Business Context and Reporting Period
This Form 6-K filing by Farmmi, Inc. covers the month of June 2021, specifically dated June 23, 2021. The report discloses two primary corporate actions: the entry into a strategic investment agreement to establish a new distribution network and a change in the company's certifying accountant.
Key Financial Metrics
The filing does not provide specific financial performance metrics such as revenue, profit, cash flow, margins, debt, or liquidity for the reporting period. The document focuses on corporate governance and strategic transactions rather than financial results.
Material Changes and Transactions
Investment and Cooperation Agreement
- Transaction: Farmmi, Inc., through its subsidiary Farmmi (Hangzhou) Enterprise Management Co., Ltd., entered into an agreement with Sigma Holding (Hangzhou) Co., Ltd. ("Sigma") and Hangzhou Xuyue Interactive Culture and Media Co., Ltd. ("Hangzhou Xuyue").
- Objective: To establish a community group purchasing distribution network company.
- Capital Structure:
- Farmmi: Invest RMB 5 million (25% ownership).
- Sigma: Invest RMB 12 million (60% ownership).
- Hangzhou Xuyue: Invest RMB 3 million (15% ownership).
- Related Party Disclosure: The transaction involves significant related parties. Sigma's 95% shareholder, Aihong Wang, is the sister of Farmmi Director Zhengyu Wang and sister-in-law of Farmmi CEO/Chairwoman Yefang Zhang. Additionally, Sigma's 5% shareholder, Yiren Tang, controls a shareholder of Farmmi's subsidiary Zhejiang Forest Food Co., Ltd.
Change in Certifying Accountant
- Previous Accountant: Friedman LLP was dismissed.
- New Accountant: YCM CPA Inc. was appointed for the fiscal year ending September 30, 2021.
- Reason for Change: Friedman LLP informed the registrant on June 16, 2021, that due to schedule conflicts, it could not review the interim consolidated financial results for the six months ended March 31, 2021. Consequently, YCM CPA Inc. was appointed to perform this review.
Guidance, Outlook, and Risks
The filing does not contain forward-looking guidance, revenue outlook, or specific risk factors beyond the inherent risks of the related-party transaction and the operational shift in accounting oversight. Management commentary is limited to the announcement of the agreement and the necessity of the accountant change due to scheduling conflicts.
Investor Verification Checklist
- Verify the terms of the Investment and Cooperation Agreement (Exhibit 10.1) to confirm the governance structure of the new joint venture.
- Review the related party disclosures to assess potential conflicts of interest given the familial ties between Farmmi leadership and Sigma's ownership.
- Confirm the status of the interim financial results review by YCM CPA Inc. for the period ended March 31, 2021.
- Examine the letter from Friedman LLP (Exhibit 99.2) to ensure there are no undisclosed disagreements regarding the change in accountant.