $23.18 million | $16.72 million | $12.82 million |
| Shareholders' Equity | $123.86 million | $170.02 million | $161.98 million |
| Cash and Restricted Cash | $0.80 million | $0.49 million | $12.79 million |
Material Changes vs. Prior Period
- Revenue Decline: Revenue decreased 56.4% to $27.97 million, driven primarily by a 97.5% drop in corn trading revenue ($30.2 million decrease) and declines in Shiitake and Mu Er sales volumes due to reduced market demand.
- Significant Impairments and Allowances: The net loss was heavily impacted by a $45.1 million allowance for credit losses (up from $0.4 million in 2024) and an $8.9 million impairment loss on biological assets (forestry rights), which were fully impaired in 2025.
- Logistics Segment Expansion: Revenue from logistics services grew to $7.33 million (26.2% of total revenue) from negligible amounts in 2024. However, this segment operated at a gross loss of $1.48 million due to the gestation period of new U.S. warehouse operations.
- Divestitures: The company divested several subsidiaries (Farmmi Food, Farmmi Supply Chain, Farmmi Biotech) in 2025, recognizing a gain on disposal of $1.9 million, compared to a $3.9 million loss on disposal in 2024.
- Acquisition Termination: A planned $99 million acquisition of a forestry entity (Senbo Forestry) was terminated in September 2025. The company received a note receivable of $59.6 million for the refund of consideration paid.
Guidance, Outlook, and Risks
- Outlook: Management expects sales of edible fungi to grow as consumption rises in China. The company is focusing on expanding its U.S. logistics network (now ~550,000 sq. ft.) to improve supply chain efficiency.
- Capital Structure Changes: In December 2025, shareholders approved a dual-class share structure. Class B shares (held by the CEO) carry 50 votes per share, while Class A shares carry 1 vote. This consolidates control with the founder.
- Key Risks:
- Customer Concentration: One customer (Shanghai Yunmihui) accounted for 68.1% of 2025 revenue. Loss of this customer would be material.
- Regulatory Risks (PRC): Significant risks related to PRC data security laws, cybersecurity reviews, and the potential classification of the company as a PRC tax resident enterprise.
- Internal Controls: Management disclosed material weaknesses in internal control over financial reporting, citing insufficient personnel with U.S. GAAP expertise and lack of adequate internal audit functions.
- Liquidity: While cash flow from operations turned positive ($52.5 million) due to supplier refunds, the company relies on dividends from PRC subsidiaries, which are subject to PRC restrictions and withholding taxes.
Investor Verification Checklist
- Recoverability of Note Receivable: Verify the collectability of the $59.6 million note receivable resulting from the terminated Senbo Forestry acquisition, which is a critical audit matter.
- Credit Loss Allowances: Scrutinize the $45.1 million allowance for credit losses, specifically regarding the aging of accounts receivable and advances to suppliers.
- Customer Concentration: Assess the stability of the relationship with Shanghai Yunmihui, which represents the majority of revenue.
- Internal Control Remediation: Monitor the company's progress in addressing material weaknesses in internal controls over financial reporting to ensure future reporting accuracy.
- Logistics Profitability: Track the path to profitability for the new U.S. logistics segment, which currently operates at a loss.