Farmmi Issues CEO Update Letter; Expands Addressable Market Through Acquisition; Increased Growth and Expanded Opportunities
September 29, 2021
We are in an even stronger position today than at any time in our history, with improved financial results, a broader product line, an even stronger balance sheet, and significantly more meaningful long-term growth opportunities. Our capital raises in 2021 have provided the momentum we needed to reach many of the goals we have set for the near term. While we are encouraged by
Some of the bold steps we are taking to create greater value for the Company and all Shareholders today and in the future include:
- Acquisition of
Jiangxi Xiangbo Agriculture and Forestry Development Co., Ltd.("Xiangbo"): We have agreed to acquire all the shares of Xiangbo for approximately RMB 70 millionbased on our decision to expand Farmmi'sforest related business. Xiangbo's subsidiary, Yudu County Yada Forestry Co., Ltd.owns 1,4438.5 mu of economic forest in Yudu County, Ganzhou City, Jiangxi Province. Xiangbo primarily uses its acreage in the cultivation and production of Moso Bamboo, Camellia Oleifera and Chinese Fir trees.
- Moso Bamboo is the main source of water bamboo shoots, which are not only a delicious food but also used in the development of construction and industrial products.
- Camellia Oleifera is similar to olive oil and is used the production of Camellia oil, which is a popular cooking oil and used in the production and processing of other food products. Camellia oil is also a preferred beauty product as a non-greasy, moisturizer for both skin and hair, able to permeate deep into lower layers of skin.
- Chinese Fir trees are specimen evergreens capable of reaching 150 feet high and favored by wood processors for plywood and many other products.
- The acquisition base effectively ensures the purity and quality of camellia oil, and the forest land above will also become an important raw material base for the company to sell high-quality products in the future. At the same time, as the Chinese government gradually formulates and implements policies to ultimately achieve carbon neutral, the economic forests can actively participate in Carbon-Sink Trade markets and other green markets.
- Expansion of Health and Wellness Business: In
September 2021, we established four new subsidiaries. Zhejiang Yitang Medical Service Co., Ltd., Zhejiang Yiting Medical Technology Co., Ltd., Farmmi (Hangzhou) Health Development Co., Ltd., and Zhejiang Farmmi Healthcare Technology Co., Ltd.We expect these new subsidiaries to play an important role in our growth as we accelerate development of Farmmi'snew health and wellness business. Develop Health & Wellness Food Products: The increasing number of people suffering from sub-health and chronic diseases is driving higher demand for healthy food that may also have medicinal properties or benefits. We are developing an expanded product portfolio relying on the technical support of many domestic and foreign scientific research institutions, and developing a food homologous series of products.
- Care Management: As part of our market expansion strategy, we plan to invest in rehabilitation and elderly care management providers, which are benefiting from a spike in demand related to
China'saging population. We expect this will be a major, multi-year trend and business catalyst.
- As an emerging industry, medical and health care is not only a new driving force for the Company to cultivate and develop, but also the key for the Company to win new competitive advantages in the future.
- Community Group Purchasing Distribution Network: In
June 2021, we entered into an investment and cooperation agreement (the "Agreement") to establish a community group purchasing distribution network. This is an exciting, rapidly developing business area, in which Farmmiis now positioned to benefit from expected continued growth, and an acceleration in the development and standardization of the agricultural supply chain business.
- The Agreement between one of
Farmmi'ssubsidiaries, and two other partners, seeks to maximize potential upside by leveraging each company's business platform and expertise, while reducing each party's investment risk. Farmmicommitted to investing RMB 5 million, accounting for 25% of the total registered capital of the new company, while another partner committed to investing RMB 12 million, accounting for 60% of the total registered capital of the new company, and another committed to investing RMB 3 million, accounting for 15% of the total registered capital of the new company.
Taken together, we are excited to be in a new phase of growth for
The above strategic upgrading and industrial layout involves the fields of "Base - Processing - Supply chain - Medical and health". Through continuous expansion and optimization,
Thank you again to all Shareholders,
Headquartered in Lishui,
This announcement contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact in this announcement are forward-looking statements, including the potential impact of COVID-19 on our business within and outside of
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For more information, please contact Investor Relations: Global IR Partners, David Pasquale, New York Office Phone: +1-914-337-8801, FAMI@Globalirpartners.com