# EDGAR Filing Document

**Accession Number:** 0001701261
**File Stem:** 0001477932-26-000727
**Filing Date:** 2026-2
**Character Count:** 1170632
**Document Hash:** 6319854d80fe8313657a0f9de77f9728
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001477932-26-000727.hdr.sgml**: 20260210

**ACCESSION NUMBER**: 0001477932-26-000727

**CONFORMED SUBMISSION TYPE**: 20-F

**PUBLIC DOCUMENT COUNT**: 143

**CONFORMED PERIOD OF REPORT**: 20250930

**FILED AS OF DATE**: 20260210

**DATE AS OF CHANGE**: 20260210

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Farmmi, Inc.
- **CENTRAL INDEX KEY:** 0001701261
- **STANDARD INDUSTRIAL CLASSIFICATION:** CANNED, FRUITS, VEG & PRESERVES, JAMS & JELLIES [2033]
- **ORGANIZATION NAME:** 04 Manufacturing
- **EIN:** 000000000
- **STATE OF INCORPORATION:** E9
- **FISCAL YEAR END:** 0930

**FILING VALUES:**
- **FORM TYPE:** 20-F
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-38397
- **FILM NUMBER:** 26614839

**BUSINESS ADDRESS:**
- **STREET 1:** FL 1, BUILDING NO. 1
- **STREET 2:** 888 TIANNING STREET, LIANDU DISTRICT
- **CITY:** LISHUI, ZHEJIANG PROVINCE
- **STATE:** F4
- **ZIP:** 323000
- **BUSINESS PHONE:** 86-0578-82612876

**MAIL ADDRESS:**
- **STREET 1:** FL 1, BUILDING NO. 1
- **STREET 2:** 888 TIANNING STREET, LIANDU DISTRICT
- **CITY:** LISHUI, ZHEJIANG PROVINCE
- **STATE:** F4
- **ZIP:** 323000

?xml version='1.0' encoding='ASCII'? fami_20f.htm

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 20-F**

**(Mark One)**

**☐** **REGISTRATION STATEMENT PURSUANT TO SECTION 12(B) OR 12(G) OF THE SECURITIES EXCHANGE ACT OF 1934**

**OR**

**☒** **ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934**

**For the fiscal year ended <u>September 30, 2025</u>**

**OR**

**☐** **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934**

**OR**

**☐** **SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934**

Date of event requiring this shell company report……………

**For the transition period from _____to______**

**Commission file number <u>001-38397</u>**

---

| |
|:---|
| **FARMMI, INC.** |
| (Exact name of Registrant as specified in its charter) |

---

**<u>Cayman Islands</u>**

(Jurisdiction of incorporation or organization)

**Fl 1, Building No. 1,888 Tianning Street, Liandu District**

**Lishui, Zhejiang Province**

**<u>People's Republic of China 323000</u>**

(Address of principal executive offices)

**Zhimin Lu, Chief Financial Officer**

**+86-0578-82612876**

**lzm@farmmi.com**

**F3 Building No. 1, 888 Tianning Street, Liandu District**

**Lishui, Zhejiang Province**

**People's Republic of China 323000**

Securities registered or to be registered pursuant to Section 12(b) of the Act:

---

| | |
|:---|:---|
| **Title of each class** | **Name of each exchange on**<br>**which registered** |
| Class A Ordinary Shares, $2.40 par value per share<br> FAMI | NASDAQ Capital Market |

---

Securities registered or to be registered pursuant to Section 12(g) of the Act: **None**

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: **None**

Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report: 5,481,874 ordinary shares

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes ☒ No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. ☐ Yes ☒ No

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes&nbsp;&nbsp;&nbsp;&nbsp; ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes&nbsp;&nbsp;&nbsp;&nbsp; ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of "large accelerated filer, "accelerated filer," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

---

| | | |
|:---|:---|:---|
| Large accelerated filer ☐ | Accelerated filer ☐ | Non-accelerated filer☒ |
|  |  | Emerging growth company ☐ |

---

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐

† The term "new or revised financial accounting standard" refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

---

| | | |
|:---|:---|:---|
| U.S. GAAP☒ | International Financial Reporting Standards as issued <br>by the International Accounting Standards Board ☐ | Other ☐ |

---

If "Other" has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. ☐ Item 17 ☐ Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). ☐ Yes ☒ No

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. ☐ Yes ☐ No

**Table of Contents**

---

| | | |
|:---|:---|:---|
| [Part I](#p1) |  |  |
| [Item 1.](#i1) | [Identity of Directors, Senior Management and Advisers](#i1) | 1 |
| [Item 2.](#i2) | [Offer Statistics and Expected Timetable](#i2) | 1 |
| [Item 3.](#i3) | [Key Information](#i3) | 1 |
| [Item 4.](#i4) | [Information on the Company](#i4) | 35 |
| [Item 4A.](#i4a) | [Unresolved Staff Comments](#i4a) | 81 |
| [Item 5.](#i5) | [Operating and Financial Review and Prospects](#i5) | 81 |
| [Item 6.](#i6) | [Directors, Senior Management and Employees](#i6) | 101 |
| [Item 7.](#i7) | [Major Shareholders and Related Party Transactions](#i7) | 111 |
| [Item 8.](#i8) | [Financial Information](#i8) | 115 |
| [Item 9.](#i9) | [The Offer and Listing](#i9) | 116 |
| [Item 10.](#i10) | [Additional Information](#i10) | 116 |
| [Item 11.](#i11) | [Quantitative and Qualitative Disclosures About Market Risk](#i11) | 125 |
| [Item 12.](#i12) | [Description of Securities Other than Equity Securities](#i12) | 126 |
| [Part II](#p2) |  |  |
| [Item 13.](#i13) | [Defaults, Dividend Arrearages and Delinquencies](#i13) | 127 |
| [Item 14.](#i14) | [Material Modifications to the Rights of Securities Holders and Use of Proceeds](#i14) | 127 |
| [Item 15.](#i15) | [Controls and Procedures](#i15) | 127 |
| [Item 16.](#i16) | [\[Reserved\]](#i16) | 128 |
| [Item 16A.](#i16a) | [Audit Committee Financial Expert](#i16a) | 128 |
| [Item 16B.](#i16b) | [Code of Ethics](#i16b) | 129 |
| [Item 16C.](#i16c) | [Principal Accountant Fees and Services](#i16c) | 129 |
| [Item 16D.](#i16d) | [Exemptions from the Listing Standards for Audit Committees](#i16d) | 129 |
| [Item 16E.](#i16e) | [Purchases of Equity Securities by the Issuer and Affiliated Purchasers](#i16e) | 129 |
| [Item 16F.](#i16f) | [Change in Registrant's Certifying Accountant](#i16f) | 129 |
| [Item 16G.](#i16g) | [Corporate Governance](#i16g) | 130 |
| [Item 16H.](#i16h) | [Mine Safety Disclosure](#i16h) | 130 |
| [Item 16I.](#i16i) | [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](#i16i) | 130 |
| [Item 16J.](#i16j) | [Insider Trading Policy](#i16j) | 130 |
| [Item 16K](#i16k) | [Cybersecurity](#i16k) | 130 |
| [Part III.](#p3) |  |  |
| [Item 17.](#i17) | [Financial Statements](#i17) | 131 |
| [Item 18.](#i18) | [Financial Statements](#i18) | 131 |
| [Item 19.](#i19) | [Exhibits](#i19) | 132 |

---

i<br>

**SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS**

Statements in this annual report with respect to the Company's current plans, estimates, strategies and beliefs and other statements that are not historical facts are forward-looking statements about the future performance of the Company. Forward-looking statements include, but are not limited to, those statements using words such as "believe," "expect," "plans," "strategy," "prospects," "forecast," "estimate," "project," "anticipate," "aim," "intend," "seek," "may," "might," "could" or "should," and words of similar meaning in connection with a discussion of future operations, financial performance, events or conditions. From time to time, oral or written forward-looking statements may also be included in other materials released to the public. These statements are based on management's assumptions, judgments and beliefs in light of the information currently available to it. The Company cautions investors that a number of important risks and uncertainties could cause actual results to differ materially from those discussed in the forward-looking statements, including but not limited to, product and service demand and acceptance, changes in technology, economic conditions, the impact of competition and pricing, government regulation, and other risks contained in reports filed by the company with the Securities and Exchange Commission (the "SEC"). Therefore, investors should not place undue reliance on such forward-looking statements. Actual results may differ significantly from those set forth in the forward-looking statements.

All such forward-looking statements, whether written or oral, and whether made by or on behalf of the company, are expressly qualified by the cautionary statements and any other cautionary statements which may accompany the forward-looking statements. In addition, the company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.

---

| |
|:---|
| ii |
| *[**Table of Contents**](#Toc)* |

---

**Part I**

**Item 1. Identity of Directors, Senior Management and Advisers**

Not applicable for annual reports on Form 20-F.

**Item 2. Offer Statistics and Expected Timetable**

Not applicable for annual reports on Form 20-F.

**Item 3. Key Information**

**Our Corporate Structure**

Farmmi, Inc. (the "Farmmi," "we," "our" or "us") is not a PRC operating company but a holding company incorporated in the Cayman Islands ("Cayman"). As a holding company, we own equity interests, directly or indirectly, in our operating subsidiaries. The vast majority of the business operations are conducted by our subsidiaries based in mainland China, or PRC, and we also have expanded our operations in the U.S. and Canada.

There are significant legal and operational risks associated with conducting a substantial portion of our operations in mainland China, including those changes in the legal, political, and economic policies of the PRC government, the relations between China and the United States, or PRC or U.S. regulations may materially and adversely affect our business, financial condition, results of operations, and the market price of our Class A ordinary shares (the "Class A Ordinary Shares" or "Ordinary Shares"). Any such changes could significantly limit or completely hinder our ability to offer or continue to offer our shares to investors and could cause the value of our shares to significantly decline or become worthless. Recent statements made and regulatory actions undertaken by the PRC government, including the recent enactment of China's Data Security Law, as well as our obligations to comply with China's new Cybersecurity Review Measures (which became effective on February 15, 2022), regulations and guidelines relating to the multi-level protection scheme, Personal Information Protection Law, or PIPL, the Trial Measures for the Administration of Overseas Issuance and Listing of Securities by Domestic Enterprises and related guidelines (collectively, the "Trial Measures" or "Overseas Listing Rules"), and any other future laws and regulations may require us to incur significant expenses and could materially affect our ability to conduct our business, accept foreign investments or continue to be listed on a U.S. or foreign stock exchange.

In addition, prior to January 2024, we had also operated limited products sales through online and e-commerce channels. PRC laws and regulations restrict and impose conditions on foreign investment in internet based, value-added telecommunication services, mobile application services and certain other businesses. Accordingly, we had operated our online and e-commerce sales in China mainly through our consolidated affiliated entities and relied on contractual arrangements among our PRC subsidiaries, previously consolidated affiliated entities and their nominee shareholder to control the business operations. Those affiliated entities were consolidated for accounting purposes but were not entities in which our Cayman holding company, or our investors, owned equity. Such structure and the contractual arrangements were designed to enable Farmmi to have power to direct significant activities of those entities and to receive economic benefits from these entities where PRC law prohibits, restricts or imposes conditions on direct foreign investment in such entities.

Our consolidated affiliated entities have been treated as Variable Interest Entities under the Statement of Financial Accounting Standards Board Accounting Standards Codification 810 Consolidation, and we were regarded as the primary beneficiary of those consolidated affiliated entities (i.e., VIEs). Accordingly, we treated our VIEs as our consolidated entities under U.S. GAAP and we consolidated the financial results of our former VIEs in our consolidated financial statements in accordance with U.S. GAAP prior to January 2024.

---

| |
|:---|
| 1 |
| *[**Table of Contents**](#Toc)* |

---

The following diagram illustrates our Company's organizational structure as of the date of this annual report:

![fami_20fimg33.jpg](fami_20fimg33.jpg)

&nbsp;&nbsp;&nbsp;&nbsp;

**Permissions Required from the PRC Authorities for Our Operations**

We conduct our business in China through our subsidiaries established under PRC law. We are required to obtain certain permissions from the PRC authorities to operate, issue securities to foreign investors, and transfer certain data. The PRC government has exercised, and may continue to exercise, substantial influence or control over virtually every sector of the Chinese economy through regulation and state ownership. Our ability to operate in China may be undermined if our PRC subsidiaries are not able to obtain or maintain approvals to operate in China. The central or local governments could impose new, stricter regulations or interpretations of existing regulations that could require additional expenditures, and efforts on our part to ensure our compliance with such regulations or interpretations. To operate our general business activities currently conducted in mainland China, each of our PRC subsidiaries is required to obtain a business license from the local counterpart of the State Administration for Market Regulation, or SAMR. Each of our PRC subsidiaries has obtained a valid business license from the local SAMR, and no application for any such license has been denied. Our PRC subsidiaries are also required to obtain certain licenses and permits. Among our PRC subsidiaries, Farmmi Food and Farmmi Biotech are required to obtain food business licenses pursuant to the PRC Food Safety Law. As of the date of this report, as advised by our PRC legal counsel, Zhiheng Law Firm, we and our PRC subsidiaries have received all requisite permits, approvals and certificates from the PRC government authorities to conduct our business operations in China. To our knowledge, no permission or approval has been denied or revoked. However, given the uncertainties of interpretation and implementation of relevant laws and regulations and the enforcement practice by government authorities, we cannot be certain that relevant policies in this regard will not change in the future, which may require us or our subsidiaries to obtain additional licenses, permits, filings or approvals for conducting our business in the PRC. If we or our subsidiaries do not receive or maintain required permissions or approvals, or inadvertently conclude that such permissions or approvals are not required, we may be subject to governmental investigations or enforcement actions, fines, penalties, suspension of operations, or be prohibited from engaging in relevant business or conducting securities offering, and these risks could result in a material adverse change in our operations, significantly limit or completely hinder our ability to offer or continue to offer securities to investors, or cause such securities to significantly decline in value or become worthless.

In connection with our previous issuance of securities to foreign investors, under current PRC laws, regulations and regulatory rules, as of the date of this annual report, we and our PRC subsidiaries, (i) are not required to obtain permissions from the China Securities Regulatory Commission, or the CSRC, (ii) are not required to go through cybersecurity review by the Cyberspace Administration of China, or the CAC, and (iii) have not received or were denied such requisite permissions by any PRC authority. However, the PRC government has recently indicated an intent to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers.

---

| |
|:---|
| 2 |
| *[**Table of Contents**](#Toc)* |

---

On July 10, 2021, the CAC published a revised draft revision to the Cybersecurity Review Measures for public comment, or the Revised Cybersecurity Measures. Under these measures, an operator having more than one million users shall be subject to cybersecurity review before listing abroad. The cybersecurity review will evaluate the risk of critical information infrastructure, core data, important data, or a large amount of personal information being influenced, controlled or maliciously used by foreign governments after going public overseas. The procurement of network products and services, data processing activities and overseas listing should also be subject to cybersecurity review if they concern or potentially pose risks to national security. According to the effective Cybersecurity Review Measures, online platform/website operators of certain industries may be identified as critical information infrastructure operators by the CAC, once they meet standard as stated in the National Cybersecurity Inspection Operation Guide, and such operators may be subject to cybersecurity review. On December 28, 2021, the CAC, the National Development and Reform Commission ("NDRC"), and other government agencies jointly issued the final version of the Revised Measures for Cybersecurity Review, or the Measures, which took effect on February 15, 2022 and replaced the previously issued Revised Cybersecurity Review Measures. Under the Measures, an "online platform operator" in possession of personal data of more than one million users must apply for a cybersecurity review if it intends to list its securities on a foreign stock exchange. The operators of critical information infrastructure and the online platform operators (collectively, the "Operators") carrying out data processing activities that affect or may affect national security, shall conduct a cybersecurity review, and any online platform operator who controls more than one million users' personal information must go through a cybersecurity review by the cybersecurity review office if it seeks to be listed in a foreign country. Pursuant to the Measures, we believe we are not subject to the cybersecurity review by the CAC, given that (i) we possess personal information of a relatively small number of users in our business operations as of the date of this report, significantly less than one million users; and (ii) data processed in our business does not have a bearing on national security and thus shall not be classified as core or important data by the PRC authorities. We don't believe that we are an Operator within the meaning of the Measures, nor do we control more than one million users' personal information, and as such, we should not be required to apply for a cybersecurity review under the Revised Measures. Further, an expert interpretation of the Measures published at the CAC's website on February 17, 2022 indicated no application review is required for operators that have been listed abroad before the implementation of the Revised Cybersecurity Measures. However, the Measures were just recently released and there is a general lack of guidance and substantial uncertainties exist with respect to their interpretation and implementation. Whether the data processing activities carried out by traditional enterprises (such as food, medicine, manufacturing, and merchandise sales enterprises) are subject to such review and the scope of the review remain to be further clarified by the regulatory authorities in the subsequent implementation process.

The PRC government recently initiated a series of regulatory actions and statements to regulate business operations in China, including adopting new measures to extend the scope of cybersecurity reviews, cracking down on illegal activities in the securities market, and expanding the efforts in anti-monopoly enforcement. The PRC government is increasingly focused on data security. In July 2021, the CAC opened cybersecurity probes into several U.S.-listed technology companies focusing on anti-monopoly regulation, and how companies collect, store, process and transfer data. On November 14, 2021, the CAC published the Draft Regulations on Network Data Security Management for public comments, which among other things, stipulates that a data processor listed overseas must conduct an annual data security review by itself or by engaging a data security service provider and submit the annual data security review report for a given year to the municipal cybersecurity department before January 31 of the following year. If the Draft Regulations on Network Data Security Management are enacted in the current form, we, as an overseas listed company, would be required to carry out an annual data security review and comply with the relevant reporting obligations. As of the date of this report, the draft regulations have been released for public comment only and have not been formally adopted. The final provisions and the timeline for its adoption are subject to changes and uncertainties. We have been closely monitoring the regulatory development in China, particularly regarding the requirements of approvals, annual data security review or other procedures that may be imposed on us. If any approval, review or other procedure is in fact required, we cannot assure our investors that we will be able to obtain such approval or complete such review or other procedure timely or at all. For any approval that we may be able to obtain, it could nevertheless be revoked and the terms of its issuance may impose restrictions on our operations and/or securities offerings. The PRC regulatory requirements with respect to cybersecurity and data security are constantly evolving and can be subject to varying interpretations and significant changes, resulting in uncertainties about the scope of our responsibilities in that regard. Failure to comply with these cybersecurity and data privacy requirements in a timely manner, or at all, may subject us to government enforcement actions and investigations, fines, penalties, suspension or disruption of our operations.

Pursuant to the Cybersecurity Law of the PRC, which was promulgated on October 28, 2025 and came into effect on January 1, 2026, listed companies are required, among other things, (a) to fulfill their security protection obligations in accordance with the requirements of the cybersecurity tiered protection system, to prevent networks from being disturbed, damaged, or accessed without authorization, as well as data leakage, theft, or tampering; (b) to take technical measures and other necessary measures to ensure the secure and stable operation of their networks, effectively respond to cybersecurity incidents, guard against cyber-related criminal activities; and strictly keep personal information collected confidential, without disclosing, tampering with, or damaging it; (c) to set up a dedicated security management organization and responsible person, conduct security background checks, and regularly provide cybersecurity education, technical training, and skill assessments for employees, if listed companies operate critical information infrastructure, and operators of critical information infrastructure are required to conduct at least one security inspection and assessment each year, report the results and improvement measures to relevant departments, and also develop emergency response plans and conduct regular drills; and (d) for listed companies that store network data overseas or provide data to overseas entities, to undergo security assessments or take corresponding security measures to ensure the security of cross-border data flows. Listed companies that violate cybersecurity regulations may face penalties such as warnings, fines, suspension of related business activities, revocation of licenses or business licenses, etc. If the violation constitutes a crime, criminal responsibility shall be pursued according to law.

The PRC regulatory requirements with respect to cybersecurity and data security are constantly evolving and can be subject to varying interpretations and significant changes, resulting in uncertainties about the scope of our responsibilities in that regard. Failure to comply with these cybersecurity and data privacy requirements in a timely manner, or at all, may subject us to government enforcement actions and investigations, fines, penalties, suspension or disruption of our operations.

---

| |
|:---|
| 3 |
| *[**Table of Contents**](#Toc)* |

---

On February 17, 2023, China Securities Regulatory Commission (the "CSRC") issued the Trial Measures for the Administration of Overseas Issuance and Listing of Securities by Domestic Enterprises and five supporting guidelines (collectively, the "Trial Measures" or "Overseas Listing Rules"), which took effect on March 31, 2023. Under the Trial Measures, a company established in mainland China seeking securities offering and listing, by both direct or indirect means, in an overseas market is required to undertake filing procedures with the CSRC for its overseas offering and listing activities. The Trial Measures also set forth a list of circumstance under which overseas offering and listing by domestic companies established in mainland China is prohibit, including: (i) where such securities offering and listing is explicitly prohibited by the PRC laws; (ii) where the intended securities offering and listing may endanger national security as reviewed and determined by competent PRC authorities under the State Council in accordance with PRC laws; (iii) where the domestic company established in mainland China, or its controlling shareholders and the actual controller, have committed crimes such as corruption, bribery, embezzlement, misappropriation of property or undermining the order of the socialist market economy during the latest three (3) years; (iv) where the domestic company established in mainland China seeking securities offering and listing is suspected of committing crimes or major violations of laws and regulations, and is under investigation according to law, and no conclusion has yet been made thereof; and (v) where there are material ownership disputes over equity held by the controlling shareholder of the company established in mainland China or by other shareholders that are controlled by the controlling shareholder and/or actual controller. In accordance with the Trial Measures, the listing and trading of our Ordinary Shares on Nasdaq is deemed as an indirect overseas offering and listing by domestic companies established in mainland China, and thus, we are subject to the relevant filing procedures as required. Further, we believe, as of the date of this report, none of the circumstances prohibiting the overseas offering and listing by domestic companies established in mainland China as listed above applies to us, and we can offer and continue to offer our Ordinary Shares on Nasdaq.

In accordance with the Notice on the Arrangement for the Filing of Overseas Offering and Listing by Domestic Companies issued by the CSRC, we are deemed as an "Existing Issuer" because we had been listed overseas before March 31, 2023. Under such Notice, we are not required to undertake the initial filing procedure immediately. However, we shall carry out filing procedures as required in a timely manner for the subsequent events, including any further follow-up offerings on Nasdaq, dual and/or secondary offering and listing on different overseas markets, and occurrence of material events including change of control, investigations or sanctions imposed by overseas securities regulatory agencies or other relevant competent authorities, change of listing status or transfer of listing segment, and voluntary or mandatory delisting. Among other things, if an overseas listed issuer intends to effect any follow-on offering in an overseas stock market, it should, through its major operating entity incorporated in the PRC, submit filing materials to the CSRC within three working days after the completion of the offering. The required filing materials shall include, but not be limited to, (1) filing report and relevant commitment letter and (2) domestic legal opinions. We may be subject to additional compliance requirements in the future, and we cannot assure you that we will be able to get the above-mentioned clearance of filing procedures on a timely basis, or at all. If we or our PRC Subsidiaries in the future fail to undertake filing procedures as stipulated in the Trial Measures or offer and list securities in an overseas market in violation of the Trial Measures, the CSRC may order rectification, issue warnings to us and/or our PRC Subsidiaries and impose a fine of between RMB 1,000,000 and RMB 10,000,000. The CSRC may also inform its regulatory counterparts in the overseas jurisdictions, such as the SEC, via cross-border securities regulatory cooperation mechanisms.

Further, on February 24, 2023, the CSRC, together with Ministry of Finance, National Administration of State Secrets Protection, and National Archives Administration of China, released the Provisions on Strengthening the Confidentiality and Archives Administration Related to the Overseas Securities Offering and Listing by Domestic Enterprises (the "Confidentiality Provisions"), which went into effect on March 31, 2023 with the Trial Measures. Under the Confidentiality Provisions, domestic companies established in mainland China seeking overseas offering and listing, by both direct and indirect means, are required to institute a sound confidentiality and archives system. If such domestic companies established in mainland China intend to, either directly or through its overseas listed entity, publicly disclose or provide to relevant individuals or entities including securities companies, securities service providers and overseas regulators, any documents and materials that contain state secrets or working secrets of government agencies, they shall obtain approval from competent authorities and complete the relevant filing procedure with the competent secrecy administrative department prior to their disclosure or provision of such documents and materials. Further, if they provide or publicly disclose documents and materials which may adversely affect national security or public interests, they shall strictly follow the corresponding procedures in accordance with relevant laws and regulations. Any failure or perceived failure by us or our subsidiaries to comply with the above confidentiality and archives administration requirements under the Confidentiality Provisions and other relevant PRC laws and regulations may cause relevant entities to be held legally liable by competent authorities and referred to the judicial organ to be investigated for criminal liability if suspected of committing a crime. As of the date of this report, we believe that we and our subsidiaries have not provided or publicly disclosed any documents or materials involving state secrets or work secrets of PRC government agencies or any of which may adversely affect national security or public interests, to relevant securities companies, securities service institutions, overseas regulatory agencies and other entities and individuals. We intend to comply with the Confidentiality Provisions and other relevant PRC laws and regulations in our future offerings.

However, any failure of us or our PRC Subsidiaries to fully comply with the Trial Measures and/or the Confidentiality Provisions, may significantly limit or completely hinder our ability to offer or continue to offer our Ordinary Shares on Nasdaq, cause significant disruption to our business operations, severely damage our reputation, materially and adversely affect our financial condition and results of operations and cause our Ordinary Shares to significantly decline in value or become worthless.

For more detailed information, see "Item 3. Key Information-D. Risk Factors-Risks Relating to Doing Business in China."

---

| |
|:---|
| 4 |
| *[**Table of Contents**](#Toc)* |

---

**Cash Flows through Our Organization**

Farmmi is a holding company with no operations of its own. We conduct our operations principally in China through our subsidiaries. As a result, we may rely upon dividends paid to us by our subsidiaries in the PRC to pay dividends and to finance any debt we may incur. As of the date of this report, none of our subsidiaries has issued any dividends or distributions to us and we have not made any dividends or distributions to our shareholders. Our subsidiaries in the PRC generate and retain cash generated from operating activities and re-invest it in our business.

Current PRC regulations permit our subsidiary in mainland China to pay dividends to the Company only out of its accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. Under our current corporate structure, we rely on dividend payments or other distributions from our subsidiaries to fund any cash and financing requirements we may have, including the funds necessary to pay dividends and other cash distributions to our shareholders or to service any debt we may incur. If any subsidiary incurs debt on its own behalf in the future, the instruments governing such debt may restrict its ability to pay dividends to us. In addition, under PRC laws and regulations, each of our Chinese subsidiaries is required to set aside a portion of their net income each year to fund a statutory surplus reserve until such reserve reaches 50% of its registered capital. This reserve is not distributable as dividends. As a result, our PRC subsidiaries are restricted in their ability to transfer a portion of its net assets to us in the form of dividends, loans or advances. Further, the PRC government also imposes controls on the conversion of RMB into foreign currencies and the remittance of currencies out of the PRC. Therefore, we may experience difficulties in completing the administrative procedures necessary to obtain and remit foreign currency for the payment of dividends from our profits, if any. If we are unable to receive funds from our subsidiaries, we may be unable to pay cash dividends on our ordinary shares.

Cash dividends, if any, on our ordinary shares will be paid in U.S. dollars. If we are considered a PRC tax resident enterprise for tax purposes, any dividends we pay to our overseas shareholders may be regarded as China-sourced income and as a result may be subject to PRC withholding tax at a rate of up to 10%. A 10% PRC withholding tax is applicable to dividends payable to investors that are non-resident enterprises. Any gain realized on the transfer of ordinary shares by such investors is also subject to PRC tax at a current rate of 10% which in the case of dividends will be withheld at source if such gain is regarded as income derived from sources within the PRC.

Pursuant to the Arrangement between Mainland China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and Tax Evasion on Income, or the Double Tax Avoidance Arrangement, the 10% withholding tax rate may be lowered to 5% if a Hong Kong resident enterprise owns no less than 25% of a PRC resident enterprise. However, the 5% withholding tax rate does not automatically apply and certain requirements must be satisfied, including without limitation that (a) the Hong Kong resident enterprise must be the beneficial owner of the relevant dividends; and (b) the Hong Kong resident enterprise must directly hold no less than 25% share ownership in a PRC entity during the 12 consecutive months preceding its receipt of the dividends. In current practice, a Hong Kong entity must obtain a tax resident certificate from the Hong Kong tax authority to apply for the 5% lower PRC withholding tax rate. As the Hong Kong tax authority will issue such a tax resident certificate on a case-by-case basis, we cannot be certain that we will be able to obtain the tax resident certificate from the relevant Hong Kong tax authority and enjoy the preferential withholding tax rate of 5% under the Double Taxation Arrangement with respect to dividends to be paid by our PRC subsidiaries to our Hong Kong subsidiaries. As of the date of this report, we have not applied for the tax resident certificate from the relevant Hong Kong tax authority. Our Hong Kong subsidiaries intend to apply for the tax resident certificate when our subsidiaries in mainland China plan to declare and pay dividends to their Hong Kong parent companies.

As an offshore holding company, we will be permitted under PRC laws and regulations to provide funding from the proceeds of our offshore fund-raising activities to our subsidiaries in China only through loans or capital contributions, subject to the satisfaction of the applicable government registration and approval requirements. Before providing loans to our PRC subsidiaries, we will be required to make filings about details of the loans with the State Administration of Foreign Exchange of the PRC (the "SAFE") in accordance with relevant PRC laws and regulations. Our PRC subsidiaries that receive the loans are only allowed to use the loans for the purposes set forth in these laws and regulations. Under regulations of the SAFE, Renminbi is not convertible into foreign currencies for capital account items, such as loans, repatriation of investments and investments outside of China, unless the prior approval of the SAFE is obtained and prior registration with the SAFE is made.

Under PRC law, we may provide funding to our PRC subsidiaries only through capital contributions or loans, and prior to the dismantling of our PRC consolidated affiliated entities only through loans to our former consolidated affiliated entities, subject to satisfaction of applicable government registration and approval requirements.

For the fiscal year ended September 30, 2025, we provided working capital loans of $157.7 million in aggregate to our subsidiaries.

For the fiscal year ended September 30, 2024, we provided working capital loans of $151.8 million in aggregate to our subsidiaries.

For the fiscal year ended September 30, 2023, we provided working capital loans of $151.7 million in aggregate to our subsidiaries.

---

| |
|:---|
| 5 |
| *[**Table of Contents**](#Toc)* |

---

We have not declared or paid any cash dividends, nor do we have any present plan to pay any cash dividends on our ordinary shares in the foreseeable future. We currently intend to retain most, if not all, of our available funds and any future earnings to operate and expand our business.

As of the date of this report, we do not anticipate any difficulties on our ability to transfer cash between subsidiaries. We have not installed any cash management policies that dictate the amount of such funds and how such funds are transferred.

**The Holding Foreign Companies Accountable Act**

Our Ordinary Shares may be prohibited from trading on a national exchange or "over-the-counter" markets under the HFCAA if the PCAOB is unable to inspect our auditors for two consecutive years. Pursuant to the HFCAA enacted in December 2020 and related legislation, if the SEC determines that a company has filed an audit report issued by a registered public accounting firm that has not been subject to inspection by the PCAOB for two consecutive years, the SEC is required to prohibit such company's securities from being traded on a national securities exchange or in the over the counter trading market in the U.S.

Pursuant to the HFCAA, the PCAOB issued a Determination Report on December 16, 2021, which found that the PCAOB was unable to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong. In addition, the PCAOB's report identified the specific registered public accounting firms which are subject to these determinations. On August 26, 2022, the PCAOB signed a Statement of Protocol (SOP) Agreement with the CSRC and the MOF of the PRC regarding cooperation in the oversight of PCAOB-registered public accounting firms in the PRC and Hong Kong to establish a method for the PCAOB to conduct inspections of PCAOB-registered public accounting firms in the PRC and Hong Kong, as contemplated by the Sarbanes-Oxley Act. Under the agreement, (a) the PCAOB has sole discretion to select the firms, audit engagements and potential violations it inspects and investigates without consultation with, or input from, PRC authorities; (b) procedures are in place for PCAOB inspectors and investigators to view complete audit work papers with all information included and for the PCAOB to retain information as needed; (c) the PCAOB has direct access to interview and take testimony from all personnel associated with the audits the PCAOB inspects or investigates; and (d) the PCAOB shall have the unfettered ability to transfer information to the SEC in accordance with the Sarbanes-Oxley Act, and the SEC can use the information for all regulatory purposes, including administrative or civil enforcement actions. On December 15, 2022, the PCAOB determined that the PCAOB was able to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and vacated its previous 2021 adverse determinations. However, should PRC authorities obstruct or otherwise fail to facilitate the PCAOB's access in the future, the PCAOB will consider the need to issue a new determination.

Our current auditor is based in the U.S. and has been inspected by the PCAOB on a regular basis. Our auditor is not among the PCAOB-registered public accounting firms headquartered in the PRC or Hong Kong that are subject to PCAOB's determination. Notwithstanding the foregoing, in the future, if it is later determined that the PCAOB is unable to inspect or investigate our auditor completely, or if there is any regulatory change or step taken by PRC regulators that does not permit our auditor to provide audit documentations to the PCAOB for inspection or investigation, our investors may be deprived of the benefits of such inspection. Any audit reports not issued by auditors that are completely inspected or investigated by the PCAOB, or a lack of PCAOB inspections of audit work undertaken in China that prevents the PCAOB from regularly evaluating our auditors' audits and their quality control procedures, could result in a lack of assurance that our financial statements and disclosures are adequate and accurate, which could result in limitation or restriction to our access to the U.S. capital markets and trading of our securities, including trading on the national exchange or "over-the-counter" markets, may be prohibited under the HFCAA.

---

| |
|:---|
| 6 |
| *[**Table of Contents**](#Toc)* |

---

**A. Selected Financial Data**

In the table below, we provide you with historical selected financial data for our company. The selected consolidated statements of operations data for the fiscal years ended September 30, 2025, 2024, and 2023 and the selected consolidated balance sheets data as of September 30, 2025 and 2024 have been derived from our audited consolidated financial statements, which are included in this annual report beginning on page F-1. Our historical results do not necessarily indicate results expected for any future periods. The selected consolidated financial data should be read in conjunction with, and are qualified in their entirety by reference to, our audited consolidated financial statements and related notes and "Item 5. Operating and Financial Review and Prospects" below. Our audited consolidated financial statements are prepared and presented in accordance with US GAAP.

(All amounts in U.S. dollars)

**<u>Statements of operations data:</u>**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **For the Years Ended September 30,**  | **For the Years Ended September 30,**  | **For the Years Ended September 30,**  | **For the Years Ended September 30,**  | **For the Years Ended September 30,**  |
|  | **2025**  | **2024**  | **2023**  | **2022**  | **2021**  |
| Revenues | $27971360 | $64131332 | $110364887 | $99213379 | $39289951 |
| Gross profit | 801523 | 3873714 | 4286755 | 5438086 | 5109281 |
| Operating expenses | (56917899) | (3078029) | (2245380) | (4495718) | (2256405) |
| (Loss) income from operations | (56116376) | 795685 | 2041375 | 942368 | 2852876 |
| Income tax (expenses) benefits | (42) | (264) | (313493) | 118367 | (25571) |
| Net (loss) income from continuing operations | (53385988) | (4627772) | 2543813 | 2223979 | 2407790 |
| Net loss from discontinued operations, net of tax |  |  |  |  | (51352) |
| Net (loss) income | $(53385988) | $(4627772) | $2543813 | $2223979 | $2356438 |
| (Loss) earnings per share, basic |  |  |  |  |  |
| Continuing operations | (29.08) | (7.83) | 8.41 | 9.18 | 56.19 |
| Discontinued operations |  |  |  |  | (1.20) |
| (Loss) earnings per share, diluted |  |  |  |  |  |
| Continuing operations | (29.08) | (7.83) | 8.41 | 9.18 | 56.19 |
| Discontinued operations |  |  |  |  | (1.18) |
| Weighted average ordinary share outstanding, basic | 1836043 | 590694 | 302410 | 242165 | 42851 |
| Weighted average ordinary share outstanding, diluted | 1836043 | 590694 | 704406 | 242165 | 43523 |

---

---

| |
|:---|
| 7 |
| *[**Table of Contents**](#Toc)* |

---

**Balance sheets data**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **2025**  | **2024**  | **2023**  | **2022**  | **2021**  |
| Current assets | $93125955 | $161925796 | $158171175 | $153254380 | $155305536 |
| Total assets | $147033182 | $186733719 | $174800086 | $163782853 | $165686901 |
| Current liabilities | $9956330 | $10060240 | $10712982 | $8289321 | $4146426 |
| Total liabilities | $23175730 | $16717482 | $12824160 | $9098762 | $4894483 |
| Total shareholders' equity (net assets) | $123857452 | $170016237 | $161975926 | $154684091 | $160792418 |

---

**Selected Consolidated Financial Schedule**

The tables below disaggregated the Consolidated Statements of Operations and Comprehensive Income (Loss) of the Company into FAMI, PRC subsidiaries, and non-PRC subsidiaries for the years ended September 30, 2025 and 2024, and into FAMI, the VIE and its subsidiaries, the WFOE that is the primary beneficiary of the VIEs and an aggregation of other entities that are consolidated for the fiscal year ended September 30, 2023.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **For the Year Ended September 30, 2025**  | **For the Year Ended September 30, 2025**  | **For the Year Ended September 30, 2025**  | **For the Year Ended September 30, 2025**  | **For the Year Ended September 30, 2025**  |
|  | **Non-PRC** <br>**Subsidiaries**  | **PRC** <br>**Subsidiaries**  | <br>**FAMI**  | <br>**Eliminations**  | **Consolidated** <br>**total**  |
| Revenues | $7326921 | $20644439 |  |  | $27971360 |
| Cost of revenues | (8805651) | (18364186) | - |  | (27169837) |
| Gross (loss) profit | (1478730) | 2280253 |  |  | 801523 |
| Operating expenses | (821384) | (55099230) | (997285) |  | (56917899) |
| Loss from operations | (2300114) | (52818977) | (997285) |  | (56116376) |
| Other income (expenses) | 1233449 | 2071039 | (574058) |  | 2730430 |
| Loss before income taxes | (1066665) | (50747938) | (1571343) |  | (53385946) |
| Income tax expenses | - | (42) | - |  | (42) |
| Net loss | $(1066665) | $(50747980) | $(1571343) |  | $(53385988) |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **For the year ended September 30, 2024**  | **For the year ended September 30, 2024**  | **For the year ended September 30, 2024**  | **For the year ended September 30, 2024**  | **For the year ended September 30, 2024**  |
|  | **Non-PRC** <br>**Subsidiaries**  | **PRC** <br>**Subsidiaries**  |<br>**FAMI**  |<br>**Eliminations**  | **Consolidated** <br>**total**  |
| Revenues | $9400 | $64121932 |  |  | $64131332 |
| Cost of revenues | (4480) | (60253138) | - |  | (60257618) |
| Gross profit | 4920 | 3868794 |  |  | 3873714 |
| Operating expenses | (338119) | (1936427) | (803483) |  | (3078029) |
| (Loss) income from operations | (333199) | 1932367 | (803483) |  | 795685 |
| Other (expenses) income | (4853175) | 4529659 | (5099677) |  | (5423193) |
| (Loss) income before income taxes | (5186374) | 6462026 | (5903160) |  | (4627508) |
| Income tax expenses | 949 | (1213) | - |  | (264) |
| Net (loss) income | $(5185425) | $6460813 | $(5903160) |  | $(4627772) |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **For the year ended September 30, 2023**  | **For the year ended September 30, 2023**  | **For the year ended September 30, 2023**  | **For the year ended September 30, 2023**  | **For the year ended September 30, 2023**  |
|  | **Other entities** <br> **that are** <br>**consolidated**  | **WFOE that is** <br> **the primary** <br>**beneficiary**  |<br> **VIE and its** <br>**subsidiaries**  |<br>**FAMI**  |<br> **Consolidated** <br>**total**  |
| Revenues | $74224063 | $16034543 | $20106281 |  | $110364887 |
| Cost of revenues | (70021350) | (16023779) | (20033003) | - | (106078132) |
| Gross profit | 4202713 | 10764 | 73278 |  | 4286755 |
| Operating expenses | (1028294) | (71676) | (231462) | (913948) | (2245380) |
| Income (loss) from operations | 3174419 | (60912) | (158184) | (913948) | 2041375 |
| Other income (expenses) | 1514162 | (68416) | 634225 | (1264040) | 815931 |
| Income (loss) before income taxes | 4688581 | (129328) | 476041 | (2177988) | 2857306 |
| Provision for income taxes | (270874) | (8556) | (34063) | - | (313493) |
| Net income (loss) | $4417707 | $(137884) | $441978 | $(2177988) | $2543813 |

---

---

| |
|:---|
| 8 |
| *[**Table of Contents**](#Toc)* |

---

The tables below disaggregated the Consolidated Balance Sheets of the Company into FAMI, PRC subsidiaries and non-PRC subsidiaries as of September 30, 2025 and 2024.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **As of September 30, 2025**  | **As of September 30, 2025**  | **As of September 30, 2025**  | **As of September 30, 2025**  | **As of September 30, 2025**  |
|  | **Non-PRC** <br>**Subsidiaries**  | **PRC** <br>**Subsidiaries**  |<br>**FAMI**  |<br>**Eliminations**  | **Consolidated** <br>**total**  |
| Intercompany receivables | $15120843 | $8188 | $157699303 | $(172828334) |  |
| Current assets excluding intercompany receivables | 31988835 | 61137050 | 70 | - | 93125955 |
| Current assets | 47109678 | 61145238 | 157699373 | (172828334) | 93125955 |
| Investment in subsidiaries | 69019556 |  |  | (69019556) |  |
| Non-current assets excluding investment in subsidiaries | 46933699 | 6973528 | - | - | 53907227 |
| Non-current assets | 115953255 | 6973528 | - | (69019556) | 53907227 |
| Total assets | 163062933 | 68118766 | 157699373 | (241847890) | 147033182 |
| Intercompany payables | 148633480 | 22321325 | 3270 | (170958075) |  |
| Current liabilities excluding intercompany payables | 6520299 | 406446 | 3029585 | - | 9956330 |
| Current liabilities | 155153779 | 22727771 | 3032855 | (170958075) | 9956330 |
| Non-current liabilities | 13194630 | 24770 | - | - | 13219400 |
| Total liabilities | 168348409 | 22752541 | 3032855 | (170958075) | 23175730 |
| Total shareholders' equity (net assets) | $(5285476) | $45366225 | $154666518 | $(70889815) | $123857452 |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **As of September 30, 2024** | **As of September 30, 2024** | **As of September 30, 2024** | **As of September 30, 2024** | **As of September 30, 2024** |
|  | **Non-PRC**<br>**Subsidiaries** | **PRC**<br>**Subsidiaries** |<br>**FAMI** |<br>**Eliminations** | **Consolidated**<br>**total** |
| Intercompany receivables | $63632744 | $7653 | $151457184 | $(215097581) |  |
| Current assets excluding intercompany receivables | 680374 | 160950651 | 294771 | - | 161925796 |
| Current assets | 64313118 | 160958304 | 151751955 | (215097581) | 161925796 |
| Investment in subsidiaries | 68019556 |  |  | (68019556) |  |
| Non-current assets excluding investment in subsidiaries | 7969062 | 16838861 | - | - | 24807923 |
| Non-current assets | 75988618 | 16838861 | - | (68019556) | 24807923 |
| Total assets | 140301736 | 177797165 | 151751955 | (283117137) | 186733719 |
| Intercompany payables | 135718879 | 78130518 | 962080 | (214811477) |  |
| Current liabilities excluding intercompany payables | 3564540 | 1057154 | 5438546 | - | 10060240 |
| Current liabilities | 139283419 | 79187672 | 6400626 | (214811477) | 10060240 |
| Non-current liabilities | 6237130 | 420112 | - | - | 6657242 |
| Total liabilities | 145520549 | 79607784 | 6400626 | (214811477) | 16717482 |
| Total shareholders' equity (net assets) | $(5218813) | $98189381 | $145351329 | $(68305660) | $170016237 |

---

---

| |
|:---|
| 9 |
| *[**Table of Contents**](#Toc)* |

---

**Exchange Rate Information**

Our financial information is presented in U.S. dollars. Our functional currency is Renminbi ("RMB"), the currency of the PRC. Transactions denominated in currencies other than RMB are translated into RMB at the exchange rate quoted by the People's Bank of China at the dates of the transactions. Exchange gains and losses resulting from transactions denominated in a currency other than the RMB are included in statements of operations as foreign currency transaction gains or losses. Our financial statements have been translated into U.S. dollars in accordance with Statement of Financial Accounting Standard ("SFAS") No. 52, "Foreign Currency Translation", which was subsequently codified within ASC 830, "Foreign Currency Matters". The financial information is first prepared in RMB and then is translated into U.S. dollars at period-end exchange rates as to assets and liabilities and average exchange rates as to 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 shareholders' equity. The relevant exchange rates are listed below:

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Years Ended September 30,**  | **For the Years Ended September 30,**  | **For the Years Ended September 30,**  |
|  | **2025**  | **2024**  | **2023**  |
| Period ended exchange rate US$1=RMB | 7.1190 | 7.0176 | 7.2960 |
| Period average exchange rate US$1=RMB | 7.2125 | 7.2043 | 7.0533 |

---

**B. Capitalization and Indebtedness**

Not applicable by 20-F as an annual report.

**C. Reasons for the Offer and Use of Proceeds**

Not applicable by 20-F as an annual report.

**D. Risk Factors**

*Before you decide to purchase our Ordinary Shares, you should understand the high degree of risk involved. You should carefully consider the following risks and other information in this report, including our consolidated financial statements and related notes. If any of the following risks actually occur, our business, financial condition and operating results could be adversely affected. As a result, the trading price of our Ordinary Shares could decline, perhaps significantly.*

---

| |
|:---|
| 10 |
| *[**Table of Contents**](#Toc)* |

---

**<u>Summary of Risk Factors</u>**

Our business is subject to a number of risks, including risks that may prevent us from achieving our business objectives or may adversely affect our business, financial condition, results of operations, cash flows, and prospects. These risks are discussed more fully below and include, but are not limited to, risks related to:

***Risks Relating to Doing Business in China***

---

| |
|:---|
| The PRC government may intervene in or influence our operations at any time, which could result in a material change in our operations and significantly and adversely impact the value of our Ordinary Shares.  |
| If the Chinese government determines that our corporate structure does not comply with Chinese regulations, or if Chinese regulations change or are interpreted differently in the future, the value of our Ordinary Shares may decline in value or become worthless. |
| Uncertainties in the interpretation and enforcement of PRC laws and regulations could limit the legal protections available to us and our shareholders. |
| We are required to submit filings with the CSRC in connection with securities issuance and may be subject to approval, filing or other procedures with other Chinese regulatory authorities under PRC law; we cannot predict whether we will be able, or how long it will take us, to obtain such approval or complete such filing or other procedures. |
| Trading in our securities may be prohibited under the Holding Foreign Companies Accountable Act if the PCAOB determines that it cannot inspect or investigate completely our auditors for two consecutive years. |
| We face many uncertainties with the VIE structure we had used in our operations prior to 2024. |
| Our PRC subsidiaries are subject to restrictions on paying dividends or making other payments to us, which may restrict our ability to satisfy our liquidity requirements. |
| We may be classified as a PRC "resident enterprise" for PRC enterprise income tax purposes. Such classification would likely result in unfavorable tax consequences to us and our non-PRC shareholders and have a material adverse effect on our results of operations and the value of your investment. |

---

***Risks Related to Our Business and Industry***

· The loss of any of our key customers could reduce our revenues and our profitability.

· We buy our supplies from a relatively limited number of suppliers.

· We face risks related to health epidemics that could impact our sales and operating results.

· Our industry and business are subject to extensive regulations by the Chinese government.

· Any failure by our subsidiaries to comply with PRC food safety laws may require us to incur significant costs.

· Edible fungi cultivated by our suppliers and other agricultural products we sell are subject to risks related to diseases, pests, extreme weather events or climate risks.

---

| |
|:---|
| 11 |
| *[**Table of Contents**](#Toc)* |

---

***Risks Related to Ownership of Our Ordinary Shares***

· We are a Cayman Islands exempted company with limited liability. The rights of our shareholders may be different from the rights of shareholders governed by the laws of U.S. jurisdictions.

· As a "foreign private issuer," we are exempt from certain U.S. federal securities law provisions applicable to U.S. domestic issuers and are also permitted to rely on exemptions from certain Nasdaq corporate governance standards applicable to U.S. issuers, and such exemptions may afford less protection to shareholders.

· Our shares may be delisted if we are unable to comply with Nasdaq continued listing requirements.

· The market price of our Ordinary Shares has been, and may continue to be, highly volatile, and such volatility could cause the market price of our Ordinary Shares to decrease and could cause you to lose some or all of your investment in our Ordinary Shares.

· Our dual class share structure may limit your ability to influence corporate matters and could discourage others from pursuing any change of control transactions that holders of our Class A Ordinary Shares may view as beneficial.

**<u>Risks Related to Our Business and Industry</u>**

***We face risks related to health epidemics that could impact our sales and operating results.***

Our business could be adversely affected by the effects of a widespread outbreak of contagious disease, including COVID-19. Although the impact of COVID-19 was temporary on our business and operations in 2021 due to some shutdowns in China, any outbreak of contagious diseases in the future, and other adverse public health developments, particularly in China, could have a material and adverse effect on our business operations. These could include disruptions or restrictions on our ability to continue our operations, as well as temporary closures of our facilities and ports or the facilities of our customers and third-party service providers. Any disruption or delay of our customers or third-party service providers would likely impact our operating results and the ability of the Company to continue as a going concern. In addition, a significant outbreak of contagious diseases in the human population could result in a widespread health crisis that could adversely affect the economies and financial markets of China and many other countries, resulting in an economic downturn that could affect demand for our products and significantly impact our operating results.

***The loss of any of our key customers could reduce our revenues and our profitability.***

Our key customers in fiscal year 2025 were principally Shanghai Yunmihui Supply Chain Group Co. Ltd ("Yunmihui"), and Lil Republic Limited ("Lil Republic"). They are unrelated parties. For the fiscal years ended September 30, 2025, 2024, and 2023, sales to Yunmihui accounted for approximately 68.1%, 55.0%, and 40.5% of our total revenue, respectively. If we cannot maintain long-term relationships with these major customers, the loss of our sales to them could have an adverse effect on our business, financial condition and results of operations. There can be no assurance that we will maintain or improve the relationships with these customers, or that we will be able to continue to supply these customers at current levels or at all. Any failure to pay by these customers could have a material negative effect on our company's business. In addition, having a relatively small number of customers may cause our quarterly results to be inconsistent, depending upon when these customers pay for outstanding invoices.

---

| |
|:---|
| 12 |
| *[**Table of Contents**](#Toc)* |

---

***We buy our supplies from a relatively limited number of suppliers.***

During the years ended September 30, 2025, 2024, and 2023, we had the following suppliers that accounted for 15% or more of our purchases.

---

| | | | |
|:---|:---|:---|:---|
| | **For the Years Ended September 30,**  | **For the Years Ended September 30,**  | **For the Years Ended September 30,**  |
| <br>**Supplier Name**  | **2025**  | **2024**  | **2023**  |
| Jingning Liannong Trading Co., Ltd.  | 36.4% | 23.8% | 13.5% |
| Qingyuan Nongbang Mushroom Industry Co., Ltd.  | 34.9% | 22.3% | 7.9% |
| Changsha Golden Eagle Cross-Border Ltd  | 20.1% |  |  |
| Lishui Zhelin Trading Co., Ltd.  |  | 15.7% | 9.5% |

---

Because we purchase a material amount of our raw materials from these suppliers, the loss of any such suppliers could result in increased expenses for our company and result in adverse impact on our business, financial condition and results of operations.

***Our failure to comply with PRC food safety laws may require us to incur significant costs.***

Manufacturers in the Chinese food industry are subject to compliance with PRC food safety laws and regulations. These food safety laws require all enterprises engaged in the production of edible fungi and various vegetables and fruits to obtain a food production license for each of their production facilities. Such laws also require manufacturers to comply with regulations with respect to food, food additives, packaging, and food production sites, facilities and equipment. Meanwhile, a separate food distribution license is required for engaging in the sale of food. Failure to comply with PRC food safety laws may result in fines, suspension of operations, loss of licenses and, in more extreme cases, criminal proceedings against an enterprise and its management. The Chinese government may also change the existing laws or regulations or impose additional or stricter laws or regulations, compliance with which may cause us to incur significant capital expenditures, which we may be unable to pass on to our customers through higher prices for our products.

***We lack product and business diversification. Accordingly, our future revenues and earnings are more susceptible to fluctuations than a more diversified company.***

Our primary business activities have historically focused on edible fungi products. Because our focus is limited in this way, any risk affecting the edible fungi industry or consumers' desire for edible fungi products could disproportionately affect our business. Our lack of product and business diversification could inhibit the opportunities for growth of our business, revenues and profits. Although we have expanded into the agricultural product supply chain trading business since June 2021, we still lack product diversification in our overall product trading.

***Governmental support to the agriculture industry and/or our business may decrease or disappear.***

Currently the Chinese government is supporting agriculture with tax exemption, especially e-commerce in agriculture. In addition, our local government has been supporting our company by providing subsidies from time to time. These beneficial policies may change, so the support we receive from the government may decrease or disappear, which may impact our development.

---

| |
|:---|
| 13 |
| *[**Table of Contents**](#Toc)* |

---

***Beneficial tax incentives may disappear.***

We operate our business primarily through our subsidiaries based in mainland China. Currently the agriculture industry is highly supported by the Chinese government. For example, to further strengthen and standardize the support of comprehensive agricultural development to the characteristic industries with agricultural advantages, the Chinese National Office of Comprehensive Agricultural Development has decided to carry out the compilation of *The Plan for Comprehensive Agricultural Development to Support the Agricultural Advantage and Characteristic Industries (2019-2021)* (the "New Plan"). Edible fungi are emphasized and classified as a "dominant and characteristic industry," which may become the objects of policy-support issue in the future. However, the New Plan has not yet been formally approved and the final result remains to be further observed.

As an agricultural production enterprise, we are enjoying certain tax benefits, including a tax waiver for our dried mushroom wholesale business. If the tax policies change in a way that some or all of the tax benefits we presently receive are cancelled, we may need to pay much higher taxes which will reduce or eliminate our profit margin.

***We are subject to extensive regulations by the Chinese government.***

The food industry is subject to extensive regulations by Chinese government agencies. Among other things, these regulations govern the manufacturing, importation, processing, packaging, storage, exportation, distribution and labeling of our products. New or amended statutes and regulations, increased production at our existing facilities, and our expansion into new operations and jurisdictions may require us to obtain new licenses and permits and could require us to change our methods of operations at costs that could be substantial.

***While we are not aware of any data breach in the past, cyber-attacks, computer viruses or any future failure to adequately maintain security and prevent unauthorized access to electronic and other confidential information could result in a data breach which could materially adversely affect our reputation, financial condition and operating results.***

As part of business operations, we collect, process, store and transmit our employees, business partners and other third party data. Our customers, business partners and employees expect us to adequately safeguard and protect their sensitive personal and business information. We may experience cyber-attacks and other security incidents of varying degrees from time to time, and we may incur significant costs in protecting against or remediating such incidents. In addition, we are subject to a variety of laws and regulations in the PRC and other countries relating to cybersecurity and data protection. Security breaches or unauthorized access to confidential information could also expose us to liability related to the loss of the information, time-consuming and expensive litigation and negative publicity. If security measures are breached because of third-party action, employee error, malfeasance or otherwise, or if design flaws in our technology infrastructure are exposed and exploited, our relationships with customers and cooperation partners could be severely damaged. Affected third parties or government authorities could initiate legal or regulatory actions against us in connection with any actual or perceived security breaches or improper access to or disclosure of data, which could cause us to incur significant expense and liability, and our business and operations could be materially and adversely affected.

***Failure to make adequate contributions to Housing Provident Fund for certain employees of our PRC subsidiaries could subject us to labor disputes or complaint and adversely affect our financial condition.***

Pursuant to the Regulations on Management of Housing Provident Fund ("HPF"), promulgated by the State Council on April 3, 1999 and amended on March 24, 2002, PRC enterprises must register with relevant HPF management center, open special HPF accounts at a designated bank and make timely HPF contributions for their employees. In accordance with the Regulations on Management of Housing Provident Fund and the Rules for Administrative Enforcement of Housing Provident Fund in Zhejiang Province, an enterprise that fails to register with HPF management center or open accounts for its employees shall be ordered to do so within the prescribed time; if a PRC company fails to comply within the prescribed time, it could be fined between RMB 10,000 and RMB 50,000.

Furthermore, if such enterprise fails to pay in full or in part its HPF contributions, such enterprise will be ordered by the HPF enforcement authorities to make such contributions and may be compelled by the people's court that has jurisdiction over the matter to make such contributions. Pursuant to the relevant HPF laws and regulations, HPF contributions are only required for employees with urban housing registration. For employees with rural housing registration, contributions are voluntary and are not required. In addition, there are discrepancies in the interpretation and enforcement of such regulations at the national and local level. Local and national enforcement practices at times vary significantly.

Our PRC subsidiaries have not opened HPF accounts for approximately 80% of their employees (most of them are with rural housing registration), and their contribution to HPF did not cover these employees. Regarding those employees with urban housing registration but not covered by our PRC subsidiaries' contribution to HPF, our PRC subsidiaries may potentially be ordered by HPF enforcement authorities to make full contribution, and face litigation by employees in relation to their failure to make full contribution. As of the date of this report, our PRC subsidiaries have not received any demand or order from the competent authorities with respect their HPF contribution. To the extent the PRC subsidiaries are required to make such payment, our financial condition will likely be adversely affected.

***Changes in trade policies may make our products more expensive to end purchasers in other countries or regions.***

We currently receive incentives and support from our local government. Further, China has policy support for the agricultural sector. Because we export approximately 0.6% of our agricultural products for sale outside China, we are subject to the risk that foreign governments will view such support, either now or in the future, as unfair trade practices. If this were to happen, our products could be subjected to tariffs or other taxes that cause such products to be more expensive and thus less attractive to potential purchasers.

---

| |
|:---|
| 14 |
| *[**Table of Contents**](#Toc)* |

---

***The edible fungi cultivated by our suppliers is subject to risks related to diseases, pests, abnormal temperature change and extreme weather events.***

Edible fungi are exposed to diseases and pests. Pests and diseases during the cultivation process may significantly decrease the quantity of the qualified edible fungi provided to us, which may force us to breach our contracts with our clients by not being able to supply enough products to them timely and further impact our revenues.

Temperature can have a significant impact on the growth and the quality of edible fungi. Mushrooms can only grow under certain temperature. If the temperature is too low, the edible fungi may grow slowly or even not grow at all. If the temperature is too high, the edible fungi may grow too fast and have a worse texture.

Global warming is increasing the frequency and severity of extreme weather events around the world. Although our suppliers are using more and more carefully managed environments for cultivation, extreme weather events may still impact our cultivation process. As a result, the supply of our raw materials may be affected. For example, because of the warm winter in 2016, the quantity of edible fungi cultivated in Lishui, Zhejiang Province increased, but the quality decreased and the price decreased accordingly.

***Our supplier farms may fail to comply with the legal requirements and our quality standards and negatively affect the quality of our raw materials.***

Our supplier farms are responsible for complying with the legal requirements. It is possible that they fail to comply with any PRC law relating to food safety during their production process. If the governmental agency determines they are not eligible to continue the operation, we will need to find alternative supplier farms to meet our demands. The supplier farms may also fail to comply with our quality standards. As a result, our raw materials provided by these family farms will be negatively affected. If we are unable to inspect and rule out any affected fungi and we sell them to our clients, our reputation will be harmed. Our clients may cease purchasing products from us. Even if we are able to inspect the affected fungi, we will need to spend extra time to find alternative suppliers to supplement our raw materials.

***The purchase price of dried edible fungi is based on local market price which we cannot control and predict.***

When we purchase dried edible fungi from our suppliers, we usually reach a price slightly higher than the local market price on that day or during that period because we seek to purchase top quality dried mushrooms, which command premium prices. If the local market price is unusually higher on that day or during that period, and if we have to purchase certain amount of edible fungi to fulfill our clients' orders, we will spend more on the costs than expected. Because we receive the orders from our clients first when the sale price is set, and then purchase dried edible fungi accordingly, a higher purchase price will reduce our profit margin.

***Increases in edible fungi costs may negatively affect our operating results.***

The price of edible fungi may be inelastic when we wish to purchase supplies. While we have attempted to mitigate this risk by taking advantage of decreases in other expenses (due to better transportation infrastructure reducing the cost of bringing materials to our company and from our company to our customers) and improving efficiency, we cannot guarantee that we will be able to control our material expenses. In addition, as we are competing based upon low price, we will risk losing customers by increasing our selling prices. To the extent our expenses increase beyond the price we can charge our customers, our operating results could be harmed.

***Our products are not nationally well known.***

Our product visibility in general is not high in China. Although we plan to participate in more industry events to improve recognition and drive revenues, we have no guarantee that we will be able to materially increase the market recognition of all our edible fungi products. To the extent we are unable to increase our product visibility, we may face challenges in increasing revenues or increasing the profit margin for such products.

---

| |
|:---|
| 15 |
| *[**Table of Contents**](#Toc)* |

---

***Our products have relatively low technical requirements; therefore, barriers to entry are minimal.***

Processing edible fungi does not require complicated technology. Our competitors can create similar products at a relatively low cost because there are minimal barriers of entry. To the extent our customers discriminate based on price, we may find that we lose market share to new producers. Moreover, we may be required to reduce our price in order to maintain or slow loss of market share for such products.

***Our directors' and executive officers' other business activities may pose conflicts of time commitment and conflicts of interest.***

Our directors and executive officers have other business interests outside the company that could potentially give rise to conflicts of time commitment. For example, our Chief Executive Officer and Chairwoman, Yefang Zhang, and her husband and a director of the Company through January 18, 2025, Zhengyu Wang, collectively own all of Forasen Group. Zhengyu Wang was also the chairman of the board of directors of Tantech Holdings Ltd ("Tantech"), another Nasdaq listed company until December 19, 2024, and Yefang Zhang is currently the chairwoman of Tantech's board of directors.

Ms. Zhang has historically devoted approximately 85% of her time to matters concerning Farmmi, approximately 5% of her time to matters for Tantech, and approximately 10% of her time to matters concerning Forasen Group. Mr. Wang has historically devoted approximately 15% of his time to matters concerning Farmmi, approximately 15% of his time to matters for Tantech, and approximately 70% of his time to matters concerning Forasen Group. As Ms. Zhang and Mr. Wang devote considerable time and effort to Tantech and Forasen Group, these sort of business activities could both distract them from focusing on Farmmi and pose a conflict of time commitment.

Our company and Forasen Group signed a Non-Competition Agreement which provides that Forasen Group should not engage in any business that our company engages in, except purchasing products from us. In addition, Mr. Wang and Ms. Zhang signed a Non-Competition Agreement with our 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 we conduct. Although because of these non-competition agreements, we do not believe that there are business activities of Mr. Wang and Ms. Zhang that will compete directly with our business operations, it is possible that the enforceability of these agreements is challenged and a conflict of interest occurs.

***Outstanding bank loans may reduce our available funds.***

As of September 30, 2025 and 2024, we had approximately nil and $2.4 million in outstanding bank loans. In the future, if we have outstanding bank loans, although we believe we have adequate capital to repay those bank loans, there can be no guarantee that we will be able to pay all amounts when due or to refinance the amounts on terms that are acceptable to us or at all. If we are unable to make our payments when due or to refinance such amounts, we could be subject to penalty and our business could be negatively affected.

---

| |
|:---|
| 16 |
| *[**Table of Contents**](#Toc)* |

---

While we do not believe they will impact our liquidity, the terms of the debt agreements impose significant operating and financial restrictions on us. These restrictions could also have a negative impact on our business, financial condition and results of operations by significantly limiting or prohibiting us from engaging in certain transactions, including but not limited to incurring or guaranteeing additional indebtedness; transferring or selling assets currently held by us; and transferring ownership interests in certain of our subsidiaries. The failure to comply with any of these covenants could cause a default under our other debt agreements. Any of these defaults, if not waived, could result in the acceleration of all of our debt, in which case the debt would become immediately due and payable. If this occurs, we may not be able to repay our debt or borrow sufficient funds to refinance it on favorable terms, if any.

***We may be unable to refinance our short-term loans.***

We expect to be able to refinance our short-term loans based on past experience and our good credit history. We do not believe failure to refinance from certain banks will have significant negative impact on our normal business operations. For the years ended September 30, 2024 and 2023, our operating cash flow was negative, while for the year ended September 30, 2025, our operating cash flow was positive. Our related parties, including our major shareholders and affiliate companies, are willing to provide us financial support. However, it is possible for us to have negative cash flow again in the future, and for our related parties to be unable to provide us financial support as needed. As a result, the failure to refinance our short-term loans could potentially affect our capital expenditure and expansion of business.

***We have in the past guaranteed third parties' debt; if we guarantee third parties' debt in the future, a failure by such parties to repay their debts may be enforced against our company.***

As a condition of obtaining bank financing, smaller companies in China sometimes enter into reciprocal debt guaranties with third parties, pursuant to which the bank agrees to provide loans to one or more unrelated entities if such entities agree to guarantee the loans made to the other entities.

Over the years, our subsidiaries were the guarantors of third parties' debts and were also beneficiaries of third parties' guaranties.

We are not currently guaranteeing any third-party debts or intend to enter into any third-party guarantees. We have also adopted a policy that restricts third party guarantees. In addition, no banks currently require such guarantee arrangements from us. However, it is possible that we may, in the future, require bank loans to support our business or expand our operations and be unable to obtain unguaranteed loans. If this were to occur in the future, future lenders might demand unrelated third-party guarantees. If we were to enter into any other guarantees for third party debts and they failed to pay, our cash position could be adversely affected and we might be unable to be made whole by our counter-guarantor.

***If we guarantee related parties' debt in the future, we may be liable if they fail to pay the underlying debt.***

In the past, we facilitated the operations of our related party Forasen Group by agreeing to guarantee its obligations.

For example, on December 20, 2013, Forasen Group signed a guarantee agreement with Bank of China to guarantee the loan and credit of up to RMB 15,000,000 on a loan from the Bank of China to Zhejiang Feiyan Down Products Co., Ltd ("Feiyan"). Relying on this guarantee, Feiyan was able to borrow RMB 15,000,000 from the Bank of China.

Feiyan subsequently defaulted on its debt and Forasen Group entrusted Zhejiang FLS Mushroom Co., Ltd ("FLS Mushroom") to repay the money on Forasen Group's behalf. Accordingly, FLS Mushroom signed a credit transfer agreement with Bank of China by which it promised to honor the guarantee in Forasen Group's place.

In five installments paid in 2015, 2016 and 2017, Forasen Group fully repaid all outstanding amounts, and FLS Mushroom has no remaining liability for its guarantee.

If we enter into related party guarantees in the future and we are unable to cause a related party to honor such obligations, we could find that our company bears primary responsibility for such obligations.

---

| |
|:---|
| 17 |
| *[**Table of Contents**](#Toc)* |

---

***When China's currency appreciates, our products may become more expensive to export to countries or regions outside mainland China.***

While 2023 and 2022, we saw the Renminbi's depreciation against the U.S. dollar, 2021 saw the Renminbi's appreciation against the U.S. dollar. We are subject to exchange rate risk between U.S. dollar and Renminbi because we sell our products in U.S. dollar from time to time, and our export distributors settle in U.S. dollar and these distributors may also be affected by U.S. dollar exchange rate. Among our export sales for the year ended September 30, 2025, approximately 18.96% were sold to U.S., 16.48% sold to Canada, 10.12% sold to Japan, 15.96% sold to Europe, and 38.48% sold to the Middle East. Settlement currency is USD for export transactions no matter what the destination country is.

***We may require additional financing in the future and our operations could be curtailed if we are unable to obtain required additional financing when needed.***

While we conducted a private placement in November 2018 and we have outstanding bank loans, we may need to obtain additional debt or equity financing to fund future capital expenditures. While we do not anticipate seeking additional financing in the immediate future, any additional equity may result in dilution to the holders of our outstanding shares of capital stock. Additional debt financing may include conditions that would restrict our freedom to operate our business, such as conditions that:

· limit our ability to pay dividends or require us to seek consent for the payment of dividends;

· increase our vulnerability to general adverse economic and industry conditions;

· require us to dedicate a portion of our cash flow from operations to payments on our debt, thereby reducing the availability of our cash flow to fund capital expenditures, working capital and other general corporate purposes; and

· limit our flexibility in planning for, or reacting to, changes in our business and our industry.

We cannot guarantee that we will be able to obtain any additional financing on terms that are acceptable to us, or at all.

***Our bank accounts are not fully insured or protected against loss.***

We maintain our cash with various banks located in mainland China. Cash maintained in banks within the People's Republic of China of less than RMB 0.5 million (equivalent to $70,235) per bank are covered by "Deposit Insurance Regulation" promulgated by the State Council of the People's Republic of China. Our cash accounts are not insured or otherwise protected. Should any bank or trust company holding our cash deposits become insolvent, or if we are otherwise unable to withdraw funds, we would lose the cash on deposit with that particular bank or escrow agent.

---

| |
|:---|
| 18 |
| *[**Table of Contents**](#Toc)* |

---

***We are substantially dependent upon our senior management.***

We are highly dependent on our senior management to manage our business and operations. In particular, we rely substantially on our Chief Executive Officer and Chairwoman, Ms. Yefang Zhang to manage our operations. Ms. Zhang has been involved in the mushroom industry for more than twenty years. Ms. Zhang cofounded Lishui Jingning Huali Co., Ltd in 1994 with her husband Mr. Zhengyu Wang to engage in the mushroom business. Due to her experience in the industry and long relationships with our customer base, Ms. Zhang would be difficult to replace.

While we provide the legally required personal insurance for the benefit of our employees, we do not maintain key person life insurance on any of our senior management, including Ms. Zhang. The loss of any one of them would have a material adverse effect on our business and operations. Competition for senior management and our other key personnel is intense, and the pool of suitable candidates is limited. We may be unable to quickly locate a suitable replacement for any senior management that we lose. In addition, if any member of our senior management joins a competitor or forms a competing company, they may compete with us for customers, business partners and other key professionals and staff members of our company. Although some of our senior management have signed confidentiality agreements in connection with their employment with us, we cannot assure you that we will be able to successfully enforce these provisions in the event of a dispute between us and any member of our senior management.

***Failure to manage our growth could strain our management, operational and other resources, which could materially and adversely affect our business and prospects.***

Our growth strategy includes developing export customers of our existing products of edible fungi, increasing varieties of agricultural products and expanding our e-commerce platforms. Pursuing these strategies have resulted in, and will continue to result in, substantial demands on management resources. In particular, the management of our growth will require, among other things:

---

| |
|:---|
| stringent cost controls and sufficient liquidity; |
| strengthening of financial and management controls; |
| increased marketing, sales and support activities; and |
| hiring and training of new personnel. |

---

If we are not able to manage our growth successfully, our business and prospects would be materially and adversely affected.

***An insufficient amount of insurance could expose us to significant costs and business disruption.***

While we have purchased insurance to cover certain assets and property of our business, the amounts and scope of coverage could leave our business inadequately protected from loss. For example, not all of our subsidiaries have coverage of business interruption insurance. If we were to incur substantial losses or liabilities due to fire, explosions, floods, other natural disasters or accidents or business interruption, our results of operations could be materially and adversely affected.

***If we fail to protect our intellectual property rights, it could harm our business and competitive position.***

We rely on a combination of trademark, domain name laws and non-disclosure agreements and other methods to protect our intellectual property rights.

---

| |
|:---|
| 19 |
| *[**Table of Contents**](#Toc)* |

---

Implementation of PRC intellectual property-related laws have historically been lacking, primarily because of ambiguities in the PRC laws and enforcement difficulties. Accordingly, intellectual property rights and confidentiality protections in China may not be as effective as in the United States or other western countries. Furthermore, policing unauthorized use of proprietary technology is difficult and expensive, and we may need to resort to litigation to enforce or defend patents issued to us or to determine the enforceability, scope and validity of our proprietary rights or those of others. Such litigation and an adverse determination in any such litigation, if any, could result in substantial costs and diversion of resources and management attention, which could harm our business and competitive position.

***We may be exposed to trademark infringement and other claims by third parties which, if successful, could disrupt our business and have a material adverse effect on our financial condition and results of operations.***

If we sell our branded products internationally, and as litigation becomes more common in China, we face a higher risk of being the subject of claims for trademark infringement, invalidity or indemnification relating to other parties' proprietary rights. The defense of trademark suits, including of trademark infringement suits, and related legal and administrative proceedings can be both costly and time consuming and may significantly divert the efforts and resources of our management personnel. Furthermore, an adverse determination in any such litigation or proceedings to which we may become a party could cause us to:

· pay damage awards;

· seek licenses from third parties;

· pay ongoing royalties;

· redesign our branded products; or

· be restricted by injunctions,

each of which could effectively prevent us from pursuing some or all of our business and result in our customers or potential customers deferring or limiting their purchase or use of our products. This could have a material adverse effect on our financial condition and results of operations.

***Our investments in other businesses may not be successful.***

On November 5, 2021, we purchased 124,590,064 shares of Shanghai Jiaoda Onlly Co., Ltd ("Jiaoda Onlly"), a Shanghai Stock Exchange listed company under the ticker 600530.SH, from shareholders of Jiaoda Onlly. Jiaoda Onlly operates elderly care institutions and engages in the research and development, production and sale of health food. We, through one of our subsidiaries, Zhejiang Yitang Medical Service Co., Ltd ("Yitang"), purchased a total of 16% of the shares of Jiaoda Onlly from China Capital Investment Group Co., Ltd ("CCIG") and its affiliates for approximately RMB 509 million (approximately US$71.6 million). In January 2022, we determined that the investment in Jiaoda Onlly no longer aligned with our business objectives and transferred our obligations and rights under the Equity Transfer Framework Agreement to two unrelated parties. Although we did not suffer a financial loss in this transaction, we could incur a loss in future investments.

---

| |
|:---|
| 20 |
| *[**Table of Contents**](#Toc)* |

---

***An increase in prepaid expenses and accounts receivable may have a material adverse effect on our financial condition and the results of operations.***

We have significantly increased our advances to suppliers and accounts receivable in fiscal year 2021. Although we increased such advances to suppliers mainly in anticipation of higher revenue to be generated in fiscal 2023, we cannot guarantee that such customer demand will be forthcoming, that such commodity prices will justify the amount of such increase, that the suppliers will continue to operate in business, that we would be able to recover any prepayments in the event suppliers are unable to deliver according to our agreements or that the market prices for our products will allow us to sell such products profitably even with increased demand. Similarly, our customers had significantly increased accounts receivable to us during fiscal year 2021. While this increase was partially related to an increase in revenues, some of the increase was also due to slower-paying customers than in fiscal year 2020. Although we recovered some of the accounts receivable following completion of the fiscal year, we cannot guarantee that we will be successful in recovering accounts receivable in a timely fashion in the future. In the event our customers fail to pay our business for products or suppliers fail to return advances in the event they are unable to meet our requirements, our financial operation would be materially adversely affected.

**<u>Risks Related to Doing Business in China</u>**

***The PRC government may intervene in or influence our operations at any time, which could result in a material change in our operations and significantly and adversely impact the value of our Ordinary Shares.***

The Chinese government has significant oversight and discretion over the conduct of our business and may intervene or influence our operations as the government deems appropriate to further regulatory, political and societal goals. The Chinese government has recently published new policies that significantly affected certain industries such as the education and internet industries, and we cannot rule out the possibility that it will in the future release regulations or policies regarding our industries that could require us to seek permission from Chinese authorities to continue to operate our business, which may adversely affect our business, financial condition and results of operations. Furthermore, recent statements made by the Chinese government have indicated an intent to increase the government's oversight and control over offerings of companies with significant operations in mainland China that are to be conducted in foreign markets, as well as foreign investment in China-based issuers like us. Any such action, if taken by the Chinese government, could significantly limit or completely hinder our ability to offer or continue to offer Ordinary Shares to our investors and could cause the value of our Ordinary Shares to significantly decline or become worthless.

***We are required to file with the CSRC and may be subject to the approval of, filing or other procedures with other Chinese regulatory authorities in connection with securities offerings under PRC law, and we cannot predict whether we will be able, or how long it will take us, to obtain such approval or complete such filing or other procedures.***

The Chinese government has exercised, and may continue to exercise, substantial influence or control over virtually every sector of the Chinese economy through regulation and state ownership. Our ability to operate in mainland China could be undermined if our Chinese subsidiaries and consolidated entities are not able to obtain or maintain approvals to operate in mainland China. The central or local governments could impose new, stricter regulations or interpretations of existing regulations that could require additional expenditures and efforts on our part to ensure our compliance with such regulations or interpretations.

As of the date of this Annual Report, we are required to submit filings to the CSRC in connection with the future issuance of our equity securities to foreign investors. As there are uncertainties with respect to the Chinese legal system and changes in laws, regulations and policies, including how those laws, regulations and policies will be interpreted or implemented, there can be no assurance that we will not be subject to additional requirements, approvals, or permissions in the future. We are required to obtain certain approvals from Chinese authorities in order to operate our Chinese subsidiaries.

The Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rules, appear to require that offshore special purpose vehicles, controlled by Chinese companies or individuals formed for the purpose of seeking a public listing on an overseas stock exchange through acquisitions of Chinese domestic companies or assets in exchange for the shares of the offshore special purpose vehicles, obtain CSRC approval prior to publicly listing their securities on an overseas stock exchange.

---

| |
|:---|
| 21 |
| *[**Table of Contents**](#Toc)* |

---

Further, on July 6, 2021, the General Office of the Communist Party of China Central Committee and the General Office of the State Council jointly promulgated the Opinions on Strictly Cracking Down on Illegal Securities Activities in Accordance with the Law, pursuant to which Chinese regulators are required to accelerate rulemaking related to the overseas issuance and listing of securities, and update the existing laws and regulations related to data security, cross-border data flow, and management of confidential information. Numerous regulations, guidelines and other measures have been or are expected to be adopted in addition to the Cyber Security Law and Data Security Law.

Additionally, the Draft Rules, if declared into effect, will implement a new regulatory framework requiring China-based companies such as us to submit filings to CSRC in connection with the issuance of equity securities to foreign investors. The instructions on the Draft Rules released by the CSRC suggest that companies already listed on overseas exchanges will be exempt, such that prior offerings will not need to be filed with the CSRC. However, if the Draft Rules are declared into effect, we may be required to submit filings to the CSRC in connection with any future offerings, including follow-on offerings, secondary offerings or other shelf offerings, within three working days following the completion of any such offering(s).

As there are still uncertainties regarding the interpretation and implementation of such regulatory guidance, we cannot assure investors that we will be able to comply with new regulatory requirements relating to our future overseas capital-raising activities, and we may become subject to more stringent requirements with respect to matters including data privacy and cross-border investigation and enforcement of legal claims.

If our Chinese subsidiaries or consolidated entities do not receive or maintain approvals or inadvertently conclude that approvals needed for their business are not required or if there are changes in applicable laws (including regulations) or interpretations of laws and our Chinese subsidiaries or consolidated entities are required but unable to obtain approvals in the future, then such changes or need for approvals (if not obtained) could adversely affect the operations of our Chinese subsidiaries or consolidated entities, including limiting or prohibiting the ability of our Chinese subsidiaries or consolidated entities to operate, and the value of our shares could significantly decline or become worthless.

To operate our general business activities currently conducted in mainland China, each of our Chinese subsidiaries and consolidated entities is required to obtain a business license from the local counterpart of the State Administration for Market Regulation, or SAMR. Each of our Chinese subsidiaries and consolidated entities has obtained a valid business license from the local counterpart of the SAMR, and no application for any such license has been denied.

As of the date of this Annual Report, we have not received any inquiry, notice, warning or sanction regarding obtaining approval, completing filing or other procedures in connection with issuing securities to foreign investors from the CSRC or any other Chinese regulatory authorities that have jurisdiction over our operations. Based on the above and our understanding of the Chinese laws and regulations currently in effect, we were not required to submit an application to the CSRC or any other Chinese regulatory authorities for issuing securities to foreign investors. However, there remains significant uncertainty as to the enactment, interpretation and implementation of regulatory requirements related to overseas securities offerings and other capital markets activities, and we cannot assure you that the relevant Chinese regulatory authorities, including the CSRC, would reach the same conclusion as us. If it is determined in the future that the approval of, filing or other procedure with the CSRC or any other regulatory authority is required for issuing our securities to foreign investors, it is uncertain whether we will be able and how long it will take for us to obtain the approval or complete the filing or other procedure, despite our best efforts. If we, for any reason, are unable to obtain or complete, or experience significant delays in obtaining or completing, the requisite relevant approval(s), filing or other procedure(s), we may face sanctions by the CSRC or other Chinese regulatory authorities. These regulatory authorities may impose fines and penalties on our operations in mainland China, limit our ability to pay dividends outside of mainland China, limit our operations in mainland China, delay or restrict the repatriation of the proceeds from our public offerings into mainland China or take other actions that could have a material adverse effect on our business, financial condition, results of operations and prospects, as well as the trading price of our shares. In addition, if the CSRC or other regulatory authorities later promulgate new rules requiring that we obtain their approvals or complete filing or other procedures for any future public offerings, we may be unable to obtain a waiver of such requirements, if and when procedures are established to obtain such a waiver. Any uncertainties and/or negative publicity regarding such a requirement could have a material adverse effect on the trading price of our shares, including potentially making those shares worthless.

***If the Chinese government determines that our corporate structure does not comply with Chinese regulations, or if Chinese regulations change or are interpreted differently in the future, the value of our Ordinary Shares may decline in value or become worthless.***

In July 2021, the Chinese government provided new guidance on Chinese companies raising capital outside of mainland China, including through arrangements called variable interest entities, or VIEs. We are not in an industry that is subject to foreign ownership limitations in mainland China. While our business operations are conducted by our PRC subsidiaries, our previous product sales via online and e-commerce channels, which accounted for a smaller portion of our business, were conducted by former VIE through a series of contractual arrangements entered into between our subsidiaries and VIE and the shareholder of the VIE. As a result of these contractual arrangements, we had exerted control over former VIE and consolidated the VIE's operating results in our financial statements under U.S. GAAP. We believe our previous ownership structure and the contractual arrangements among our subsidiaries, former VIE and the shareholder of the VIE were not in violation of the PRC laws, rules and regulations; and those contractual arrangements were valid, binding and enforceable in accordance with their terms and applicable PRC laws and regulations. However, there are substantial uncertainties regarding the interpretation and application of PRC laws and regulations and there can be no assurance that the PRC government will ultimately take a view that is consistent with our belief.

***Uncertainties in the interpretation and enforcement of PRC laws and regulations could limit the legal protections available to you and us.***

The PRC legal system is based on written statutes. Unlike common law systems, it is a system in which legal cases have limited value as precedents. In the late 1970s, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters in general. The overall effect of legislation over the past three decades has significantly increased the protections afforded to various forms of foreign or private-sector investment in China. Our PRC subsidiaries are subject to various PRC laws and regulations generally applicable to companies in China. However, since these laws and regulations are relatively new and the PRC legal system continues to rapidly evolve, the interpretations of many laws, regulations and rules are not always uniform and enforcement of these laws, regulations and rules involve uncertainties.

---

| |
|:---|
| 22 |
| *[**Table of Contents**](#Toc)* |

---

From time to time, we may have to resort to administrative and court proceedings to enforce our legal rights. However, since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory and contractual terms, it may be more difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection we enjoy than in more developed legal systems. Furthermore, the PRC legal system is based in part on government policies and internal rules (some of which are not published in a timely manner or at all) that may have retroactive effect. As a result, we may not be aware of our violation of these policies and rules until sometime after the violation. Such uncertainties, including uncertainty over the scope and effect of our contractual, property (including intellectual property) and procedural rights, and any failure to respond to changes in the regulatory environment in China could materially and adversely affect our business and impede our ability to continue our operations.

***Trading in our securities may be prohibited under the Holding Foreign Companies Accountable Act if the PCAOB determines that it cannot inspect or investigate completed our auditors for two consecutive years.***

In recent years, U.S. regulatory authorities have continued to express their concerns about challenges in their oversight of financial statement audits of U.S.-listed companies with significant operations in China. As part of a continued regulatory focus in the United States on access to audit and other information, the Holding Foreign Companies Accountable Act, or the HFCAA, was enacted on December 18, 2020. The HFCAA includes requirements for the SEC to identify issuers whose audit work is performed by auditors that the PCAOB is unable to inspect or investigate completely because of a restriction imposed by a non-U.S. authority in the auditor's local jurisdiction. The HFCAA also requires that, to the extent that the PCAOB has been unable to inspect an issuer's auditor for three consecutive years since 2021, the SEC shall prohibit its securities registered in the United States from being traded on any national securities exchange or over-the-counter markets in the United States.

On March 24, 2021, the SEC adopted interim final rules relating to the implementation of certain disclosure and documentation requirements of the HFCAA. The interim final rule applies to registrants that the SEC identifies as having filed an annual report with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction that the PCAOB is unable to inspect or investigate completely because of a position taken by an authority in that jurisdiction. Consistent with the HFCAA, the interim final rule requires the submission of documentation to the SEC establishing that such a registrant is not owned or controlled by a government entity in that foreign jurisdiction and also requires disclosure in a foreign issuer's annual report regarding the audit arrangements of, and government influence on, such registrants. On May 13, 2021, the PCAOB issued proposed PCAOB Rule 6100, Board Determinations Under the Holding Foreign Companies Accountable Act for public comment. The proposed rule provides a framework for making determinations as to whether PCAOB is unable to inspect an audit firm in a foreign jurisdiction, including the timing, factors, bases, publication and revocation or modification of such determinations, and such determinations will be made on a jurisdiction-wide basis in a consistent manner applicable to all firms headquartered in the jurisdiction. In November 2021, the SEC approved PCAOB Rule 6100. On December 2, 2021, the SEC adopted amendments to final rules implementing the disclosure and submission requirements of the HFCAA.

On December 2, 2021, the SEC issued amendments to finalize rules implementing the submission and disclosure requirements in the HFCAA. The rules apply to registrants that the SEC identifies as having filed an annual report with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that PCAOB is unable to inspect or investigate completely because of a position taken by an authority in foreign jurisdictions.

On December 16, 2021, the PCAOB announced the PCAOB Holding Foreign Companies Accountable Act determinations (the "PCAOB determinations") relating to the PCAOB's inability to inspect or investigate completely registered public accounting firms headquartered in mainland China of the PRC or Hong Kong, a Special Administrative Region and dependency of the PRC, because of a position taken by one or more authorities in the PRC or Hong Kong.

---

| |
|:---|
| 23 |
| *[**Table of Contents**](#Toc)* |

---

On August 26, 2022, the PCAOB signed a SOP with the CSRC and the MOF of the PRC regarding cooperation in the oversight of PCAOB-registered public accounting firms in the PRC and Hong Kong which establishes a method for the PCAOB to conduct inspections of PCAOB-registered public accounting firms in the PRC and Hong Kong, as contemplated by the Sarbanes-Oxley Act. Under the agreement, (a) the PCAOB has sole discretion to select the firms, audit engagements and potential violations it inspects and investigates without consultation with, or input from, PRC authorities; (b) procedures are in place for PCAOB inspectors and investigators to view complete audit work papers with all information included and for the PCAOB to retain information as needed; (c) the PCAOB has direct access to interview and take testimony from all personnel associated with the audits the PCAOB inspects or investigates; and (d) the PCAOB shall have the unfettered ability to transfer information to the SEC in accordance with the Sarbanes-Oxley Act, and the SEC can use the information for all regulatory purposes, including administrative or civil enforcement actions. The PCAOB was required to reassess its determinations as to whether it is able to carry out inspections and investigations completely and without obstruction by the end of 2022. On December 15, 2022, the PCAOB determined that the PCAOB was able to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and vacated its previous determinations. However, should PRC authorities obstruct or otherwise fail to facilitate the PCAOB's access in the future, the PCAOB will consider the need to issue a new determination.

Congress passed fiscal year 2023 Omnibus spending legislation in December 2022, which contained provisions to accelerate the HFCAA timeline for implementation of trading prohibitions from three years to two years. As a result, the SEC is required to prohibit an issuer's securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections or complete investigations for two consecutive years.

Our current auditor, YCM CPA INC., an independent registered public accounting firm that is headquartered in the United States, is a firm registered with the U.S. Public Company Accounting Oversight Board (the "PCAOB") and is required by the laws of the U.S. to undergo regular inspections by the PCAOB to assess its compliance with the laws of the U.S. and professional standards. YCM CPA INC. has been subject to PCAOB inspections and is not among the PCAOB-registered public accounting firms headquartered in the PRC or Hong Kong that are subject to PCAOB's determination. Notwithstanding the foregoing, if it is later determined that the PCAOB is unable to inspect or investigate our auditor completely, or if there is any regulatory change or step taken by PRC regulators that does not permit our auditor to provide audit documentations located in China or Hong Kong to the PCAOB for inspection or investigation, or the PCAOB expands the scope of the Determination so that we are subject to the HFCAA, as the same may be amended, you may be deprived of the benefits of such inspection. Any audit reports not issued by auditors that are completely inspected or investigated by the PCAOB, or a lack of PCAOB inspections or investigations of audit work undertaken in China that prevents the PCAOB from regularly evaluating our auditors' audits and their quality control procedures, could result in a lack of assurance that our financial statements and disclosures are adequate and accurate.

***U.S. regulatory bodies may be limited in their ability to conduct investigations or inspections of our operations in China.***

The SEC, the U.S. Department of Justice and other U.S. authorities may also have difficulties in bringing and enforcing actions against us or our directors or executive officers in the PRC. The SEC has stated that there are significant legal and other obstacles to obtaining information needed for investigations or litigation in China. Under a revised securities law that became effective on March 1, 2020, Article 177 provides, among other things, that no overseas securities regulator is allowed to directly conduct investigation or evidence collection activities within the territory of the PRC. Accordingly, without governmental approval in China, no entity or individual in China may provide documents and information relating to securities business activities to overseas regulators when it is under direct investigation or evidence discovery conducted by overseas regulators, which could present significant legal and other obstacles to obtaining information needed for investigations and litigation conducted outside of China.

---

| |
|:---|
| 24 |
| *[**Table of Contents**](#Toc)* |

---

***The enforcement of the PRC Labor Contract Law and other labor-related regulations in the PRC may adversely affect our business and our results of operations.***

The PRC Labor Contract Law became effective and was implemented on January 1, 2008, which was amended on December 28, 2012. It has reinforced the protection of employees who, under the PRC Labor Contract Law, have the right, among others, to have written labor contracts, to enter into labor contracts with no fixed terms under certain circumstances, to receive overtime wages and to terminate or alter terms in labor contracts. According to the PRC Social Insurance Law, which became effective on July 1, 2011, and the Administrative Regulations on the Housing Funds, Companies operating in China are required to participate in pension insurance, work-related injury insurance, medical insurance, unemployment insurance, maternity insurance and housing funds plans, and the employers must pay all or a portion of the social insurance premiums and housing funds for their employees.

As a result of these laws and regulations designed to enhance labor protection, we expect our labor costs will continue to increase. In addition, as the interpretation and implementation of these laws and regulations are still evolving, our employment practice may not at all times be deemed in compliance with the new laws and regulations. If we are subject to severe penalties or incur significant liabilities in connection with labor disputes or investigations, our business and results of operations may be adversely affected.

***We may be exposed to liabilities under the Foreign Corrupt Practices Act and Chinese anti-corruption law.***

We are subject to the U.S. Foreign Corrupt Practices Act ("FCPA"), and other laws that prohibit improper payments or offers of payments to foreign governments and their officials and political parties by U.S. persons and issuers as defined by the statute for the purpose of obtaining or retaining business. We are also subject to Chinese anti-corruption laws, which strictly prohibit the payment of bribes to government officials. We have operations, agreements with third parties, and make sales in China, which may experience corruption. Our activities in China create the risk of unauthorized payments or offers of payments by one of the employees, consultants or distributors of our company, because these parties are not always subject to our control. We are in process of implementing an anticorruption program, which prohibits the offering or giving of anything of value to foreign officials, directly or indirectly, for the purpose of obtaining or retaining business. The anticorruption program also requires that clauses mandating compliance with our policy be included in all contracts with foreign sales agents, sales consultants and distributors and that they certify their compliance with our policy annually. It further requires that all hospitality involving promotion of sales to foreign governments and government-owned or controlled entities be in accordance with specified guidelines. In the meantime, we believe to date we have complied in all material respects with the provisions of the FCPA and Chinese anti-corruption law. However, our existing safeguards and any future improvements may prove to be less than effective, and the employees, consultants or distributors of our Company may engage in conduct for which we might be held responsible. Violations of the FCPA or Chinese anti-corruption law may result in severe criminal or civil sanctions, and we may be subject to other liabilities, which could negatively affect our business, operating results and financial condition. In addition, the government may seek to hold our Company liable for successor liability FCPA violations committed by companies in which we invest or that we acquire.

***Fluctuations in exchange rates could have a material and adverse effect on our results of operations and the value of your investment.***

The value of the Renminbi against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in political and economic conditions in China and by China's foreign exchange policies. On July 21, 2005, the PRC government changed its decade-old policy of pegging the value of the Renminbi to the U.S. dollar, and the Renminbi appreciated more than 20% against the U.S. dollar over the following three years. Between July 2008 and June 2010, this appreciation halted and the exchange rate between the Renminbi and the U.S. dollar remained within a narrow band. Since June 2010, the Renminbi has fluctuated against the U.S. dollar, at times significantly and unpredictably. It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between the Renminbi and the U.S. dollar in the future.

We are subject to exchange rate risk between U.S. dollar and Renminbi because we sell our products in U.S. dollar from time to time, and our export distributors settle in U.S. dollar and these distributors may also be affected by U.S. dollar exchange rate. If China's currency appreciates, our products may become more expensive to export to other countries and our sales may be negatively affected by the appreciation.

Significant revaluation of the Renminbi may have a material and adverse effect on your investment. For example, to the extent that we need to convert U.S. dollars we receive upon cash exercises, if any, of the warrants to purchase the Ordinary Shares offered hereby into Renminbi for our operations, appreciation of the Renminbi against the U.S. dollar would have an adverse effect on the Renminbi amount we would receive from the conversion. Conversely, if we decide to convert our Renminbi into U.S. dollars for the purpose of making payments for dividends on our Ordinary Shares or for other business purposes, appreciation of the U.S. dollar against the Renminbi would have a negative effect on the U.S. dollar amount available to us.

Very limited hedging options are available in China to reduce our exposure to exchange rate fluctuations. To date, we have not entered into any hedging transactions in an effort to reduce our exposure to foreign currency exchange risk. While we may decide to enter into hedging transactions in the future, the availability and effectiveness of these hedges may be limited, and we may not be able to adequately hedge our exposure. In addition, our currency exchange losses may be magnified by PRC exchange control regulations that restrict our ability to convert Renminbi into foreign currency.

---

| |
|:---|
| 25 |
| *[**Table of Contents**](#Toc)* |

---

***Our business may be materially and adversely affected if any of our PRC subsidiaries declares bankruptcy or becomes subject to a dissolution or liquidation proceeding.***

The Enterprise Bankruptcy Law of the PRC, or the Bankruptcy Law, came into effect on June 1, 2007. The Bankruptcy Law provides that an enterprise will be liquidated if the enterprise fails to settle its debts as and when they fall due and if the enterprise's assets are, or are demonstrably, insufficient to clear such debts.

Our PRC subsidiaries hold certain assets that are important to our business operations. If any of our PRC subsidiaries undergoes a voluntary or involuntary liquidation proceeding, unrelated third-party creditors may claim rights to some or all of these assets, thereby hindering our ability to operate our business, which could materially and adversely affect our business, financial condition and results of operations.

According to the SAFE's Notice of the State Administration of Foreign Exchange on Further Improving and Adjusting Foreign Exchange Administration Policies for Direct Investment, effective on December 17, 2012, and the Provisions for Administration of Foreign Exchange Relating to Inbound Direct Investment by Foreign Investors, effective May 13, 2013, if any of our PRC subsidiaries undergoes a voluntary or involuntary liquidation proceeding, prior approval from the SAFE for remittance of foreign exchange to our shareholders abroad is no longer required, but we still need to conduct a registration process with the SAFE local branch. It is not clear whether "registration" is a mere formality or involves the kind of substantive review process undertaken by SAFE and its relevant branches in the past.

***PRC regulations relating to foreign exchange registration of overseas investment by PRC residents may subject our PRC resident beneficial owners or our PRC subsidiaries to liability or penalties, limit our ability to inject capital into these subsidiaries, limit these PRC subsidiaries' ability to increase their registered capital or distribute profits to us, or may otherwise adversely affect us.***

On July 4, 2014, the State Administration of Foreign Exchange, or SAFE, promulgated the Circular on Relevant Issues Relating to Domestic Resident's Investment and Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular 37, which replaced the former Notice on Relevant Issues Concerning Foreign Exchange Administration for PRC Residents to Engage in Financing and Inbound Investment via Overseas Special Purpose Vehicles (generally known as SAFE Circular 75) promulgated by SAFE on October 21, 2005. On February 13, 2015, SAFE further promulgated the Circular on Further Simplifying and Improving the Administration of the Foreign Exchange Concerning Direct Investment, or SAFE Circular 13, which took effect on June 1, 2015. This SAFE Circular 13 has amended SAFE Circular 37 by requiring PRC residents or entities to register with qualified banks rather than SAFE or its local branch in connection with their establishment or control of an offshore entity established for the purpose of overseas investment or financing.

---

| |
|:---|
| 26 |
| *[**Table of Contents**](#Toc)* |

---

These circulars require PRC residents to register with qualified banks in connection with their direct establishment or indirect control of an offshore entity, for the purpose of overseas investment and financing, with such PRC residents' legally owned assets or equity interests in domestic enterprises or offshore assets or interests, which is referred to in SAFE Circular 37 as a "special purpose vehicle." These circulars further require amendment to the registration in the event of any significant changes with respect to the special purpose vehicle, such as an increase or decrease of capital contributed by PRC residents, share transfer or exchange, merger, division or other material events. In the event that a PRC resident holding interests in a special purpose vehicle fails to complete the required SAFE registration, the PRC subsidiary of that special purpose vehicle may be prohibited from making profit distributions to the offshore parent and from carrying out subsequent cross-border foreign exchange activities, and the special purpose vehicle may be restricted in its ability to contribute additional capital into its PRC subsidiary. Furthermore, failure to comply with the various SAFE registration requirements described above could result in liability under PRC law for evasion of foreign exchange controls.

While Ms. Yefang Zhang, a citizen of Saint Lucia, is not required to register with qualified bank according to the various SAFE registration requirements, we may not at all times be fully aware or informed of the identities of all our shareholders or beneficial owners that are required to make such registrations, and we may not always be able to compel them to comply with all relevant foreign exchange regulations. As a result, we cannot assure you that all of our shareholders or beneficial owners who are PRC residents will at all times comply with, or in the future make or obtain any applicable registrations or approvals required by all relevant foreign exchange regulations. The failure or inability of such individuals to comply with the registration procedures set forth in these regulations may subject us to fines or legal sanctions, restrictions on our cross-border investment activities or our PRC subsidiaries' ability to distribute dividends to, or obtain foreign-exchange-dominated loans from, our company, or prevent us from making distributions or paying dividends. As a result, our business operations and our ability to make distributions to you could be materially and adversely affected.

Furthermore, as these foreign exchange regulations are still relatively new and their interpretation and implementation has been constantly evolving, it is unclear how these regulations, and any future regulation concerning offshore or cross-border transactions, will be interpreted, amended and implemented by the relevant government authorities. We cannot predict how these regulations will affect our business operations or future strategy. In addition, if we decide to acquire a PRC domestic company, we cannot assure you that we or the owners of such company, as the case may be, will be able to obtain the necessary approvals or complete the necessary filings and registrations required by the foreign exchange regulations. This may restrict our ability to implement our acquisition strategy and could adversely affect our business and prospects.

***Under the PRC Enterprise Income Tax Law, we may be classified as a PRC "resident enterprise" for PRC enterprise income tax purposes. Such classification would likely result in unfavorable tax consequences to us and our non-PRC shareholders and have a material adverse effect on our results of operations and the value of your investment.***

Under the PRC Enterprise Income Tax Law, or the EIT Law, that became effective in January 2008, an enterprise established outside the PRC with "de facto management bodies" within the PRC is considered a "resident enterprise" for PRC enterprise income tax purposes and is generally subject to a uniform 25% enterprise income tax rate on its worldwide income. Under the implementation rules to the EIT Law, a "de facto management body" is defined as a body that has material and overall management and control over the manufacturing and business operations, personnel and human resources, finances and properties of an enterprise. In addition, a circular, known as SAT Circular 82, issued in April 2009 by the State Administration of Taxation, or the SAT, specifies that certain offshore incorporated enterprises controlled by PRC enterprises or PRC enterprise groups will be classified as PRC resident enterprises if the following are located or resident in the PRC: senior management personnel and departments that are responsible for daily production, operation and management; financial and personnel decision making bodies; key properties, accounting books, company seal, and minutes of board meetings and shareholders' meetings; and half or more of the senior management or directors having voting rights. Further to SAT Circular 82, the SAT issued a bulletin, known as SAT Bulletin 45, which took effect in September 2011, to provide more guidance on the implementation of SAT Circular 82 and clarify the reporting and filing obligations of such "Chinese-controlled offshore incorporated resident enterprises." SAT Bulletin 45 provides procedures and administrative details for the determination of resident status and administration on post-determination matters.

Although both SAT Circular 82 and SAT Bulletin 45 only apply to offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC individuals or foreign individuals, the determining criteria set forth in SAT Circular 82 and SAT Bulletin 45 may reflect the SAT's general position on how the "de facto management body" test should be applied in determining the tax resident status of offshore enterprises, regardless of whether they are controlled by PRC enterprises, PRC enterprise groups or by PRC or foreign individuals.

---

| |
|:---|
| 27 |
| *[**Table of Contents**](#Toc)* |

---

If the PRC tax authorities determine that the actual management body of Farmmi, Inc. ("FAMI") is within the territory of China, FAMI may be deemed to be a PRC resident enterprise for PRC enterprise income tax purposes and a number of unfavorable PRC tax consequences could follow. First, we will be subject to the uniform 25% enterprise income tax on our world-wide income, which could materially reduce our net income. In addition, we will also be subject to PRC enterprise income tax reporting obligations.

Up to the date of this report, FAMI has not been notified or informed by the PRC tax authorities that it has been deemed to be a resident enterprise for the purpose of the EIT Law.

Finally, dividends payable by us to our investors and gains on the sale of our shares may become subject to PRC withholding tax, at a rate of 10% in the case of non-PRC enterprises or 20% in the case of non-PRC individuals (in each case, subject to the provisions of any applicable tax treaty), if such gains are deemed to be from PRC sources. It is unclear whether non-PRC shareholders of our company would be able to claim the benefits of any tax treaties between their country of tax residence and the PRC in the event that we are treated as a PRC resident enterprise. Any such tax may reduce the returns on your investment in our shares.

***Enhanced scrutiny over acquisition transactions by the PRC tax authorities may have a negative impact on potential acquisitions we may pursue in the future.***

Pursuant to the Notice on Strengthening Administration of Enterprise Income Tax for Share Transfers by Non-PRC Resident Enterprises, or SAT Circular 698, issued by the SAT on December 10, 2009, where a foreign investor transfers the equity interests of a resident enterprise indirectly via disposition of the equity interests of an overseas holding company, or an "indirect transfer," and such overseas holding company is located in a tax jurisdiction that (i) has an effective tax rate less than 12.5% or (ii) does not tax foreign income of its residents, the foreign investor shall report the indirect transfer to the competent tax authority. The PRC tax authority will examine the true nature of the indirect transfer, and if the tax authority considers that the foreign investor has adopted an "abusive arrangement" in order to avoid PRC tax, it may disregard the existence of the overseas holding company and re-characterize the indirect transfer and as a result, gains derived from such indirect transfer may be subject to PRC withholding tax at a rate of up to 10%.

On February 3, 2015, the SAT issued the Announcement of the State Administration of Taxation on Several Issues Concerning the Enterprise Income Tax on Indirect Property Transfer by Non-Resident Enterprises, or SAT Bulletin 7, to supersede existing provisions in relation to the "indirect transfer" as set forth in Circular 698, while the other provisions of Circular 698 remain in force. Pursuant to SAT Bulletin 7, where a non-resident enterprise indirectly transfers properties such as equity in PRC resident enterprises without any justifiable business purposes and aiming to avoid the payment of enterprise income tax, such indirect transfer must be reclassified as a direct transfer of equity in PRC resident enterprise. To assess whether an indirect transfer of PRC taxable properties has reasonable commercial purposes, all arrangements related to the indirect transfer must be considered comprehensively and factors set forth in SAT Bulletin 7 must be comprehensively analyzed in light of the actual circumstances. SAT Bulletin 7 also provides that, where a non-PRC resident enterprise transfers its equity interests in a resident enterprise to its related parties at a price lower than the fair market value, the competent tax authority has the power to make a reasonable adjustment to the taxable income of the transaction.

There is little practical experience regarding the application of SAT Bulletin 7 because it was issued in February 2015. During the effective period of SAT Circular 698, some intermediary holding companies were actually looked through by the PRC tax authorities, and consequently the non-PRC resident investors were deemed to have transferred the PRC subsidiary and PRC corporate taxes were assessed accordingly. It is possible that we or our non-PRC resident investors may become at risk of being taxed under SAT Bulletin 7 and may be required to expend valuable resources to comply with SAT Bulletin 7 or to establish that we or our non-PRC resident investors should not be taxed under SAT Bulletin 7, which may have an adverse effect on our financial condition and results of operations or such non-PRC resident investors' investment in us.

***Our PRC subsidiaries are subject to restrictions on paying dividends or making other payments to us, which may restrict our ability to satisfy our liquidity requirements.***

We are a holding company incorporated in the Cayman Islands. We may need dividends and other distributions on equity from our PRC subsidiaries to satisfy our liquidity requirements. Current PRC regulations permit our PRC subsidiaries to pay dividends to us only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, Our PRC subsidiaries are required to set aside at least 10% of their respective accumulated profits each year, if any, to fund certain reserve funds until the total amount set aside reaches 50% of their respective registered capital. Our PRC subsidiaries may also allocate a portion of its after-tax profits based on PRC accounting standards to employee welfare and bonus funds at their discretion. These reserves are not distributable as cash dividends. Furthermore, if our PRC subsidiaries incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments to us.

---

| |
|:---|
| 28 |
| *[**Table of Contents**](#Toc)* |

---

In addition, the PRC tax authorities may require us to adjust our taxable income under the contractual arrangements we currently have in place in a manner that would materially and adversely affect our PRC subsidiaries' ability to pay dividends and other distributions to us. Any limitation on the ability of our subsidiary to distribute dividends to us or on the ability of our PRC consolidated VIE to make payments to us may restrict our ability to satisfy our liquidity requirements.

In addition, the EIT Law, and its implementation rules provide that a withholding tax rate of up to 10% will be applicable to dividends payable by Chinese companies to non-PRC-resident enterprises unless otherwise exempted or reduced according to treaties or arrangements between the PRC central government and governments of other countries or regions where the non-PRC-resident enterprises are incorporated.

***Governmental control of currency conversion may affect the value of your investment.***

The PRC government imposes controls on the convertibility of the RMB into foreign currencies and, in certain cases, the remittance of currency out of China. We receive substantially all of our revenues in RMB. Under our current corporate structure, our company in the Cayman Islands may rely on dividend payments from our PRC subsidiaries to fund any cash and financing requirements we may have. Under existing PRC foreign exchange regulations, payments of current account items, such as profit distributions and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval from SAFE by complying with certain procedural requirements. Therefore, our PRC subsidiaries are able to pay dividends in foreign currencies to us without prior approval from SAFE, subject to the condition that the remittance of such dividends outside of the PRC complies with certain procedures under PRC foreign exchange regulation, such as the overseas investment registrations by our shareholders or the ultimate shareholders of our corporate shareholders who are PRC residents. But approval from or registration with appropriate government authorities is required where RMB is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. For foreign investors, after reporting and being reviewed and approved by the appropriate government authorities, the foreign investors can transfer money through banks and other payment institutions, but the daily limit is $50,000 and the amount of each remittance cannot exceed $10,000. In addition, we can also distribute and transfer profits or dividends through our overseas third-party institutions in accordance with the law. The PRC government may also, at its discretion, restrict access in the future to foreign currencies for current account transactions. If the foreign exchange control system prevents us from obtaining sufficient foreign currencies to satisfy our foreign currency demands, we may not be able to pay dividends in foreign currencies to our The PRC government imposes controls on the convertibility of the RMB into foreign currencies and, in certain cases, the remittance of currency out of China. We receive substantially all of our revenues in RMB. Under our current corporate structure, our company in the Cayman Islands may rely on dividend payments from our PRC subsidiaries to fund any cash and financing requirements we may have. Under existing PRC foreign exchange regulations, payments of current account items, such as profit distributions and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval from SAFE by complying with certain procedural requirements. Therefore, our PRC subsidiaries are able to pay dividends in foreign currencies to us without prior approval from SAFE, subject to the condition that the remittance of such dividends outside of the PRC complies with certain procedures under PRC foreign exchange regulation, such as the overseas investment registrations by our shareholders or the ultimate shareholders of our corporate shareholders who are PRC residents. But approval from or registration with appropriate government authorities is required where RMB is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. For foreign investors, after reporting and being reviewed and approved by the appropriate government authorities, the foreign investors can transfer money through banks and other payment institutions, but the daily limit is $50,000 and the amount of each remittance cannot exceed $10,000. In addition, we can also distribute and transfer profits or dividends through our overseas third-party institutions in accordance with the law. The PRC government may also, at its discretion, restrict access in the future to foreign currencies for current account transactions. If the foreign exchange control system prevents us from obtaining sufficient foreign currencies to satisfy our foreign currency demands, we may not be able to pay dividends in foreign currencies to our shareholders.

***The M&A Rules and certain other PRC regulations establish complex procedures for some acquisitions of Chinese companies by foreign investors, which could make it more difficult for us to pursue growth through acquisitions in China.***

The Regulations on Mergers and Acquisitions of Domestic Companies by Foreign Investors, or the "M&A Rules," adopted by six PRC regulatory agencies in 2006 and amended in 2009, and recently adopted regulations and rules concerning mergers and acquisitions established additional procedures and requirements that could make merger and acquisition activities by foreign investors more time consuming and complex. For example, the M&A Rules require that the Ministry of Commerce be notified in advance of any change-of-control transaction in which a foreign investor takes control of a PRC domestic enterprise, if (i) any important industry is concerned, (ii) such transaction involves factors that have or may have impact on the national economic security, or (iii) such transaction will lead to a change in control of a domestic enterprise which holds a famous trademark or PRC time-honored brand. Mergers, acquisitions or contractual arrangements that allow one market player to take control of or to exert decisive impact on another market player must also be notified in advance to the Ministry of Commerce when the threshold under the Provisions on Thresholds for Prior Notification of Concentrations of Undertakings, or the Prior Notification Rules, issued by the State Council in August 2008 is triggered. In addition, the security review rules issued by the Ministry of Commerce that became effective in September 2011 specify that mergers and acquisitions by foreign investors that raise "national defense and security" concerns and mergers and acquisitions through which foreign investors may acquire de facto control over domestic enterprises that raise "national security" concerns are subject to strict review by the Ministry of Commerce, and the rules prohibit any activities attempting to bypass a security review, including by structuring the transaction through a proxy or contractual control arrangement. In the future, we may grow our business by acquiring complementary businesses. Complying with the requirements of the above-mentioned regulations and other relevant rules to complete such transactions could be time consuming, and any required approval processes, including obtaining approval from the Ministry of Commerce or its local counterparts may delay or inhibit our ability to complete such transactions. It is clear that our business would not be deemed to be in an industry that raises "national defense and security" or "national security" concerns. However, the Ministry of Commerce or other government agencies may publish explanations in the future determining that our business is in an industry subject to the security review, in which case our future acquisitions in the PRC, including those by way of entering into contractual control arrangements with target entities, may be closely scrutinized or prohibited. Our ability to expand our business or maintain or expand our market share through future acquisitions would as such be materially and adversely affected.

---

| |
|:---|
| 29 |
| *[**Table of Contents**](#Toc)* |

---

**<u>Risks Related to Ownership of Our Ordinary Shares</u>**

***We are a Cayman Islands exempted company with limited liability. The rights of our shareholders may be different from the rights of shareholders governed by the laws of U.S. jurisdictions.***

We are a Cayman Islands exempted company with limited liability. Our corporate affairs are governed by our First Amended and Restated Memorandum and Articles of Association and by the laws of the Cayman Islands. The rights of shareholders and the responsibilities of members of our board of directors (the "Board of Directors") may be different from the rights of shareholders and responsibilities of directors in companies governed by the laws of U.S. jurisdictions. In the performance of its duties, the board of directors of a solvent Cayman Islands exempted company is required to consider the company's interests, and the interests of its shareholders as a whole, which may differ from the interests of one or more of its individual shareholders. See "Item 16.G. Corporate Governance."

***We are a "foreign private issuer," and our disclosure obligations differ from those of U.S. domestic reporting companies. As a result, we may not provide you the same information as U.S. domestic reporting companies or we may provide information at different times, which may make it more difficult for you to evaluate our performance and prospects.***

We are a foreign private issuer and, as a result, we are not subject to the same requirements as U.S. domestic issuers. Under the Exchange Act, we are subject to reporting obligations that, to some extent, are more lenient and less frequent than those of U.S. domestic reporting companies. For example, we are not required to issue quarterly reports or proxy statements. We are not required to disclose detailed individual executive compensation information. Furthermore, our directors and executive officers are not subject to the insider short-swing profit disclosure and recovery regime.

As a foreign private issuer, we are also exempt from the requirements of Regulation FD (Fair Disclosure) which, generally, are meant to ensure that select groups of investors are not privy to specific information about an issuer before other investors. However, we are still subject to the anti-fraud and anti-manipulation rules of the SEC, such as Rule 10b-5 under the Exchange Act. Since many of the disclosure obligations imposed on us as a foreign private issuer differ from those imposed on U.S. domestic reporting companies, you should not expect to receive the same information about us and at the same time as the information provided by U.S. domestic reporting companies.

***Our dual class share structure may limit your ability to influence corporate matters and could discourage others from pursuing any change of control transactions that holders of our Class A Ordinary Shares may view as beneficial.***

Our authorized and issued ordinary shares are divided into Class A Ordinary Shares and Class B Ordinary Shares. Each Class A Ordinary Share is entitled to one vote, while each Class B Ordinary Share is entitled to fifty votes, with all ordinary shares voting together as a single class on most matters. Each Class B Ordinary Share is convertible into one Class A Ordinary Share at any time by the holder thereof, while Class A Ordinary Shares are not convertible into Class B Ordinary Shares under any circumstances. Only Class A Ordinary Shares are listed and traded on Nasdaq. Our CEO, Chairwoman and founder, Yefang Zhang, owns all of the issued Class B Ordinary Shares. As a result of the dual class share structure and the effective control of our Company, the holder of Class B Ordinary Shares has considerable influence over matters such as decisions regarding election of directors and other significant corporate actions. This control may discourage, delay, or prevent a change in control of us, which could have the effect of depriving our other shareholders of the opportunity to receive a premium for their shares as part of a sale of us and may reduce our share price. This concentrated control will limit the ability of holders of Class A Ordinary Shares to influence corporate matters and could discourage others from pursuing any potential merger, takeover, or other change of control transactions that holders of Class A Ordinary Shares may view as beneficial.

***The Holding Foreign Companies Accountable Act, recent regulatory actions taken by the SEC and the Public Company Accounting Oversight Board, and proposed rule changes submitted by Nasdaq calling for additional and more stringent criteria to be applied to China-based public companies could add uncertainties to our capital raising activities and compliance costs.***

Public companies with operations based in China have been the subject of intense scrutiny, criticism and negative publicity by investors, financial commentators and regulatory agencies, such as the SEC. Much of the scrutiny, criticism and negative publicity has centered on financial and accounting irregularities and mistakes, a lack of effective internal controls over financial accounting, inadequate corporate governance policies or a lack of adherence thereto and, in many cases, allegations of fraud.

On December 7, 2018, the SEC and the PCAOB issued a joint statement highlighting continued challenges faced by the U.S. regulators in their oversight of financial statement audits of U.S.-listed companies with significant operations in China. On April 21, 2020, the SEC Chairman and PCAOB Chairman, along with other senior SEC staff, released a joint statement highlighting the risks associated with investing in companies based in or have substantial operations in emerging markets including China, reiterating past SEC and PCAOB statements on matters including the difficulty associated with inspecting accounting firms and audit work papers in China and higher risks of fraud in emerging markets and the difficulty of bringing and enforcing SEC, Department of Justice and other U.S. regulatory actions, including in instances of fraud, in emerging markets generally.

On May 18, 2020, NASDAQ filed three proposals with the SEC to (i) apply minimum offering size requirement for companies primarily operating in a "Restrictive Market", (ii) prohibit Restrictive Market companies from directly listing on NASDAQ Capital Market, and only permit them to list on NASDAQ Global Select or NASDAQ Global Market in connection with a direct listing, and (iii) apply additional and more stringent criteria to an applicant or listed company based on the qualifications of the company's auditors.

---

| |
|:---|
| 30 |
| *[**Table of Contents**](#Toc)* |

---

On May 20, 2020, the U.S. Senate passed the Holding Foreign Companies Accountable Act requiring a foreign company to certify it is not owned or controlled by a foreign government if the PCAOB is unable to audit specified reports because the company uses a foreign auditor not subject to PCAOB inspection. If the PCAOB is unable to inspect the company's auditors for three consecutive years, the issuer's securities are prohibited to trade on a national exchange. On December 2, 2020, the U.S. House of Representatives passed the Holding Foreign Companies Accountable Act. On December 18, 2020, the Holding Foreign Companies Accountable Act was signed into law.

On March 24, 2021, the SEC adopted interim final amendments to implement congressionally mandated submission and disclosure requirements of the Act. The interim final amendments will apply to registrants that the SEC identifies as having filed an annual report on Forms 10-K, 20-F, 40-F or N-CSR with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that the PCAOB has determined it is unable to inspect or investigate completely because of a position taken by an authority in that jurisdiction. The SEC will implement a process for identifying such a registrant and any such identified registrant will be required to submit documentation to the SEC establishing that it is not owned or controlled by a governmental entity in that foreign jurisdiction and will also require disclosure in the registrant's annual report regarding the audit arrangements of, and governmental influence on, such a registrant.

On December 2, 2021, the SEC issued amendments to finalize rules implementing the submission and disclosure requirements in the Holding Foreign Companies Accountable Act. The rules apply to registrants that the SEC identifies as having filed an annual report with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that PCAOB is unable to inspect or investigate completely because of a position taken by an authority in foreign jurisdictions.

On December 16, 2021, PCAOB announced the PCAOB Holding Foreign Companies Accountable Act determinations (the "PCAOB determinations") relating to the PCAOB's inability to inspect or investigate completely registered public accounting firms headquartered in mainland China of the PRC or Hong Kong, a Special Administrative Region and dependency of the PRC, because of a position taken by one or more authorities in the PRC or Hong Kong.

On August 26, 2022, the PCAOB signed a SOP with the CSRC and the MOF of the PRC regarding cooperation in the oversight of PCAOB-registered public accounting firms in the PRC and Hong Kong. The SOP seeks to establish a method for the PCAOB to conduct inspections of PCAOB-registered public accounting firms in the PRC and Hong Kong. Under the agreement, (a) the PCAOB has sole discretion to select the firms, audit engagements and potential violations it inspects and investigates without consultation with, or input from, PRC authorities; (b) procedures are in place for PCAOB inspectors and investigators to view complete audit work papers with all information included and for the PCAOB to retain information as needed; (c) the PCAOB has direct access to interview and take testimony from all personnel associated with the audits the PCAOB inspects or investigates; and (d) the PCAOB shall have the unfettered ability to transfer information to the SEC in accordance with the Sarbanes-Oxley Act, and the SEC can use the information for all regulatory purposes, including administrative or civil enforcement actions. The PCAOB is required to reassess its determinations as to whether it is able to carry out inspections and investigations completely and without obstruction by the end of 2022.

On December 15, 2022, the PCAOB determined that the PCAOB was able to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and voted to vacate its previous determinations. However, should PRC authorities obstruct or otherwise fail to facilitate the PCAOB's access in the future, the PCAOB will consider the need to issue a new determination.

In December 2022, Congress passed fiscal year 2023 Omnibus spending legislation, which contained provisions to accelerate the HFCAA timeline for implementation of trading prohibitions from three years to two years. As a result of the legislation, the SEC is required to prohibit an issuer's securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections or complete investigations for two consecutive years.

The recent regulatory developments have resulted in additional regulatory compliance costs and uncertainties to our future capital raise activities, business and our share price. In addition, any additional actions, proceedings or rules resulting from these efforts could create new uncertainties for our shareholders, and the market price of our shares could be adversely affected,

***As a foreign private issuer, we are permitted to rely on exemptions from certain Nasdaq corporate governance standards applicable to U.S. issuers, including the requirement that a majority of an issuer's directors consist of independent directors. If we opt to rely on such exemptions in the future, such decision might afford less protection to holders of our Ordinary Shares.***

Section 5605(b)(1) of the Nasdaq Listing Rules requires listed companies to have, among other things, a majority of its board members to be independent, and Section 5605(d) and 5605(e) require listed companies to have independent director oversight of executive compensation and nomination of directors. As a foreign private issuer, however, we are permitted to follow home country practice in lieu of the above requirements.

The corporate governance practice in our home country, the Cayman Islands, does not require a majority of our board to consist of independent directors or the implementation of a nominating and corporate governance committee. Since a majority of our Board of Directors would not consist of independent directors if we relied on the foreign private issuer exemption, fewer board members would be exercising independent judgment and the level of board oversight on the management of our company might decrease as a result. In addition, we could opt to follow Cayman Islands law instead of the Nasdaq requirements that mandate that we obtain shareholder approval for certain dilutive events, such as an issuance that will result in a change of control, certain transactions other than a public offering involving issuances of 20% or greater interests in the company and certain acquisitions of the shares or assets of another company.

---

| |
|:---|
| 31 |
| *[**Table of Contents**](#Toc)* |

---

***If we are unable to implement and maintain effective internal control over financial reporting in the future, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our Ordinary Shares may decline.***

As a public company, we are required to maintain internal control over financial reporting and to report any material weaknesses in such internal control. In addition, we are required to furnish a report by management on the effectiveness of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act. Currently we have not established and maintained effective disclosure controls and procedures. In addition, there are material weaknesses in our internal control over financial reporting. Among other things, we did not have sufficient personnel with appropriate levels of accounting knowledge and experience to address complex U.S. GAAP accounting issues and to prepare and review financial statements and related disclosures under U.S. GAAP. Specifically, our control did not operate effectively to ensure the appropriate and timely analysis of and accounting for unusual and non-routine transactions and certain financial statement accounts. We also have not established sufficient risk assessment in accordance with the requirement of COSO 2013 Framework. In addition, we have not established an internal control department and had a lack of adequate policies and procedures in internal audit function to ensure that our policies and procedures have been carried out as planned. As a result, our internal control over financial reporting was not effective as of September 30, 2023. We are in the process of designing, implementing, and testing the internal control over financial reporting required to comply with this obligation, which process is time consuming, costly, and complicated. If we identify material weaknesses in our internal control over financial reporting, if we are unable to comply with the requirements of Section 404 in a timely manner or assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting when required, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our Ordinary Shares could be negatively affected, and we could become subject to investigations by the stock exchange on which our securities are listed, the SEC, or other regulatory authorities, which could require additional financial and management resources.

***The requirements of being a public company may strain our resources and divert management's attention.***

As a public company, we are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Act, the listing requirements of the securities exchange on which we list, and other applicable securities rules and regulations. Despite recent reforms made possible by the JOBS Act, compliance with these rules and regulations will nonetheless increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and increase demand on our systems and resources. We must engage U.S. securities law counsel and U.S. auditors, and we have annual payments for listing on a stock exchange. In addition, the Sarbanes-Oxley Act and rules and regulations implemented by the SEC and The Nasdaq Capital Market require significantly heightened corporate governance practices for public companies. The Exchange Act requires, among other things, that we file annual and current reports with respect to our business and operating results. In addition, as long as we are listed on The Nasdaq Capital Market, we are also required to file semi-annual financial statements. While it is impossible to determine the amounts of such expenses in advance, we expect that we will incur expenses of between $500,000 and $1 million per year. We do not expect to incur materially greater costs as a result of becoming a public company than those incurred by similarly sized foreign private issuers.

If we fail to comply with these rules and regulations, we could become the subject of a governmental enforcement action, investors may lose confidence in us and the market price of our Ordinary Shares could decline.

As a result of disclosure of information in this report and in filings required of a public company, our business and financial condition will become more visible, which we believe may result in threatened or actual litigation, including by competitors and other third parties. If such claims are successful, our business and operating results could be harmed, and even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and adversely affect our business, brand and reputation and results of operations.

We also expect that being a public company and these rules and regulations makes it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could also make it more difficult for us to attract and retain qualified members of our Board of Directors, particularly to serve on our audit committee and compensation committee, and qualified executive officers.

***The obligation to disclose information publicly may put us at a disadvantage to competitors that are private companies.***

As a publicly listed company, we are required to file periodic reports with the SEC upon the occurrence of matters that are material to our company and shareholders. In some cases, we need to disclose material agreements or results of financial operations that we would not be required to disclose if we were a private company. Our competitors may have access to this information, which would otherwise be confidential. This may give them advantages in competing with our company. Similarly, as a U.S.-listed public company, we are governed by U.S. laws that our non-publicly traded competitors are not required to follow. To the extent compliance with U.S. laws increases our expenses or decreases our competitiveness against such companies, our public listing could affect our results of operations.

---

| |
|:---|
| 32 |
| *[**Table of Contents**](#Toc)* |

---

***The market price of our Ordinary Shares may be volatile or may decline regardless of our operating performance.***

Since our Ordinary Shares became listed on The Nasdaq Capital Market in February 2018, the trading price of our Ordinary Shares has fluctuated substantially. Between January 1, 2025 and the date of this report, our shares have closed between a low of $1.11 and a high of $4.4018 per share, and the last reported trading price on February 6, 2026 was $1.19 per Ordinary Share. The trading prices of our Ordinary Shares may be volatile and could fluctuate widely due to factors beyond our control. This may happen because of broad market and industry factors, like the performance and fluctuation in the market prices or the underperformance or deteriorating financial results of other listed companies based in China. The securities of some of these companies have experienced significant volatility since their initial public offerings, including, in some cases, substantial price declines in the trading prices of their securities. The trading performances of other Chinese companies' securities after their offerings may affect the attitudes of investors toward Chinese companies listed in the United States, which consequently may impact the trading performance of our Ordinary Shares, regardless of our actual operating performance. In addition, any negative news or perceptions about inadequate corporate governance practices or fraudulent accounting, corporate structure or matters of other Chinese companies may also negatively affect the attitudes of investors towards Chinese companies in general, including us, regardless of whether we have conducted any inappropriate activities. The market price of our Ordinary Shares may fluctuate significantly in response to numerous factors, many of which are beyond our control, including:

· actual or anticipated fluctuations in our revenue and other operating results;

· the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections;

· actions of securities analysts who initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors;

· announcements by us or our competitors of significant products or features, technical innovations, acquisitions, strategic partnerships, joint ventures, or capital commitments;

· price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole;

· lawsuits threatened or filed against us; and

· other events or factors, including those resulting from war or incidents of terrorism, or responses to these events.

In addition, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. Stock prices of many companies have fluctuated in a manner unrelated or disproportionate to the operating performance of those companies. In the past, shareholders have filed securities class action litigation following periods of market volatility. If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business, and adversely affect our business.

***We may be unable to comply with the applicable continued listing requirements of the Nasdaq Capital Market and as a result, our Ordinary Shares could be delisted from Nasdaq, which may cause the price of our shares to decline and adversely impact our ability to raise capital.***

Our Ordinary Shares are traded on the Nasdaq Capital Market. Nasdaq rules require us to maintain a minimum closing bid price of $1.00 per common share. The closing bid price of our Ordinary Shares previously fell below $1.00 per share for 30 consecutive trading days, and as a result, we were not compliant with Nasdaq's listing standards. Although we regained compliance, there can be no assurance we will continue to meet the minimum bid price requirements or any other requirements in the future, in which case our Ordinary Shares could be delisted.

In the event that our Ordinary Shares are delisted from Nasdaq and are not eligible for quotation or listing on another market or exchange, trading of our Ordinary Shares could be conducted only in the over-the-counter market or on an electronic bulletin board established for unlisted securities such as the OTC. In such event, it could become more difficult to sell or obtain accurate price quotations for our Ordinary Shares and there would likely also be a reduction in our coverage by securities analysts and news media, which could cause the price of our Ordinary Shares to decline further. In addition, our ability to raise additional capital may be severely impacted, which may negatively affect our plans and the results of our operations.

***We do not intend to pay dividends for the foreseeable future.***

We currently intend to retain any future earnings to finance the operation and expansion of our business, and we do not expect to declare or pay any dividends in the foreseeable future. As a result, you may only receive a return on your investment in our Ordinary Shares if the market price of our Ordinary Shares increases.

***Shares eligible for future sale may adversely affect the market price of our Ordinary Shares, as the future sale of a substantial amount of outstanding Ordinary Shares in the public marketplace could reduce the price of our Ordinary Shares.***

The market price of our shares could decline as a result of sales of substantial amounts of our shares in the public market, or the perception that these sales could occur. In addition, these factors could make it more difficult for us to raise funds through future offerings of our Ordinary Shares.

***Our shareholders may face difficulties in protecting their interests because we are a Cayman Islands exempted company.***

Our corporate affairs are governed by our Fourth Amended and Restated Memorandum and Articles of Association, by the Companies Law (as revised) of the Cayman Islands and the common law of the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under the laws of the Cayman Islands are not as clearly defined as under statutes or judicial precedent in existence in jurisdictions in the United States. Therefore, you may have more difficulty protecting your interests than would shareholders of a corporation incorporated in a jurisdiction in the United States, due to the comparatively less formal nature of Cayman Islands law in this area.

---

| |
|:---|
| 33 |
| *[**Table of Contents**](#Toc)* |

---

While Cayman Islands law allows a dissenting shareholder to express the shareholder's view that a court sanctioned reorganization of a Cayman Islands company would not provide fair value for the shareholder's shares, Cayman Islands statutory law does not specifically provide for shareholder appraisal rights in connection with a merger or consolidation of a company. This may make it more difficult for you to assess the value of any consideration you may receive in a merger or consolidation or to require that the acquirer gives you additional consideration if you believe the consideration offered is insufficient. However, Cayman Islands statutory law provides a mechanism for a dissenting shareholder in a merger or consolidation to apply to the Grand Court for a determination of the fair value of the dissenter's shares if it is not possible for the company and the dissenter to agree on a fair price within the time limits prescribed.

Shareholders of Cayman Islands exempted companies (such as us) have no general rights under Cayman Islands law to inspect corporate records and accounts or to obtain copies of lists of shareholders. Our directors have discretion under our Amended and Restated Memorandum and Articles of Association to determine whether or not, and under what conditions, our corporate records may be inspected by our shareholders but are not obliged to make them available to our shareholders. This may make it more difficult for you to obtain information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest. Subject to limited exceptions, under Cayman Islands' law, a minority shareholder may not bring a derivative action against the board of directors. Class actions are not recognized in the Cayman Islands, but groups of shareholders with identical interests may bring representative proceedings, which are similar.

***United States civil liabilities and certain judgments obtained against us by our shareholders may not be enforceable.***

We are a Cayman Islands exempted company and most of our assets are located outside of the United States. In addition, the majority of our directors and officers are nationals and residents of countries other than the United States. A substantial portion of the assets of these persons is located outside of the United States. As a result, it may be difficult to effect service of process within the United States upon these persons. It may also be difficult to enforce in U.S. courts judgments obtained in U.S. courts based on the civil liability provisions of the U.S. federal securities laws against us and our officers and directors who are not resident in the United States and the substantial majority of whose assets are located outside of the United States.

Further, it is unclear if original actions predicated on civil liabilities based solely upon U.S. federal securities laws are enforceable in courts outside the United States, including in the Cayman Islands. Courts of the Cayman Islands may not, in an original action in the Cayman Islands, recognize or enforce judgments of U.S. courts predicated upon the civil liability provisions of the securities laws of the United States or any state of the United States on the grounds that such provisions are penal in nature. Although there is no statutory enforcement in the Cayman Islands of judgments obtained in the United States, courts of the Cayman Islands will recognize and enforce a foreign judgment of a court of competent jurisdiction if such judgment is final, for a liquidated sum, provided it is not in respect of taxes or a fine or penalty, is not inconsistent with a Cayman Islands' judgment in respect of the same matters, and was not obtained in a manner which is contrary to the public policy of the Cayman Islands. In addition, a Cayman Islands court may stay proceedings if concurrent proceedings are being brought elsewhere.

***Our Board of Directors may decline to register transfers of Ordinary Shares in certain circumstances.***

Our Board of Directors may, in its sole discretion, decline to register any transfer of any ordinary share which is not fully paid up or on which we have a lien. Our directors may also decline to register any transfer of any share unless (i) the instrument of transfer is lodged with us, accompanied by the certificate for the shares to which it relates and such other evidence as our Board of Directors may reasonably require to show the right of the transferor to make the transfer; (ii) the instrument of transfer is in respect of only one class of shares; (iii) the instrument of transfer is properly stamped, if required; (iv) in the case of a transfer to joint holders, the number of joint holders to whom the share is to be transferred does not exceed four; (v) the shares conceded are free of any lien in favor of us; or (vi) a fee of such maximum sum as Nasdaq may determine to be payable, or such lesser sum as our Board of Directors may from time to time require, is paid to us in respect thereof.

If our directors refuse to register a transfer they shall, within one month after the date on which the instrument of transfer was lodged, send to each of the transferor and the transferee notice of such refusal. The registration of transfers may, on 14 days' notice being given by advertisement in such one or more newspapers or by electronic means, be suspended and the register closed at such times and for such periods as our Board of Directors may from time to time determine, provided, however, that the registration of transfers shall not be suspended nor the register closed for more than 30 days in any year.

---

| |
|:---|
| 34 |
| *[**Table of Contents**](#Toc)* |

---

**Item 4. Information on the Company**

**A. History and Development of the Company**

Farmmi, Inc. ("FAMI"), is a Cayman Islands holding company incorporated on July 28, 2015. We conduct our operations in China principally through our foreign-owned PRC subsidiaries. FAMI's registered office is at the office of Sertus Incorporations (Cayman) Limited, Sertus Chambers, Governors Square, Suite # 5-204, 23 Lime Tree Bay Avenue, P.O. Box 2547, Grand Cayman, KY1-1104, Cayman Islands. Its registered office's telephone number is +1.345.745.5100. Farmmi, Inc.'s agent in the U.S. is Shangzhi Zhang, with the address of 33202 Havers Drive, Cary, NC 27518.

FLS Mushroom, a major operating entity of our Company prior to its divestiture in September 2022, previously was under mushroom business sectors of Forasen Group, which is controlled by Ms. Yefang Zhang and Mr. Zhengyu Wang. Forasen Group (initially named as Lishui Forasen Green Industry Group) was established in April 2003. Forasen Group's primary business areas used to include rubber trading, mushroom sales, biomass power generation, and marketing.

Mr. Wang and Ms. Zhang decided to spin off various business sectors from Forasen Group and to develop them separately. Since 2010, they began to spin off bamboo-based charcoal businesses by establishing several offshore and domestic companies and re-organizing related operating entities in China. In 2011, they established Tantech Holdings Ltd, which completed an IPO and listing on the Nasdaq Capital Market in March 2015. Since 2015, Ms. Zhang and Mr. Wang started to spin off the edible fungi business from Forasen Group by establishing several offshore companies and re-organizing related operating entities in China. In July 2015, FMI was established. After a series of transactions, Forest Food is indirectly controlled by FMI and no longer has any common relationship with Forasen Group. FMI also controls some other companies which develop our e-commerce business of edible fungi products and other agricultural products. In February 2018, FMI completed its initial public offering and its Ordinary Shares commenced trading on Nasdaq under the symbol "FAMI."

***Historical Timeline***

---

| |
|:---|
| November 1994: Our Chairwoman and CEO Ms. Yefang Zhang and her husband Mr. Zhengyu Wang founded Lishui Jingning Huali Co., Ltd in China to start edible fungi business by selling dried edible fungi. |
| May 2003: Forest Food was established in China. |
| December 2006: We passed ISO 22000 certification. |
| December 2008: We passed QS certification. |
| August 2010: We passed BRC certification. |
| March 2011: FLS Mushroom was established in China. |
| July 2015: Farmmi, Inc. was incorporated in the Cayman Islands. |
| August 2015: Farmmi International was incorporated in Hong Kong. |
| December 2015: Nongyuan Network was established in China. |
| December 2015: Suyuan Agriculture was established in China. |
| May 2016: Farmmi Enterprise was established in China. |
| July 2016: Farmmi Technology was established in China. |
| December 2016: Farmmi Liangpin Market (*www.farmmi.com/www.farmmi88.com*) began operating. |

---

---

| |
|:---|
| 35 |
| *[**Table of Contents**](#Toc)* |

---

---

| |
|:---|
| February 2018: FAMI completed its initial public offering and its Ordinary Shares commenced trading on Nasdaq under the symbol "FAMI." We raised approximately $6 million in net proceeds after deducting underwriting commissions and the offering expenses payable by us. |
| May 2018: Farmmi Food started operation in China. |
| August 2018: Farmmi Liangpin Market (*www.farmmi.com/www.farmmi88.com*) was restructured as two online stores: Farmmi Jicai (*www.farmmi88.com*) targeting centralized procurement and Farmmi Liangpin Market (*www.farmmi.com*) targeting direct retail for consumption. Liangpin Market and Farmmi Jicai were closed in 2020 and 2023, respectively. |
| November 2018: FAMI completed a $7.5 million private placement (the "Private Placement") with an institutional investor. The securities sold by the Company in the Private Placement consisted of (a) senior convertible notes with an aggregate principal amount of $7,500,000 (the "Notes") which are initially convertible into an aggregate of 1,198,084 of the Company's Ordinary Shares at the rate of $6.26 per share and (b) warrants to purchase an aggregate of 800,000 Ordinary Shares at an exercise price of $6.53 per share (the "Investor Warrants"). We also issued warrants to purchase an aggregate of 119,808 Ordinary Shares for an exercise price of $7.183 per share to the placement agent (the "Placement Agent Warrants," and together with the Investor Warrants, the "Warrants"). |
| December 2018: In connection with the Private Placement, FAMI filed a registration statement with the SEC on Form F-1 (Registration No. 333-228677), which was amended by Pre-Effective Amendment No. 1 to Form F-1 filed with the SEC on February 4, 2019 (as amended, the "F-1 Registration Statement"). The F-1 Registration Statement was declared effective by the SEC on February 12, 2019. |
| March 2019: Lishui Farmmi E-Commerce Co., Ltd ("Farmmi E-Commerce") was established under the laws of the PRC. Nongyuan Network and Suyuan Agriculture owns 98% and 2% of interests in Farmmi E-Commerce, respectively. |
| November 2019: In connection with the Private Placement, FAMI filed a post-effective registration statement with SEC Amendment No. 1 to the F-1 Registration Statement on Form F-3 (the "Post-Effective Amendment No. 1"). The Post-Effective Amendment No. 1 was declared effective by the SEC on December 3, 2019. |
| December 2019: Xinyang Wang, as the new shareholder of Nongyuan Network, signed a series of VIE agreements (the "Xinyang Wang VIE Agreements") with Nongyuan Network and Suyuan Agriculture. |
| May 2020: To clarify the legal effect of the Original VIE Agreements (as defined below) and to sustain the effective control over Nongyuan Network by the Company, Nongyuan Network and Suyuan Agriculture signed a series of documents with the effective date of December 10, 2019. |
| September 2020: At the 2020 annual shareholder meeting of the Company, the shareholders approved an ordinary resolution that the authorized share capital of the Company be increased from 20,000,000 ordinary shares of $0.001 par value each to 200,000,000 ordinary shares of $0.001 par value each. |
| December 2020: We closed Farmmi Liangpin Market, including the mobile application and the WeChat mini program. |

---

---

| |
|:---|
| 36 |
| *[**Table of Contents**](#Toc)* |

---

---

| |
|:---|
| On March 22, 2021, Farmmi entered into an underwriting agreement (the "Underwriting Agreement") with Aegis Capital Corp. (the "Underwriter"), pursuant to which the Company agreed to sell to the Underwriter, in a firm commitment public offering (the "Offering"), 6,469,467 ordinary shares (the "Shares") of the Company, par value $0.001 per share, for a public offering price of $1.15 per share. The Company received approximately $6.6 million in net proceeds from the Offering after deducting the underwriting discount and estimated offering expenses payable by the Company. The Company also granted the Underwriter an option for a period of 25 days to purchase an additional 970,419 ordinary shares at a price of $1.15 per ordinary share solely to cover over-allotments. On April 9, 2021 the over-allotment was exercised and the net proceeds the Company received is approximately $1.0 million. Pursuant to the terms of the Underwriting Agreement, the Shares were offered pursuant to a registration statement on Form F-3 (File No. 333-254036) which was filed with the Securities Exchange Commission on March 9, 2021 and was declared effective on March 16, 2021. A final prospectus relating to and describing the terms of the offering has been filed with the Securities and Exchange Commission on March 23, 2021. |
| In April 2021, FAMI incorporated Farmmi (Hangzhou) Ecology Agriculture Development Co., Ltd ("Farmmi Ecology") in China through its wholly-owned subsidiary Farmmi International Limited. |
| April 7, 2021, Farmmi incorporated Zhejiang Farmmi Biotechnology Co., Ltd ("Farmmi Biotechnology"), through its former wholly-owned subsidiary Hangzhou Suyuan Agriculture Technology Co., Ltd. |
| On April 28, 2021, Farmmi entered into an underwriting agreement (the "Underwriting Agreement") with Aegis Capital Corp. (the "Underwriter"), pursuant to which the Company agreed to sell to the Underwriter, in a firm commitment public offering (the "Offering"), 140,000,000 ordinary shares of the Company, par value $0.001 per share, at a public offering price of $0.30 per share. Under the terms of the Underwriting Agreement, the Company granted the Underwriter a 45-day option to purchase up to an additional 21,000,000 ordinary shares solely to cover over-allotments, if any. The over-allotment option was exercised in full at a price of $0.30 per share on April 30, 2021. The Company received approximately $43.9 million in net proceeds from the Offering (including the net proceeds from the exercise of the over-allotment option in full), after deducting underwriting discounts and commissions and estimated offering expenses payable by the Company. The Offering was conducted pursuant to the Company's registration statement on Form F-1 (File No. 333-255387) declared effective by the Securities and Exchange Commission on April 28, 2021, an abbreviated registration statement on Form F-1 pursuant to Rule 462(b) under the Securities Act of 1933, as amended (the "Securities Act") (File No. 333-255590) effective upon filing on April 28, 2021, and a prospectus dated April 28, 2021, after deducting underwriting discounts and commissions and estimated offering expenses payable by the Company. |
| In May 2021, Farmmi Ecology incorporated Zhejiang Farmmi Agricultural Supply Chain Co., Ltd ("Farmmi Supply Chain") in China. |
| In July 2021, at the 2021 annual shareholder meeting of the Company, the shareholders approved an ordinary resolution that the authorized share capital of the Company be increased from 20,000,000 ordinary shares of $0.001 par value each to 600,000,000 ordinary shares of $0.001 par value each. |
| In July 22, 2021, shareholders approved the 2021 Share Incentive Plan (the "2021 Plan") and authorized the Company to reserve a total of 40,000,000 unissued ordinary shares for issuance under the 2021 Plan. |
| On August 26, 2021, Suyuan Agriculture has changed its name to Zhejiang Farmmi Agricultural Science and Technology Group Co., Ltd, and its capital was increased to RMB 50 million. |
| Zhejiang Yitang Medical Service Co., Ltd was incorporated on September 7, 2021. Upon formation, Nongyuan Network and Farmmi Ecology owned 95% and 5% of the equity interests in Yitang Medical Service, respectively. On April 20, 2023, Nongyuan Network transferred the 95% equity it held in Yitang Medical Service to Farmmi Medical Health. After the transfer, Yitang Medical Service becomes one of our wholly owned subsidiaries. |

---

---

| |
|:---|
| 37 |
| *[**Table of Contents**](#Toc)* |

---

---

| |
|:---|
| On September 13, 2021, Farmmi entered into an underwriting agreement (the "Underwriting Agreement") with Aegis Capital Corp. (the "Underwriter"), pursuant to which the Company agreed to sell to the Underwriter, in a firm commitment public offering (the "Offering"), 93,111,717 ordinary shares (the "Shares") of the Company, par value $0.001 per share, for a public offering price of $0.22 per share, and 275,150,000 pre-funded warrants (the "Pre-funded Warrants") to purchase 275,150,000 shares (the "Warrant Shares"), for a public offering price of $0.2199 per Pre-funded Warrant to those purchasers whose purchase of ordinary shares in this offering would otherwise result in the purchaser, together with its affiliates and certain related parties, beneficially owning more than 4.99% (or, at the election of the holder, 9.99%) of our outstanding ordinary shares immediately following the consummation of this Offering. The Pre-funded Warrants have an exercise price of $0.0001 per share. The Pre-funded Warrants were issued in registered form under a warrant agent agreement (the "Warrant Agent Agreement") between the Company and TranShare Corporation as the warrant agent. The Company received approximately $74.2 million in net proceeds from the Offering after deducting the underwriting discount and estimated offering expenses payable by the Company. Each warrant is exercisable for one ordinary share of the Company. During the year ended September 30, 2021, 275,150,000 warrants were exercised for 275,114,477 ordinary shares of the Company for a total proceed of $19,050. Any securities offered and sold in the Offering (including the Warrant Shares) will be issued pursuant to the Company's shelf registration statement on Form F-3 (File No.: 333-254036) filed with the Securities and Exchange Commission (the "SEC") on March 9, 2021 and declared effective on March 16, 2021 (the "Registration Statement"), as supplemented by the preliminary prospectus supplement dated September 13, 2021 relating to the Offering and filed with the SEC on September 13, 2021 and a final prospectus supplement dated September 13, 2021. |
| Zhejiang Yiting Medical Technology Co., Ltd was incorporated on September 17, 2021. |
| We incorporated Farmmi (Hangzhou) Health Development Co., Ltd on September 17, 2021. |
| We incorporated Zhejiang Farmmi Medical Health Technology Co., Ltd on September 18, 2021. |
| We incorporated Zhejiang Farmmi Holdings Group Co., Ltd on September 18, 2021. |
| On September 27, 2021, we acquired Jiangxi Xiangbo Agriculture and Forestry Development Co. Ltd ("Jiangxi Xiangbo), from a third party, Ganzhou Tengguang Agriculture and Forestry Development Co., Ltd, for a total price of RMB 70 million (approximately $10.9 million). The acquisition transaction was completed on October 27, 2021. Together with Jiangxi Xianbo, its 100% controlled subsidiary Yudu County Yada Forestry Co., Ltd became a part of us. |
| On September 27, 2021, we signed as a sale and purchase agreement to acquire 100% interest in an entity, Guoning Zhonghao (Ningbo) Trade Co., Ltd, from a third party, Ningbo Guoning Zhonghao Technology Co., Ltd, for a total price of RMB 5,000 (approximately $776). The acquisition transaction was completed on December 1, 2021. |
| On September 27, 2021, Farmmi Agricultural and Hangzhou Dawo Software Co., Ltd, the only shareholders of Zhejiang Forest Food Co., Ltd ("Zhejiang Forest Food"), entered into a Share Transfer Agreement to transfer all of their equity in Zhejiang Forest to Lishui Zhongjun Technology Co., Ltd, an unrelated party, for a total price of RMB 18,200,000 (approximately $2.82 million). The divestment was completed on October 1, 2021. We received the whole proceed of disposal on November 5, 2021. After this transfer, Zhejiang Forest has been divested from the Company. |
| On November 5, 2021, we signed an Equity Transfer Framework Agreement to purchase 124,590,064 shares of Shanghai Jiaoda Onlly Co., Ltd ("Jiaoda Onlly"), a Shanghai Stock Exchange listed company under the ticker 600530.SH, from former shareholders of Jiaoda Onlly for approximately RMB 509 million (approximately US$71.6 million). |
| Lishui Yilong Enterprise Management Co., Ltd, a subsidiary of Nongyuan Network, was incorporated on January 10, 2022. It was deregistered in April 2023. |

---

---

| |
|:---|
| 38 |
| *[**Table of Contents**](#Toc)* |

---

---

| |
|:---|
| Lishui Yifeng Medical Health Technology Co., Ltd, a subsidiary of Nongyuan Network, was incorporated on January 10, 2022. It was deregistered in April 2023. |
| Lishui Yifeng Yilong Medical Technology Development Partnership (Limited Partnership) was formed on January 19, 2022. It was owned 80% by Yilong Enterprise and 20% by Yifeng Medical Health, respectively. This partnership was deregistered in April 2023. |
| Lishui Yitang Shangke Medical and Health Technology Partnership (Limited Partnership) was formed on January 19, 2022. It was owned 80% by Yilong Enterprise and 20% by Yifeng Medical Health, respectively. This partnership was deregistered in April 2023. |
| On January 27, 2022, Yitang entered into an agreement to assign its obligations and rights under the Equity Transfer Framework Agreement with respect to Jiaoda Onlly to Shanghai Shijie Decoration Design Engineering Co., Ltd and Shanghai Yunjian Industrial Development Co., Ltd, two unrelated parties. |
| On February 15, 2022, we issued 10,000,000 Shares under the 2021 Plan to certain employees. |
| On February 15, 2022, we cancelled the reserved but unissued 30,000,000 Shares under the 2021 Plan and released the reservation of such Shares. |
| On February 25, 2022, we entered into a securities purchase agreement with certain investors in a private placement transaction, pursuant to which Farmmi agreed to sell to the investors an aggregate of 30,000,000 ordinary shares at USD$0.20 per share for USD$6,000,000. On February 28, 2022, Farmmi closed the Transaction. There were 597,780,383 ordinary shares outstanding after the issuance of the shares purchased. |
| We incorporated Zhejiang Farmmi Ecological Agricultural Technology Co., Ltd on May 27, 2022. |
| On May 31, 2022, Farmmi effected a share consolidation of its authorized shares including issued and unissued ordinary shares at the ratio of one-for-twenty-five. As a result of the share consolidation, the Company's 600,000,000 authorized shares of a single class, par value of US$0.001 each, were consolidated into 24,000,000 shares, par value of US$0.025 each. |
| We formed a wholly-owned subsidiary in Canada, Farmmi Canada Inc. on July 13, 2022. Farmmi Canada is engaged in the production and sales of agricultural products, such as mushroom, as well as agricultural trade business in Canada and other international markets. Farmmi Canada was deregistered on December 31, 2024. |
| We incorporated Zhejiang Suyuan Agricultural Technology Co., Ltd on July 25, 2022. |

---

---

| |
|:---|
| 39 |
| *[**Table of Contents**](#Toc)* |

---

---

| |
|:---|
| On September 26, 2022, the Company entered into a securities purchase agreement with Streeterville Capital, LLC, pursuant to which the Company issued to Streeterville, in an unregistered private transaction, an unsecured promissory note on September 26, 2022 in the original principal amount of $6,440,000.00 (the "Note"), convertible into ordinary shares, $0.025 par value, for $6,000,000.00 in gross proceeds. On November 13, 2023, Farmmi and Streeterville entered an Amendment to the Convertible Promissory Note, which, among other things, extended the term of the Note from twelve months to twenty four months from the Purchase Price Date, or until September 28, 2024. On January 12, 2024, the Company and Streeterville entered into a Forbearance Agreement under which Streeterville agreed to withdraw the December Redemption Notice and not to seek to enforce any remedies under the Note with respect to the December Redemption Notice. In exchange for the forbearance, the Company agreed to pay to Streeterville a forbearance fee equal to ten percent (10%) of the outstanding balance of the Note.  |
| On September 30, 2022, Zhejiang Farmmi Agricultural Science and Technology Group Co., Ltd, the then-shareholder of FLS Mushroom, entered into a Share Transfer Agreement and Supplementary Agreement to transfer all of the equity in FLS Mushroom to Zhejiang Jingcai Industrial Co., Ltd, an unrelated party, for RMB 24.1 million. The divestiture of FLS Mushroom was completed following the closing of the transaction. |
| In November 2022, Zhejiang Farmmi Agricultural Science and Technology Group Co., Ltd formed a new subsidiary, Ningbo Farmmi Baitong Trading Co., Ltd ("Farmmi Ningbo"). Farmmi Ningbo is engaged in the production and sales of agricultural products, such as mushroom, as well as agricultural trade business. |
| In March 2023, at the annual meeting of the Company, the shareholders approved an ordinary resolution that the authorized share capital of the Company be increased from (i) US$600,000, divided into 24,000,000 ordinary shares of US$0.025 par value each, to (ii) US$2,500,000, divided into 100,000,000 ordinary shares of US$0.025 par value each, by the creation of additional 76,000,000 ordinary shares of US$0.025 par value each. |
| In April 2023, we established a new subsidiary, FARMMI USA INC. in Newark, California ("Farmmi USA"). The Company plans to use Farmmi USA as a platform to sell its high-quality agricultural products to the North America market and to sell high-quality food products from North America to Asia. |
| On July 12, 2023, we entered into a securities purchase agreement with certain non-U.S. purchasers in reliance on Regulation S, pursuant to which we issued and sold an aggregate of 21,052,632 ordinary shares, par value $0.025 per share of the Company, at a price of $0.38 per share for aggregate gross proceeds of US$8,000,000.00. |
| On September 21, 2023, at an extraordinary general meeting of shareholders (EGM), the Company's shareholders approved a proposal to effect a share consolidation of the Company's authorized shares including issued and unissued ordinary shares at the ratio of one-for-eight. As a result of the Share Consolidation, the Company's 100,000,000 authorized shares of a single class each with a par value of US$0.025, including all issued shares and unissued shares, were consolidated into 12,500,000 shares each with a par value of US$0.20. |
| On September 21, 2023, at an extraordinary general meeting of shareholders, the Company's shareholders approved an ordinary resolution that, immediately following the Share Consolidation, the authorized share capital of the Company be increased from (i) US$2,500,000 divided into 12,500,000 ordinary shares of US$0.20 nominal or par value each, to (ii) US$100,000,000 divided into 500,000,000 ordinary shares of US$0.20 nominal or par value each, by the creation of an additional 487,500,000 ordinary shares of US$0.20 nominal or par value each. |
| On January 31, 2024, Zhejiang Suyuan Agricultural Technology Co., Ltd ("Suyuan"), a wholly owned subsidiary, entered into a share transfer agreement with Lishui Chida Logistics Co., Ltd, an unrelated third party. Pursuant to the agreement, Suyuan sold 100% of the equity of its wholly owned subsidiary, Zhejiang Farmmi Holdings Group Co., Ltd ("Farmmi Holding"), to the buyer for RMB 43.1 million (approximately $6.0 million). The sale of Farmmi Holding was to reduce the costs associated with maintaining Farmmi Holding and its wholly owned subsidiary, Zhejiang Farmmi Agricultural Science and Technology Group Co., Ltd ("Farmmi Agriculture"). After the share transfer, Farmmi Agriculture's contractual arrangements with Nongyuan Network has been transferred to the buyer.  |
| On July 30, 2024, the Company entered into a note purchase agreement with Atlas Sciences, LLC, a Utah limited liability company (the "Atlas"), pursuant to which the Company issued to Atlas an unsecured promissory note dated July 30, 2024 in the original principal amount of $5,355,000.00 (the "Atlas Note") for $5,000,000.00 in gross proceeds. The Company used all of the proceeds from the Atlas Note to repay its indebtedness owed to Streeterville Capital, LLC under the Convertible Promissory Note it issued on September 26, 2022. |

---

---

| |
|:---|
| 40 |
| *[**Table of Contents**](#Toc)* |

---

---

| |
|:---|
| On August 22, 2024, the Company and certain institutional investors entered into a securities purchase agreement, pursuant to which the Company agreed to sell to such Purchasers an aggregate of 3,433,167 ordinary shares, par value $0.20 per share, in a registered direct offering and Series A warrants to purchase up to 3,433,167 ordinary shares in a concurrent private placement for gross proceeds of approximately $1.03 million before deducting the placement agent's fees and other estimated offering expenses. |
| On September 18, 2024, Farmmi International Limited entered into a share transfer agreement with Lishui Jiuanju Trading Co., Ltd, an unrelated third party. Pursuant to the agreement, Farmmi International sold 100% of the equity of its wholly owned subsidiary, Farmmi (Hangzhou) Ecology Agriculture Development Co., Ltd, to the buyer for RMB 12,000 (approximately $1,700.00). Prior to the entry into the agreement, Farmmi Ecology's 5% equity interest in Zhejiang Yitang Medical Service Co., Ltd, a wholly owned subsidiary of the Company, had been transferred to Farmmi (Hangzhou) Health Development Co., Ltd, a subsidiary. |
| On September 23, 2024, Farmmi International entered into a share transfer agreement with Jiuanju, pursuant to which Farmmi International sold 100% of the equity of its wholly owned subsidiary, Lishui Farmmi Technology Co., Ltd, to the buyer for RMB 620,000 (approximately $88,070). Prior to the entry into the agreement, Farmmi Technology's 50% equity interest in Zhejiang Farmmi Ecological Agricultural Technology Co., Ltd, a wholly owned subsidiary of the Company, had been transferred to Farmmi (Hangzhou) Enterprise Management Co., Ltd, a subsidiary.  |
| In July 2024, Farmmi USA Inc, a wholly-owned subsidiary of the Company, formed SuppChains Group Inc, a California corporation ("SuppChains"). Farmmi USA owns directly 75% of the outstanding shares of SuppChains, with the remaining 25% owned by Ttone Trucking Inc, a California company owned by Hui Xu, an unrelated third party. |
| In October 2024, SuppChains formed a wholly-owned subsidiary, SuppChains Transport Inc ("SuppChains Transport"), a California corporation. SuppChains and SuppChains Transport mainly conduct logistic and storage services business in the U.S. |
| On November 4, 2024, Zhejiang Famimi Biotechnology Co., Ltd ("Famimi") was formed, with the Company's wholly-owned subsidiaries, Zhejiang Suyuan Agricultural Technology Co., Ltd and Lishui Farmmi E-Commerce Co. Ltd, holding 95% and 5%, respectively, of the equity of Famimi. Famimi engaged in agricultural product export trading business before its deregistration in June 2025. |
| On February 25, 2025, at the annual general meeting of shareholders (the "2025 AGM"), the Company's shareholders approved an ordinary resolution to effect a consolidation of the Company's authorized shares including issued and unissued ordinary shares at the ratio of one-for-twelve (the "2025 Share Consolidation"). As a result of the share consolidation, the authorized share capital of the Company was amended from US$100,000,000 divided into 500,000,000 ordinary shares of a par or nominal value of US$0.20 each to US$100,000,000 divided into 41,666,667 ordinary shares of a nominal or par value of US$2.40 each. |
| On February 25, 2025, at the 2025 AGM, the Company's shareholders approved an ordinary resolution to increase the authorized share capital of the Company from (i) US$100,000,000 divided into 41,666,667 ordinary shares of US$2.40 nominal or par value each, to (ii) US$12,000,000,000 divided into 5,000,000,000 ordinary shares of US$2.40 nominal or par value each, by the creation of an additional 4,958,333,333 ordinary shares of US$2.40 nominal or par value each. |

---

---

| |
|:---|
| 41 |
| *[**Table of Contents**](#Toc)* |

---

---

| |
|:---|
| On February 28, 2025, Farmmi International, a wholly-owned subsidiary of the Company, entered into an equity transfer agreement with MALONG LIMITED, a Hong Kong company, to acquire 45% of the equity of EWAYFOREST GROUP LIMITED ("EWAYFOREST"), a Hong Kong company, from the seller. EWAYFOREST owns 100% of the equity of Lishui Ganglisen Enterprise Management Co., Ltd, a Chinese company, which in turn owns 100% of the equity of Lishui Senbo Forestry Co., Ltd, a Chinese company ("Senbo Forestry"). Senbo Forestry is engaged in forestry management, improvement, planting and product sales. The total consideration for the acquisition was RMB723,324,150 ($99085500). As of the date of this report, Farmmi International has paid $59.6 million in cash and $35.0 million in accounts receivable.  |
| On March 31, 2025, Zhejiang Farmmi Ecological Agricultural Technology Co., Ltd. entered into a share transfer agreement with Lishui Chida Logistics Co., Ltd, or Lishui Chida, an unrelated third party. Pursuant to the agreement, Farmmi Eco-Agri Tech sold 100% of the equities of Zhejiang Farmmi Agricultural Supply Chain Co., Ltd. and Zhejiang Farmmi Food Co., Ltd., wholly owned subsidiaries, to the buyer for RMB10,000.00 each (approximately $1,372.24) and RMB20,000.00 in aggregate (approximately $2,746.48), respectively. The transaction was for the purpose of reducing the costs associated with maintaining those subsidiaries.  |
| On April 30, 2025, Farmmi International, MALONG LIMITED and Senbo Forestry entered into a supplemental agreement to the original equity transfer agreement dated February 28, 2025. Pursuant to the supplemental agreement, MALONG and Senbo Forestry agreed to obtain a forest ownership certificate by August 30, 2025 to establish Senbo Forestry's ownership of the forest assets. If Senbo Forestry fails to complete the ownership certification procedure, the parties agree to terminate the original equity transfer agreement and MALONG would refund all consideration paid by Farmmi International under the original agreement. |
| On June 11, 2025, Zhejiang Yitang Medical Services Co., Ltd. entered into a share transfer agreement with Lishui Chida. Pursuant to the agreement, Yitang Medical sold 100% of the equities of Guoning Zhonghao (Ningbo) Trade Co., Ltd. and Ningbo Farmmi Baitong Trade Co., Ltd. to the buyer for RMB10,000.00 (approximately $1,394) and RMB5,000.00 (approximately $697), respectively. The transaction was for the purpose of reducing the costs associated with maintaining those subsidiaries.  |
| On June 13, 2025, Zhejiang Farmmi Ecological Agricultural Technology Co., Ltd. entered into a share transfer agreement with Lishui Damushan Tea Co., Ltd., an unrelated third party. Pursuant to the agreement, Farmmi Eco-Agri Tech sold 100% of the equity of Zhejiang Farmmi Biotechnology Co., Ltd., its wholly owned subsidiary, to the buyer for RMB10,000.00 (approximately $1,394) as a cost reduction measure.  |
| On June 27, 2025, Zhejiang Famimi Biotechnology Co., Ltd. was 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. |
| On August 4, 2025, the Company entered into a securities purchase agreement with certain accredited investors, pursuant to which the Company sold to the purchasers an aggregate of 4,166,667 ordinary shares, par value $2.40 per share, and Series C warrants to purchase up to 8,333,334 ordinary shares in a private placement for gross proceeds of approximately $10.0 million. All of the purchased shares and ordinary shares underlying the Series C warrants were registered pursuant to a registration statement on Form F-3 filed September 11, 2025 and declared effective by the SEC on September 19, 2025. |
| On August 6, 2025, Suppchains Oak Inc ("Suppchains Oak") was established under the laws of the State of New Jersey. Suppchains Transport owns 100% equity of Suppchains Oak. Suppchains Oak conducts warehousing and logistics services business. |
| On September 30, 2025, Farmmi International, MALONG, and Senbo Forestry entered into a termination and refund agreement to the original equity transfer agreement dated February 28, 2025 and related supplemental agreement dated April 30, 2025. Pursuant to the agreement, the parties agreed to terminate the original equity acquisition transaction and that all acquisition consideration paid by Farmmi International would be refunded by MALONG, including accounts receivable of $35.0 million and an aggregate cash payment of $59,625,500. The cash refund would be completed as follows: (a) 40% of the cash consideration of $59,625,500, or $23,850,200, be repaid in a lump sum before January 31, 2026, and (b) the remaining 60% of the cash consideration, or $35,775,300, be repaid by MALONG as follows: (i) the repayment period is two (2) years from February 1, 2026 to January 30, 2028, (ii) the interest on the unpaid balance is calculated at an annualized rate of 2%, compounded daily, and is payable quarterly, and (iii) the principal balance is repaid every six months in the following installments: a total of not less than 20% of the principal balance would be refunded during the period from February 1, 2026 to July 30, 2026, not less than 25% of the remaining principal balance would be refunded during each of the six-month periods ending January 30, 2027 and July 30, 2027, respectively, and the final remaining principal balance would be refunded by January 30, 2028. |
| On December 5, 2025, at an extraordinary general meeting (the "2025 EGM"), the Company's shareholders approved a special resolution to (i) change the authorized share capital of the Company from (i) US$12,000,000,000 divided into 5,000,000,000 Ordinary Shares of US$2.40 nominal or par value each, to (ii) US$12,000,000,000 divided into 4,500,000,000 Class A Ordinary Shares of US$2.40 nominal or par value each with one vote per share (the "Class A Ordinary Shares"), and 500,000,000 Class B Ordinary Shares of US$2.40 nominal or par value each with fifty votes per share (the "Class B Ordinary Shares"), by the redesignation of 4,500,000,000 ordinary shares into 4,500,000,000 Class A Ordinary Shares of US$2.40 nominal or par value each; and the redesignation of 500,000,000 ordinary shares into 500,000,000 Class B Ordinary Shares with a nominal or par value of US$2.40 each, and a special resolution to adopt the Fourth Amended and Restated Memorandum and Articles of Associations of the Company. |
| On January 5, 2026, the Fourth Amended and Restated Memorandum and Articles of Associations were filed with the Cayman Islands Registrar of Companies. |
| On January 12, 2026, Farmmi USA formed a wholly-owned subsidiary, Bluesage Marketing Inc ("Bluesage"), a California corporation. Bluesage engages in digital marketing business. |

---

---

| |
|:---|
| 42 |
| *[**Table of Contents**](#Toc)* |

---

**B. Business Overview**

**General**

We are a supplier of agricultural products. Our business has historically been focused on the processing and/or sales of a variety of mushrooms, edible fungi and other agricultural products. In the recent years, in response to the market demand, our product sales have been more evenly divided among Shiitake mushrooms, Mu Er mushrooms, and bulk agricultural commodity trading such as cotton and corn bulk trading.

Our founders Ms. Yefang Zhang and Mr. Zhengyu Wang started their edible fungi business in November 1994 by establishing Lishui Jingning Huali Co., Ltd. They established our first Farmmi/Forasen entity, Forest Food, in May 2003. We established Farmmi Food, a new subsidiary under Farmmi Agricultural, in December 2017 and it started the operation in May 2018. Forest Food and Farmmi Food focus on export sales and domestic sales of small packages of our edible fungi, while FLS Mushroom, which was founded in March 2011, focused on the Chinese domestic market for big packages. Our business office is located in Binjiang district of Hangzhou city in Zhejiang. We have two processing factories in Lishui. Our raw materials are directly or indirectly provided by family farms from various counties of Lishui in Zhejiang along with other provinces in China.

We are headquartered in the edible fungi rich southwest of Zhejiang Province, in the city of Lishui. Zhejiang province, located in southeastern coastal China, is China's eighth largest province in population in 2021 according to the seventh census in China, with 65.4 million residents. As the first province in China without any counties in the poverty-county list of the central government, Zhejiang has become one of the wealthiest and most developed provinces in China. Its province-wide GDP of approximately RMB 9.01 trillion in 2024 placed it as the fourth highest in China in aggregate amount and fifth per capita.

Lishui is a prefecture-level city located in southwest Zhejiang province. Approximately 2.53 million residents live in the city, and city-wide GDP is approximately RMB 218 billion in 2024. Lishui's primary industries include food processing, wood and bamboo production, ore smelting, textile, clothes making, construction materials, pharmaceuticals and electronic machinery. Lishui has cultivated edible fungi for almost 1,000 years. It is one of the major production areas of edible fungi in the southeastern China. Lishui produces approximately 0.6 million tons of edible fungi every year, contributing to 50% volume of Zhejiang Province. Lishui also has rich species of edible fungi, among which there are over 30 species of commercially cultivated mushroom.

![fami_20fimg17.jpg](fami_20fimg17.jpg)

---

| |
|:---|
| 43 |
| *[**Table of Contents**](#Toc)* |

---

We sell most of our products to domestic distributors in China, which then sell in China and internationally. For the year ended September 30, 2025, we sold approximately 96.31% of our products in China and 3.69% outside mainland China, including in the U.S., Japan, Canada, and other countries or regions. Prior to January 15, 2023, we also had sold our products online through our own e-commerce platforms, Farmmi Jicai (www.farmmi88.com) and Farmmi Liangpin Market (mobile application and mini program on WeChat). All of our online platforms were closed as of January 15, 2023 because of the costs and expenses associated with their operations.

Our typical agreements with the distributors which sell the products in China, such as Yunmihui, provide that payment is due upon receipt of a value-added tax invoice, and the customer should make the payment by bank's acceptance bill or wire transfer. Delivery is set at our factory, and the customer is responsible for the cost of transportation. Products are deemed to be accepted upon receipt unless the customer rejects the delivery. Our cooperation with other distributors which sell products in China is similar, except the delivery is set at the distributor's warehouse. For new clients, we may require full payment before we deliver the products to them.

We supply mushroom products indirectly to foreign customers such as supermarkets through Chinese distributors. Our typical agreements with these Chinese distributors provide that payment is due upon receipt of a value-added tax invoice and a copy of bill of lading, and the Chinese distributor should make the payment by wire transfer. Our products are required to meet the exportation requirements. Delivery is set at a warehouse designated by the Chinese distributor, and we are responsible for the cost of transportation from our warehouse to the warehouse designated by the Chinese distributor. Products are deemed to be accepted upon receipt unless the foreign customers raise objections.

Product quality is always our main focus. We have established a food quality traceability system to trace and correct any possible quality issues in any step. We have also established a sound quality management system and have obtained the BRC international food certification issued by Intertek Certification Ltd to certify we meet the BRC Global Standard for Food Safety, and Food Safety Management System Certificate issued by China Quality Certification Centre to certify we meet the GB/T 27341-2009/GB 14881-2013 standard.

As of the date of this report, we hold over 100 registered trademarks related to "Farmmi", "Farmmi Liangpin", "Forasen" and "Puyangtang" in different applicable trademark categories in China.

---

| |
|:---|
| 44 |
| *[**Table of Contents**](#Toc)* |

---

**<u>Our Industry</u>**

***Edible Fungi (Edible Mushroom)***

Edible fungi, or edible mushroom, is our major product category. Edible fungi are edible fruit bodies of several species of macrofungi. Edible fungi have high nutritional value. It generally has a high protein content, usually around 30 to 45% by dry weight. Almost all edible fungi contain eight kinds of amino acids essential to human nutrition. Protein contained in 1 kg of dried mushrooms is equivalent to protein in 2 kg of lean meat, 3 kg of eggs or 12 kg of milk. Edible fungi also contain a variety of vitamins and trace elements, polysaccharides, and other physiologically active substances, to promote human metabolism and enhance physical fitness. Besides the nutritional value, edible fungi also have medicinal values including wound-healing, immunity-enhancement, and tumor-retarding effects.

![fami_20fimg18.jpg](fami_20fimg18.jpg)

Mushroom Dish Models Presented at Qingyuan Mushroom Museum, Lishui City, Zhejiang Province, China

According to Expert Market Research, the global mushroom market reached USD 62.99 billion in 2023. The market is expected to grow at a CAGR of 8%, in the forecast period of 2024-2032, to reach a value of USD 100.31 billion by 2032.

Edible fungi were traditionally harvested wild and were difficult to domesticate and cultivate. Cultivation of edible mushroom species has grown rapidly in recent decades. Most mushrooms have been cultivated on various species of hardwood trees. The procedure was to cut down the natural logs in the fall (after leaf fall) and inoculate them with Shiitake spawn within 15 to 30 days after felling. One breakthrough for this cultivation was the utilization of synthetic logs instead of natural logs. Composed of sawdust and supplemented with millet and wheat bran, synthetic logs may produce three to four times as many mushrooms as natural logs in one-tenth of the time. Environmentally controlled houses allow for the manipulations of temperature, humidity, light, and the moisture content of the logs to produce the highest possible yields. The major advantages of producing mushroom on synthetic logs rather than natural ones are the consistent market supply through year-round production, increased yields, and decreased time required to complete a crop cycle. Most of the mushrooms we purchase are grown in this manner.

Most of the edible fungi produced by China is for domestic consumption. In 2020 , the export portion of edible fungi was only 1.61% of the annual production in China. Edible fungi, especially Shitake mushroom and Mu Er have become important food source for the Chinese. In 2021, the total export amount of dried edible fungi in China was the largest among all the edible fungi, totaling $1.29 billion, accounting for 45% of the total export edible fungi amount.

In general, the consumption volume of edible fungi in China is growing. From 2006 to 2020, the edible fungi consumed by China market increased from 14,140,000 metric tons (approximately 31 billion pounds) to 40,614,231 metric tons (approximately 89 billion pounds).

---

| |
|:---|
| 45 |
| *[**Table of Contents**](#Toc)* |

---

Figure 2006-2020 China Edible Fungus Market Consumption Volume and Growth Rate

![fami_20fimg19.jpg](fami_20fimg19.jpg)

Source: China Edible Fungus Association

The Belt and Road Initiative implemented by the Chinese government is expected to bring more opportunities to Chinese edible fungi industry. The Belt and Road Initiative is an initiative of jointly building the Silk Road Economic Belt and the 21st-Century Maritime Silk Road. Accelerating the building of the Belt and Road can help promote the economic prosperity of the countries along the Belt and Road and regional economic cooperation, strengthen exchanges and mutual learning between different civilizations, and promote world peace and development. It is a great undertaking that will benefit people around the world.

China Edible Fungi Association issued *The Cooperation Proposal of Edible Fungi Industry along "The Belt and Road" Countries* in April 2016. Countries along "the Belt and Road" all have a long tradition of consuming edible fungi. However, their planting technology has lagged behind and mainly focuses on Shuangbao mushroom and wild mushroom. With the Belt and Road Initiative, the edible fungi industry can be promoted, through strengthening communication, building new cooperation trend among the Belt and Road countries, and achieving the common development and prosperity.

***E-commerce for Agricultural Products***

E-commerce is the trading or facilitation of trading in products or services using computer networks, such as the Internet. There are different kinds of e-commerce business models: web portal model, online content provider, online retailer, online distributor, online market maker, online community provider and cloud application service provider. Our online sales operations make profits by selling products made by the manufacturers online.

---

| |
|:---|
| 46 |
| *[**Table of Contents**](#Toc)* |

---

Our e-commerce focuses on agricultural products. E-commerce of agricultural products is supported by Chinese policy. For example, on January 8, 2016, in the press conference of Guidance Opinion about Fusion Development of the Primary Industry, the Secondary Industry and the Service Industry by General Office of the State Council of the People's Republic of China, National Development and Reform Commission of China said China will develop modern "Internet+" agriculture and e-commerce for agricultural products.

**<u>Our Products</u>**

![fami_20fimg20.jpg](fami_20fimg20.jpg)

For the fiscal year ended September 30, 2025, our operations are mainly (i) processing, distributing, and trading dried Shiitake mushrooms, Mu Er (also known as Auricularia heimuer or black ear fungus), other edible fungi, and other agricultural products (e.g., tapioca, corn, cotton, and cornstarch), and (2) providing warehousing and logistics services.

***<u>Warehous</u>** **<u>ing</u>**  **<u>and Logistics Services</u>***

To implement our global expansion strategy and meet the growing customer demand, we launched our warehouse and logistics services business in the U.S. in the summer of 2024, with the aim to develop a food and agricultural product supply chain system. In July 2024, Farmmi USA opened our first warehouse and logistics services base in Chino, California, through the lease of warehouse spaces of 315,000 square feet from a large facility managed by established logistics companies. The facility provides special railway lines that offer sea-railway cargo transportation services. Our logistics services provided to our customers include cargo transfers and bonded warehouses. In March 2025, we further expanded our logistics service operations to the U.S. East Coast by opening a new warehouse located within an industrial park in Somerset, New Jersey. In August 2025, we leased additional warehouse spaces of approximately 183,000 square feet located in Robbinsville, New Jersey, bringing our total warehouse footprint in the U.S. to approximately 550,000 square feet. In January 2026, our U.S. subsidiary completes a Food Facility Registration with the U.S. Food and Drug Administration and has the capacity to support the storage and distribution of a wide range of foods and agricultural commodities.

Through strategic cooperations with other logistics services providers, we offer to our customers "one-piece delivery" services, including, among other things, overseas warehousing services, in-warehouse operations, final logistics services, and other related value-added services. Our U.S. subsidiaries utilize the "Warehouse Management System" ("WMS System") developed by a third-party vendor. Leveraging the online platform of the WMS system, we provide our customers with online order management, goods management, warehouse distribution and inventory management, intelligent stocking analysis, logistics order management, settlement management, report statistics, return management, logistics optimization, logistics distribution status management.

In addition to warehousing storage, shelving storage, and warehousing management services, we also offer certain delivery services. Through collaborations with third party service providers, we facilitate deliveries of goods to designated destinations and customer inspection and acceptance.

Our logistics services are in the early stages of development, and the revenue generated from this segment only accounted for 26.2% of our total revenue for the 2025 fiscal year, or approximately $7.3 million. We expect to continue expanding our service capacities to support growing customer demand and facilitate improvement of supply chain efficiency and cost controls for our customers.

---

| |
|:---|
| 47 |
| *[**Table of Contents**](#Toc)* |

---

***Shiitake***

The Shiitake (Xiang Gu in Chinese and Lentinula edodes in Latin) is a variety of mushroom that originated from Eastern Asia. Shiitake have many uses in the cuisines of East Asia. In Chinese cuisine, they are often sautéed in vegetarian dishes such as Buddha's Delight. In Japan, they are served in miso soup, used as the basis for a kind of vegetarian soup called dashi, and as an ingredient in many steamed and simmered dishes. As a potent immune-boosting mushroom, it has antitumor and antiviral properties and can potentially lower blood pressure and cholesterol if consumed regularly.

Divided by the growing season, there are four kinds of Shiitake: spring mushroom, summer mushroom, fall mushroom and winter mushroom. We focus on winter mushroom which has the best quality and taste. Depending on the species, our Shiitake products include different varieties such as floral mushroom and Jinqian ("money") mushroom. Depending on the shape, our Shiitake products include fungi in whole, Shiitake slices and Mu Er strings.

![fami_20fimg21.jpg](fami_20fimg21.jpg)

***Mu Er***

Mu Er (also known as auricularia heimuer or black ear fungus) is a variety of mushroom that is dark brown to black and native to Asia and some Pacific islands with humid climates. It is usually sold in dried form and needs to be soaked in water before use. It has little real flavor of its own and has slippery but slightly springy and crunchy texture. It is commonly found in "Hot and Sour Soup", and also widely used in stir-fried dishes. Mu Er has potential medicinal properties. For example, it is believed that it can help with health issues by benefiting the lungs, stomach and liver if consumed regularly.

---

| |
|:---|
| 48 |
| *[**Table of Contents**](#Toc)* |

---

Depending on the growing area, our Mu Er products include varieties from Zhejiang Mu Er and Northeastern Mu Er. Depending on the shape, our Mu Er products include Mu Er in whole and Mu Er strings. According to some clients' requirements, we also provide washed Mu Er which is cleaner than normal Mu Er products after we soak dried Mu Er in water to make it flat and remove the hidden impurities.

![fami_20fimg22.jpg](fami_20fimg22.jpg)

***Other edible fungi***

Based on the clients' needs and the supply, we also process and sell other edible fungi from time to time, such as bamboo fungi (Zhu Sun in Chinese), agrocybe aegerila (Cha Shu Gu in Chinese), pleurotus eryngii (Xin Bao Gu in Chinese), grifola frondosa (Hui Shu Hua in Chinese), coprinus comatus (Ji Tui Gu in Chinese), and hericium erinaceus (Hou Tou Gu in Chinese).

![fami_20fimg23.jpg](fami_20fimg23.jpg)

---

| |
|:---|
| 49 |
| *[**Table of Contents**](#Toc)* |

---

***Other agricultural products***

Historically, we had sold tea and other agricultural products through our online stores and e-commerce channels. The online sales platforms had helped diversify our product categories and expand our product sales. In June 2021, we started our bulk agricultural commodity trading business through our prior subsidiaries Zhejiang Farmmi Agricultural Supply Chain Co., Ltd and Zhejiang Farmmi Agricultural Science and Technology Group Co., Ltd, but now through Zhejiang Farmmi Ecological Agricultural Technology Co. Ltd..

![fami_20fimg24.jpg](fami_20fimg24.jpg)

For agricultural product trading business, we use our well-developed channels to purchase certain agricultural commodities from upstream third-party suppliers and then sell them directly to third-party customers. Our bulk product trading volumes are typically adjusted depending on the seasonality of agricultural products and market demand. Corn and cotton have accounted for a large percentage of our bulk commodity trading operations. We expect to make product and volume adjustments as needed in our agricultural commodity trading operations in response to customer demand and market condition.

**<u>Raw Materials and Suppliers</u>**

As a supplier of edible fungi products, we deal with raw materials which primarily include Shiitake mushrooms, Mu Er, and other bulk dried edible fungi. We typically enter into a standard form of agreements with our suppliers, including major suppliers and family farms, which set forth the terms and conditions of the transactions, subject to specific quantity and price terms to be set forth in subsequent purchase orders. The purchase agreements provide that we and the suppliers are independent parties. These companies and family farms supply dried edible fungi materials to us based on our purchase orders. We then further process the edible fungi.

JLT and QNMI are two supplier companies, both near Lishui City where our processing facilities are located. They are co-operatives representing family farms which grow and roughly process edible fungi. JLT and QNMI themselves do not have any facility and do not process any fungi. JLT and QNMI are established by the local family farms as wholesale agents. Such arrangements allow these family farms to better share resources such as procurement information and enjoy the advantage of scale.

---

| |
|:---|
| 50 |
| *[**Table of Contents**](#Toc)* |

---

The family farms supplying raw materials to us, through JLT/QNMI or directly, are responsible for growing, harvesting, dehydrating, roughly sorting and selecting edible fungi. They dehydrate the fungi until the desired moisture content is reached so fungi can be stored for a long time. They then sort the dried fungi roughly so that most of the fungi supplied to us fall within the size range required by us. The family farms also select the dried fungi to get rid of obvious impurities such as dirt.

Most of our family farm suppliers conduct their initial and rough sorting manually. Some family farms may use machines to conduct advanced sorting so the percentage of the dried fungi within the size range required by us is higher. We pay higher purchase prices to these family farms because they can save us time on initial sorting. In addition, while most of our raw materials are fungi in whole, if our clients need Shiitake slice products, we will purchase dried Shiitake slices to process at our own facilities. If our clients need Mu Er string products, we will use our own equipment to cut the dried whole Mu Er into strings.

After we receive the raw materials, we are responsible for further sorting to get the fungi in specific size range and further selecting to get rid of more impurities. For Shiitake, we also further dehydrate it to ensure the uniform level of dryness of our products. For Mu Er, we conduct additional procedures such as burning hair to increase the quality of the fungi products. We then package and sell the dried edible fungi products. For more details about our procession, please see "Our Processing Workflow of Shiitake" and "Our Processing Workflow of Mu Er" later in this section.

According to the purchase agreements, the suppliers accept the guidance of both the local governmental agencies and the technical organization regarding mushroom industry and produce mushrooms in compliance of the standardized specifications. The suppliers record the whole production process in accordance with the traceability requirements. The products provided by the suppliers should comply with the relevant quality standards and our requirements for the species and the specifications. During the term of the purchase agreements, we are entitled to examine the farms, conduct sampling inspections of the products, and require the suppliers to correct any problems at any time.

Most of our edible fungi sales are made through customers' pre-orders. After we receive a customer order, our procurement personnel communicate with the suppliers we have selected and place the purchases of the dried fungi at suppliers' sites. The raw materials are shipped to our factory which then processes them. Most of the time these suppliers can provide enough raw materials for us to fill our clients' orders. We also keep stock of raw materials from time to time before we receive orders to meet new clients' demand. For large orders, if our contracting suppliers are not able to provide enough raw materials, we may purchase additional raw materials from local farmer markets.

---

| |
|:---|
| 51 |
| *[**Table of Contents**](#Toc)* |

---

Previously, we purchased all raw materials directly from various family farms. In March 2016, some of the family farms we cooperated with established JLT and QNMI as co-operatives to represent local family farms. On April 1, 2016, we entered into a three-year framework purchase agreement with each of JLT and QNMI. The framework purchase agreements were renewed for another three years in April 2022 upon expiration. Since April 2016, we switched to JLT and QNMI for the majority of our purchases from individual family farms. Therefore, since the year ended September 30, 2016, JLT and QNMI, have been our major suppliers related edible fungi. For the years ended September 30, 2025, 2024, and 2023, JLT and QNMI contributed 34.6% and 33.2%, 23.8% and 22.3%, and 13.5% and 7.9%, respectively, of our edible fungi raw material supplies, respectively. The allocation of our total purchases vary from time to time between these two major suppliers depend upon the specific needs of our clients at certain point of time. JLT is located in Jingning County and QNMI is located in Qingyuan County. These two counties are famous for growing different kinds of edible fungi due to their unique geographic characteristics. As such, we order different types of mushrooms from these two companies. For instance, when we need flower Shiitake, we order it from JLT since Jingning County is famous for growing flower Shiitake. When we need Dengwai Shiitake, we order it from QNMI since Qingyuan County is famous for growing Dengwai Shiitake. Therefore, their respective supplies to us vary from time to time. As the quantity of different kinds of edible fungi ordered by our clients vary, the quantitative allocation of supplies among JLT, QNMI and other family farms changes.

In addition, we cooperate with a number of family farms which may provide dried edible fungi directly to us. We have a few employees who provide technology support to the family farms. These family farms are located in Zhejiang Province, Henan Province, Hubei Province, Jiangxi Province, Fujian Province and Jilin Province.

***Shiitake***

Among the family farms that we cooperate with, 5 are located in Qingyuan County, Lishui, Zhejiang Province. One of our major suppliers, QNMI, is located in Qingyuan County. We have also set up a branch in Qingyuan to have a closer access to the raw materials. Qingyuan is the birthplace of artificial cultivation of Shiitake dating back to about 1,000 years ago. The county of Qingyuan is located in a warm monsoon climate which is considered ideal for the cultivation of Shiitake. The county was officially named by Chinese Government as "The Town of Lentinula Mushroom in China" in 1994. Qingyuan Shiitake is a China national recognized "protected geographical indication product". A geographical indication product is a product named by the geographical location because of its premium quality and unique production location. The value of the public brand "Qingyuan Lentinula Mushroom" was estimated as RMB 4.926 billion (approximately $0.77 billion) in 2022. The brand was the No. 1 public brand in edible fungi category in China for eight years in a row.

In accordance with our clients' needs, we also purchase Shiitake from other areas in China because different areas cultivate different kinds and sizes of Shiitake.

***Mu Er***

We mainly purchase and process our Mu Er from Longquan County, Lishui, Zhejiang Province. Longquan has over 1,800 years of history of cultivation of Mu Er. Longquan was awarded as "The Hometown of Mu Er in China" by China Edible Fungi Association in 2010. Longquan Mu Er usually grows from October to May.

---

| |
|:---|
| 52 |
| *[**Table of Contents**](#Toc)* |

---

In accordance with our clients' needs, we also purchase and process Mu Er from Northeastern China. Mu Er from Northeastern China is famous for its premium quality. Northeastern Mu Er usually grows from July to November.

![fami_20fimg25.jpg](fami_20fimg25.jpg)

***Examination of Family Farms***

We use the following checklist to examine the family farms before we sign the purchase agreements with them:

---

| | | |
|:---|:---|:---|
| 1.  | Basic condition: | Basic condition: |
|  | a. | location |
|  | b. | equipment on site |
|  | c. | marks on site |

---

---

| |
|:---|
| 53 |
| *[**Table of Contents**](#Toc)* |

---

---

| | | |
|:---|:---|:---|
| 2.  | Cultivation management: | Cultivation management: |
|  | a.  | How many varieties are cultivated and how big production volume is (at least 10 acres or 100,000 artificial logs) |
|  | b. | How good equipment are, including ventilating equipment and watering equipment |
|  | c. | How well management standards are enforced |

---

---

| | | |
|:---|:---|:---|
| 3.  | Cultivation environment: | Cultivation environment: |
|  | a. | Contamination situation of the farm and the neighboring environment |
|  | b. | Water source |
|  | c. | If cultivation dent is provided |

---

---

| | | |
|:---|:---|:---|
| 4.  | Harvest condition: | Harvest condition: |
|  | a. | Space and sanitary conditions |
|  | b. | Whether or not harvested fungi are processed briefly before storage |

---

---

| | | |
|:---|:---|:---|
| 5. | Storage condition: | Storage condition: |
|  | a. | Whether or not there are enough storage room and/or freezer can be facilitated |

---

---

| | | |
|:---|:---|:---|
| 6. | Cultivation record: | Cultivation record: |
|  | a. | How well farms keep track of the cultivation process |

---

Our supplier farms are responsible for complying with legal requirements and our quality standards. First of all, they need to produce edible fungi in compliance of PRC law about food safety. Our purchase agreements with family farms also provide that the family farms shall accept the guidance of local governmental agencies of the industry and the technical organization and shall produce the products in compliance of the standardized specifications. Second, the family farms should record the whole production process according to the traceability requirements. The products provided by the family farms should comply with the relevant quality standards and our requirements for the species and the specifications. We have the right to exam the farms, conduct the sampling inspection, and require the suppliers to correct the problems.

In order to enter into the trading of agricultural products in bulk, the Company signed a framework agreement on agricultural products purchase and sales cooperation with Ningbo Caixiang Trading Co., Ltd on May 25, 2021. Ningbo Caixiang Trading Co., Ltd is located in Ningbo City, a port city, and is the gathering and distributing place of agriculture products in bulks in the Yangtze River (Chang Jiang) Delta region, with rich resources of agricultural products. The contract with Ningbo Caixiang Trading Co., Ltd expired in May 2022, and the two parties renewed the agricultural product supply agreement in May 2022, with a validity of 3 years. The agreement agreed that Ningbo Caixiang should provide the Company with agricultural products of no less than RMB 200 million yuan (including but not limited to cotton, corn, etc.) and pay part of the payment in advance to lock up the goods.

On April 1, 2020, the Company signed a framework cooperation agreement with Lishui Zhelin Trade Co., Ltd ("Zhelin Trade"), which is valid for 4 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.

Due to the increase of edible fungus business and preventing untimely supply of goods arising from natural disasters, the Company signed a cooperation agreement with Suizhou Huayu Ecological Agriculture Co., Ltd on August 1, 2022. Suizhou Huayu is located in Suizhou City, Hubei Province. Suizhou City is the main production area of edible fungi in central China. The cultivation of edible fungi in this area is mainly family farms and cooperatives. Advance payment is required to ensure supply, The timely and stable supply of goods and the quality of goods can be guaranteed by paying the suppliers in advance.

Many competitors of the Company and other large buyers go there 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. Allowance for credit losses of $10.1 million and nil was made for certain advances to suppliers as of September 30, 2025 and 2024.

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 and 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.

---

| |
|:---|
| 54 |
| *[**Table of Contents**](#Toc)* |

---

**Dried Edible Fungi Production Process**

The process of producing dried edible fungi products consists of the following steps, which we and/or our suppliers perform, as indicated:

1. Family Farms Plant and Harvest Edible Fungi

Family farms plant edible fungi based on our standards and harvest them.

2. Family Farms Process Edible Fungi Roughly

Family farms then dehydrate the edible fungi until the desired moisture content is reached. They then sort the dried fungi roughly to have most of the fungi fall within the size range required by us. The family farms also select the dried fungi to get rid of obvious impurities such as dirt. Some family farms may use machines to conduct advanced sorting to provide higher percentage of dried edible fungi within the size ranges required by us. In addition, if our clients need Shiitake slice products, we will purchase dried Shiitake slices and process them. If our clients need Mu Er string products, we will use our own equipment to cut the dried whole Mu Er into strings.

3. Our Company Further Processes the Dried Edible Fungi

After the dehydration process is completed, our supplier farms supply the dried edible fungi to us directly or through supplier companies (currently only JLT and QNMI) for processing. After we receive the raw materials, we are responsible for further sorting to get the fungi in specific size range and further selecting to get rid of more impurities. For Shiitake, we also further dehydrate it to ensure the uniform level of dryness of our products. For Mu Er, we conduct additional procedure such as burning hair to get the products with higher quality. We then package, sell and market the dried edible fungi products.

---

| |
|:---|
| 55 |
| *[**Table of Contents**](#Toc)* |

---

**Our Processing Workflow of Shiitake**

We develop and manufacture our Shiitake products using the following workflow:

![fami_20fimg26.jpg](fami_20fimg26.jpg)

---

| |
|:---|
| 56 |
| *[**Table of Contents**](#Toc)* |

---

**Our Processing Workflow of Mu Er**

We develop and manufacture our Mu Er products using the following workflow:

![fami_20fimg27.jpg](fami_20fimg27.jpg)

---

| |
|:---|
| 57 |
| *[**Table of Contents**](#Toc)* |

---

**<u>Seasonality</u>**

Prior to the divestiture transaction in September 2022, most of the sales of FLS Mushroom were made to China Forest. Sales increased from July to September because the client places significantly more orders with FLS Mushroom during this period. From December to January or February, there is usually a peak because people spend more on food including edible fungi to prepare for Chinese New Year celebrations. From February to March, the sales of FLS Mushroom typically decreased because of the conclusion of Chinese New Year holiday.

*Some of the company's products are* small packages of dried edible fungi. The sales peak is from December to January, as customers spend more on food including edible fungi to prepare for the New Year holidays.

**<u>Our Quality Control</u>**

Quality control is an important aspect of our work and ensuring quality at every stage of the process has been a key driver in maintaining and developing brand value for the Company.

***Quality Standards***

We apply the following national standards to our following products:

---

| | | | |
|:---|:---|:---|:---|
| **Product**<br>**Category** | **Standard** | **Issuance Agency** | **Issuance**<br>**Date** |
| Shiitake | GH/T 1013-2015 | All-China Federation of Supply and Marketing Cooperatives | March 27, 2015 |
| Mu Er | GB/T 6192-2008 | General Administration of Quality Supervision, | August 7, 2008 |
|  |  | Inspection and Quarantine of the People's |  |
|  |  | Republic of China and Standardization |  |
|  |  | Administration of the People's Republic of |  |
|  |  | China |  |
| Other edible fungi | GB 7096-2014 | National Health and Family Planning | December 24, 2014 |
|  |  | Commission of the People's Republic of China |  |
| Corn | GB 1353-2018 | State Administration for Market Regulation and | July 13, 2018 |
|  |  | National Standardization Administration of the |  |
|  |  | People's Republic of China |  |
| Cotton | GB1103.1-2012 | Standardization Administration of The People's Republic of China | November 21, 2012 |
|  | GB1103.2-2012 | Standardization Administration of The People's Republic of China | November 21, 2012 |

---

Before we purchase dried edible fungi from companies and family farms, our experienced procurement managers examine the physical characters of the samples. After the initial examination, they bring back the samples to our own laboratory and third-party inspection agents perform sophistic examinations.

---

| |
|:---|
| 58 |
| *[**Table of Contents**](#Toc)* |

---

***Quality Control Over Family Farms***

We apply quality control and examine all family farms before we sign purchase agreements with them. The purchase agreements also provide quality requirements to the family farms. See "Item 4. Information on the Company - B. Business Overview - Raw Materials and Suppliers - Examination of Family Farms."

***Quality Control in Processing Factory***

We have a selecting workshop and a packing workshop. The packing workshop is further divided into an internal packing area and a box packing area to avoid possible contamination.

The workers in the workshops are required to wear uniforms, masks, over sleeves, inner caps and outer hats.

The picking process of the edible fungi repeats twice to three times. For each time, the workers need to examine the whole fungi, identify and dispose of foreign matters such as leaves, fibers, hair and so on.

For Mu Er, we use additional process of burning mushroom filaments to refine the quality. After the workers finish the check and examination of the Mu Er on the conveyor belt, when it is falling to the oscillating screen, a fire device in front projects fire so the impurities which are hard to remove by hand such as mushroom filaments can be burned. In accordance with some clients' requirements, we also soak dried Mu Er in water to make it flat and remove the hidden impurities.

***Quality Control Group***

We have a quality control group. At different stage, we have different employees in the quality control group to conduct quality control.

![fami_20fimg28.jpg](fami_20fimg28.jpg)

---

| |
|:---|
| 59 |
| *[**Table of Contents**](#Toc)* |

---

***Traceability System***

We have established and used a traceability system since 2006 for our products of edible fungi.

First, we use mark cards to designate the vendors which provided the materials. The vendors include the raw materials suppliers such as third-party family farms, JLT and QNMI which represent local family farms, and the suppliers which provide supplementary materials such as package boxes, package bags, plastic trays, air bubble films, and desiccants.

The mark cards state the name of the materials, production lot number or production date, quantity, production location, warehouse receipt date and so on. With the mark cards, we are able to trace the materials to the specific vendors.

Second, we classify the status of the products as "to be inspected," "qualified," and "disqualified." For each status, we use different marks and put the products at designated areas.

Third, each of the following departments keep track of the records of the products, client names, quantity, weight and lot numbers: sales department, production department, packaging department, procurement department, and quality inspection department. With the records, we are able to trace the products to the specific clients. If any client submits claims for any product quality issues, the quality control department will check the problematic procedure, and trace the production records according to the product name, lot number, packing slip and so on to find the responsible department and personnel.

**<u>Distribution Channels</u>**

We distribute our products mainly through distributors. We sell most of our products to domestic distributors in China, which then sell in China and internationally.

Most of our products are sold in mainland China. The chart below is a breakdown of total revenues by geographic market for the years ended September 2025, 2024, and 2023, respectively.

---

| | | | |
|:---|:---|:---|:---|
|  | **For the years ended September 30,** | **For the years ended September 30,** | **For the years ended September 30,** |
|  | **2025** | **2024** | **2023** |
| International Markets | 3.7% | 1.3% | 0.6% |
| Domestic Markets | 96.3% | 98.7% | 99.4% |
| Total | 100.0% | 100.0% | 100.0% |

---

***International Markets and Customers***

The majority of our export items are dried Shiitake and dried Mu Er. They are sold to international markets through a related party, Forasen Group (until March 2018), and unaffiliated trading companies in China. Currently we export dried edible fungi including dried Shiitake and dried Mu Er. In the fiscal year 2025, all of our export revenues are from Japan, the Middle East and Canada (including approximately 38.48% from the Middle East, 18.96% from the U.S., 10.12% from Japan, 16.48% from Canada, and 15.96% from Europe).

---

| |
|:---|
| 60 |
| *[**Table of Contents**](#Toc)* |

---

The following is a list of selected international customers, their respective nations, the distributors and the brands.

---

| | | |
|:---|:---|:---|
| **Country/Area** | **Customer** | **Brand** |
| **Japan** | Maruhan Co., Ltd | OEM |
| **Korea** | H-MART Group | OEM |
| **United States** | Rhee Bros., Inc. | OEM |
| **Canada** | Loblaws Supermarkets | OEM |
| **Europe (England and the Netherlands)** | Processing manufacturers, supermarkets and restaurants | OEM |
| **Middle East** | Processing manufacturers, supermarkets and restaurants | OEM  |

---

A few examples of our OEM products are below:

![fami_20fimg29.jpg](fami_20fimg29.jpg)

Through domestic trading companies, we have supplied our products to Rhee Bros. Inc. for twenty years to support them in their sales of edible fungi products, primarily to Asian supermarkets in the United States.

Through domestic trading companies, we have supplied products to Loblaws supermarkets for nineteen years.

Our cooperation with Maruhan began fifteen years ago. Maruhan's wholesale offerings to supermarkets in Japan carry strict product quality and safety requirements, and we are pleased to continually satisfy their expectations.

Since the beginning of 2018, we have signed multiple sales contracts with Qingdao Gabsan Trading Co., Ltd, a Chinese trading company affiliated with H-MART Group, a supermarket chain which operates Korean supermarkets in the U.S., Canada, Europe and India.

We plan to continue increasing our export sales and develop more export customers. We intend to further investing our resources in promoting overseas market, including attending more export fairs and developing cross-border e-commerce.

***Domestic Markets and Customers***

Six categories of our products are mostly sold in China. Our domestic sales used to depend heavily on our major clients, Yunmihui contributed 68.1% and 55% of our total sales for the year ended September 30, 2025 and 2024, respectively. Yunmihui and Hongren International contributed to 40.5% and 11.7% of our total sales for the year ended September 30, 2023, respectively.

Our typical agreements with the distributors which sell the products in China, such as Yunmihui, provide that payment is due upon receipt of a value-added tax invoice, and the customer should make the payment by bank's acceptance bill or wire transfer. Our products are required to meet national requirements for agricultural products for the products involved. Delivery is set at our factory, and the customer is responsible for the cost of transportation. Products are deemed to be accepted upon receipt unless the customer rejects the delivery. The price and quantity of products are agreed upon at the time an individual sales contract is signed. Our cooperation with other distributors which sell products in China is similar.

We also sell our mushroom products to restaurants and cafeterias. In addition, we provide our mushroom products to local specialty stores from time to time, such as Lishui Department Store and Zhejiang Liujianyuan Local Specialty Store. Since August 2019, we began testing a few brick-and-mortar stores using our Farmmi Baba brand in Hangzhou. In August 2019, we have also launched the Farmmi Baba Yipinlv Organic Farm Project with a third party. The farm covers more than 18 acres and is located in Tongxiang City of Zhejiang Province. The farm focuses on enabling domestic and foreign consumers to better experience and enjoy high quality agricultural products. In addition to consumption, the farm will serve as a base for the popular immersive entertainment experience called "Agritainment" or farm-based tourism.

---

| |
|:---|
| 61 |
| *[**Table of Contents**](#Toc)* |

---

**<u>Methods of Competition and Competitive Position</u>**

***Competitive Advantages***

**1. Sophisticated quality control system.** Product quality is always our major focus. We enforce a series of quality standards for our edible fungi products, adopt sound quality control system and have been awarded various quality certificates. In addition, our workers must follow specific quality control procedures in the factories. In addition, our traceability system allows us to trace and correct any quality issues. See "Item 4. Information on the Company - B. Business Overview - Our Quality Control".

To ensure the highest quality, we have implemented systems designed to subject us to stringent oversight of our production practices and quality control systems:

2006: ISO22000 food safety management system certification.

2010: BRC British Retail Consortium certification for food safety.

2010: Implementation of Health Standards Operational Procedures.

2012: Implementation of dry mushrooms and dry black fungi hazard analysis and critical control points ("HACCP") plan.

2012: Implementation of food safety manual and food protection plan to reduce or eliminate food safety hazards, to prevent harm to public health, and to ensure the health of consumers.

**2. Established supplier relationships.** We have strong relationships with our significant suppliers to ensure access to relatively high-quality dried edible fungi. We have built long time and stable relationship with the family farms that we cooperate with. Our employees provide technological support to the family farms in need. Our procurement price is usually higher than the market price. Some of the family farms have cooperated with us for more than 10 years. They provide steady supply of raw materials to us.

**3. Stable and experienced factory employees.** Our founders started to conduct edible fungi business twenty years ago, and they have attracted many loyal employees. Among our current less than 80 factory workers, there are over 20 employees who have followed Ms. Zhang and Mr. Wang for over 10 years. They are great assets to us by being loyal to the company and possessing rich experience in the factory.

**4. Favorable location.** Lishui is an important mushroom resource base, giving our company access to an abundance of high quality, affordable raw materials. We purchase many of our Shiitake from Qingyuan of Lishui, a certified place of origin of Shiitake and most of our Mu Er from Longquan of Lishui, the town of Mu Er in China.

***Competitive Disadvantages***

1. **Low barrier to entry.** We believe the barrier to entry in our industry is relatively low. Although we believe we distinguish our company from competitors on the basis of quality, to the extent our customer base focuses heavily on price, many of our competitors can provide products at relatively low prices, affecting our profit margins as we seek to compete with them.

2. **Lack of experience in E-commerce.** We had previously devoted substantial resources to our decision to build, develop and reconstruct our online stores. Since then, we have closed all online stores due to unsuccessful operation. We do not have the experience required for scaled e-commerce operations. As a result, our product sales have primarily relied on traditional sales channels which may limit our growth and prospects.

---

| |
|:---|
| 62 |
| *[**Table of Contents**](#Toc)* |

---

***Competitive Position***

Mushroom cultivation in the Lishui area of China has a history going back 1,800 years, and the region is famous throughout China for producing some of the finest quality, best flavored mushrooms available. Our region is known as the "Hometown of Mushrooms in China" and the "Hometown of Mu Er in China." Since 2005, our region has also held China's Qingyuan Mushroom Festival, and Lishui has established a mushroom museum to introduce the long history of mushroom planting and mushroom eating in China. Therefore, it is not surprising that some of our biggest competitors are also in the Lishui area.

One of our key competitors is Zhejiang Jingning Nature Food Co. Ltd ("Jingning"), also in Lishui. Founded in 1987, Jingning has a facility in Lishui that covers approximately 18,000 square meters and fixed assets worth more than RMB 1 billion. Jingning's products have been awarded for quality and technology, and its brand has been recognized as a "Famous Brand of Lishui".

Another competitor is Zhejiang Tianhe Food Co., Ltd ("Tianhe"), which is also based in Lishui. Founded in 1979, Tianhe operates four facilities in Zhejiang for processing and packaging fresh and dried products, as well as a retail site in Shanghai. Tianhe offers a variety of specialty products, including in particular, fresh mushroom products. Tianhe's operations include 9 acres of land, 16,000 square meters of production facilities and 4,000 square meters of refrigeration facilities.

**<u>Awards and Recognition</u>**

***2010***

Famous Trademark in Zhejiang Province (Forest)

***2010 - 2011***

Model Enterprise of Food Safety in Liandu Area, Lishui City, Zhejiang Province

***2012***

Zhejiang Exportation and Importation Enterprise of Quality and Integrity

***2012 - 2013***

Model Enterprise of Food Safety in Liandu Area, Lishui City, Zhejiang Province

***2013***

Famous Brand Products in Zhejiang (Forest Shiitake and Mu Er)

***2016***

2016 Famous Brand Products in Zhejiang (Forasen)

2016 Famous Brand Products in Lishui

***2017***

Healthy Products with Premium Quality in China's Longevity Village (authorized to use "Longevity" mark for three years)

Listed Brand selected by China Edible Fungi Business Website and *Edible Fungi Market*

---

| |
|:---|
| 63 |
| *[**Table of Contents**](#Toc)* |

---

***2019***

Yangtze River Delta Famous Food Honor

Top Ten Excellent Enterprise by Zhejiang Edible Fungi Association

***2020***

China Mushroom Industry Development Boom Observation Unit by China Edible Fungi Association

Eco-premium agricultural products by Lishui government (Black Fungus and dried mushrooms).

**2021**

The first batch of assured consumer company in Liandu District

Key agricultural leading enterprises in Liandu District, Lishui City

Zhejiang Farmmi Biotechnology Co., Ltd and Zhejiang Farmmi Food Co., Ltd subsidiaries awarded title of Sunshine Factory

**2022**

Joined the National Restaurant Association.

The tenth batch of city-level key agricultural leading enterprises of Lishui, Zhejiang Province

**<u>Business Development Efforts</u>**

We believe technological innovations will help our Company achieve its long-term strategic objectives.

Our business development employees provide technology support to the family farms in need and improve the technology used in our production.

In July 2019, we appointed Eitan Neubauer as a senior technology consultant. Mr. Neubauer serves as the CEO of the Israel-based Neubauer Agro-Business & Projects Company. He previously held the position of Counselor of Agriculture, Science and International Cooperation of the Israeli Embassy in China and has considerable experience in trade management and agricultural technology.

Our major business development projects include the following:

1. internet technology development;

2. internet product development; and

3. processing technology and product development of edible fungi.

**<u>Intellectual Property</u>**

We rely on trademarks and service marks to protect our intellectual property and branding. As of the date of this report, we hold over 57 registered trademarks about or related to "Farmmi", "Farmmi Liangpin", "Forasen" and "Puyangtang" in different applicable trademark categories in China. We also own three domain names: farmmi.com, farmmi.com.cn and farmmi88.com. These websites are not part of this report.

**<u>Marketing Channels</u>**

We mainly market our products by attending trade fairs, such as The China Import and Export Fair, Anuga (originally short for Allgemeine Nahrungs und Genussmittel-Ausstellung, a leading international food fair) and FOODEX JAPAN.

---

| |
|:---|
| 64 |
| *[**Table of Contents**](#Toc)* |

---

**<u>Capital Expenditures and Divestitures</u>**

We had capital expenditures of approximately $16,667, $29,450, and $314 for the years ended September 30, 2025, 2024, and 2023, respectively.

We do not have any principal capital expenditures since the beginning of the last three fiscal years to the date of this report or any principal capital expenditures in progress.

On September 18, 2024, Farmmi International Limited ("Farmmi International"), a wholly owned subsidiary of the Company, entered into a share transfer agreement with Lishui Jiuanju Trading Co., Ltd ("Jiuanju"), an unrelated third party. Under the agreement, Farmmi International sold 100% of the equity of its wholly owned subsidiary, Farmmi (Hangzhou) Ecology Agriculture Development Co., Ltd ("Farmmi Ecology"), to the buyer for RMB 12,000 (approximately $1,700). The sale of Farmmi Ecology was to reduce operational costs associated with maintaining Farmmi Ecology. Prior to the entry into the agreement, Farmmi Ecology's 5% equity interest in Zhejiang Yitang Medical Service Co., Ltd, a wholly owned subsidiary of the Company, had been transferred to Farmmi (Hangzhou) Health Development Co., Ltd, a subsidiary of the Company. The purchase price paid by the buyer to Farmmi International was determined based on the fair value of Farmmi Ecology.

On September 23, 2024, Farmmi International entered into a share transfer agreement with Jiuanju, pursuant to which Farmmi International sold 100% of the equity of its wholly owned subsidiary, Lishui Farmmi Technology Co., Ltd ("Farmmi Technology"), to the buyer for RMB 620,000 (approximately $88,070). The sale of Farmmi Technology was to reduce operational costs. Prior to the entry into the agreement, Farmmi Technology's 50% equity interest in Zhejiang Farmmi Ecological Agricultural Technology Co., Ltd, a wholly owned subsidiary of the Company, had been transferred to Farmmi (Hangzhou) Enterprise Management Co., Ltd, a subsidiary of the Company. The purchase price paid by the buyer to Farmmi International was determined based on the fair value of Farmmi Technology.

**<u>Governmental Support</u>**

Our local government has been supporting our development in different ways, including providing subsidies. The following chart is a summary of selected projects.

---

| | | | |
|:---|:---|:---|:---|
| <br>**Year** | <br>**Governmental Agency** | <br>**Project** | **Subsidy**<br>**Amount**<br>**(RMB)** |
| 2023 | Xiaoshan District, Hangzhou City | Fund raised in capital market | 10151164 |
| 2024 | Liandu District, Lishui City | Job stabilization subsidy, provincial subsidies for leading enterprises, funds to encourage exports | 65067 |
| 2025 | Lian District, Lishui City | Exhibition subsidy | 9345 |

---

---

| |
|:---|
| 65 |
| *[**Table of Contents**](#Toc)* |

---

**<u>Community Involvement</u>**

Since our founding, we have been highly committed to community involvement, both through charitable endeavors and industry development. We believe the best approach to corporate social responsibility is through embedding elements of social responsibility in our business model. Our achievements and initiatives in the area of corporate social responsibility include the following:

***Charitable Endeavors***

We support and promote a number of charitable and socially responsible initiatives and programs in ways that we believe are in alignment with our core values and our mission. For example, on November 20, 2015, Forest Food donated RMB 100,000 to help the people affected by the landslides in Lidong Village, Yaxi Town, Lishui City.

***Industry Development***

By attending local and national industry associations, we take the responsibility of helping develop our industry. Below list shows some of our involvement with industry associations:

---

| | | |
|:---|:---|:---|
| **Association** | **Position** | **Activities** |
| China Edible Fungi Industry Association | Member Entity | Attend various industry meetings such as the Sixth |
|  |  | Member Representative General Meeting on October |
|  |  | 28, 2015; share and communicate industry information, |
|  |  | such as the M&A opportunities and operation of edible |
|  |  | fungi industry. |
| Zhejiang Province Edible Fungi Industry | Vice Chair Entity | Attend meetings such as Zhejiang Edible Fungi Meeting |
| Association |  | and Zhejiang Edible Fungi Production and Sale |
|  |  | Flourishing Meeting. |
| Zhejiang Province Lishui City Food Industry | Chair Entity | Organize events such as Lishui Food Industry Seminar |
| Association |  | and Lishui Food Fair. |
| Zhejiang Province Modern Agricultural Association of | Member Entity | Attend meetings such as Industry Leader Meeting |

---

**REGULATIONS**

We are subject to a variety of PRC and foreign laws, rules and regulations across a number of aspects of our business. This section summarizes the principal PRC laws, rules and regulations relevant to our business and operations. Areas in which we are subject to laws, rules and regulations outside of the PRC include intellectual property, competition, taxation, anti-money laundering and anti-corruption.

**<u>Regulation on Foreign Investments</u>**

Investment activities in the PRC by foreign investors are principally governed by the Catalogue of Encouraged Industries for Foreign Investment (2025 Edition) (released on December 15, 2025, effective from February 1, 2026), the Special Administrative Measures for Foreign Investment Access (Negative List) (2024 Edition) promulgated by the National Development and Reform Commission and the Ministry of Commerce under Order No. 23 on September 6, 2024, and effective from November 1, 2024, and the Foreign Investment Law of the People's Republic of China, which took effect on January 1, 2020, and its respective implementation rules and ancillary regulations. The Catalogue of Encouraged Industries and the Negative List lay out the basic framework for foreign investments in China, classifying businesses into three categories with regard to foreign investments: "encouraged", "restricted" and "prohibited". Industries not listed in the Industry Guidelines or the Negative List are generally deemed as falling into a fourth category "permitted" unless specifically restricted by other PRC laws. The Negative List specifies that Investment in Internet news service, Internet publishing service, Internet audio-visual program service, cyber culture operation (except for music) and Internet information dissemination service (except for contents opened up in China's WTO commitments) shall be prohibited.

According to the Foreign Investment Law, foreign investments shall enjoy pre-entry national treatment, except for those foreign-invested entities that operate in industries deemed to be either "restricted" or "prohibited" in the "negative list." While foreign investors shall refrain from investing in any of the foreign "prohibited" industries, foreign-invested entities operating in foreign "restricted" industries shall require market entry clearance and other approvals from relevant PRC governmental authorities. Furthermore, the Foreign Investment Law provides that foreign-invested enterprises that have been established before the implementation of the Foreign Investment Law according to the then existing laws regulating foreign investments may maintain their structure and corporate governance within five years after the implementation of the Foreign Investment Law.

---

| |
|:---|
| 66 |
| *[**Table of Contents**](#Toc)* |

---

On December 19, 2020, MOFCOM and NDRC released the Measures for the Security Review of Foreign Investments, which took effect on January 18, 2021. In July 2025, the National Development and Reform Commission and the Ministry of Commerce released the "Measures for Foreign Investment Security Review (Revised Draft for Public Comments)" to solicit public feedback. For foreign investments within the following scope, foreign investors or the relevant parties in China (hereinafter referred to collectively as the "parties concerned") shall take the initiative to declare to the office of the working mechanism prior to implementation of the investments:…(II) investments in important agricultural products, important energy and resources, important equipment manufacturing, important infrastructure, important transport services, important cultural products and services, important information technology and Internet products and services, important financial services, key technologies and other important fields relating to national security, and obtaining the actual controlling stake in the investee enterprise. Prior to a decision made by the office of the working mechanism, the parties concerned shall not make the investment. The parties concerned shall not make the investment unless the office of the working mechanism decides that security review is not required. Where the declared foreign investment affects national security, a decision on prohibiting the investment shall be made. Foreign-invested entities of the group have businesses that conduct Internet services but not related to national security within the scope of the regulations above.

On December 26, 2019, the State Council promulgated the Regulation for Implementing the Foreign Investment Law of the People's Republic of China, which took effect on January 1, 2020. The implementation regulations further clarified that the State encourages and promotes foreign investments, protects the lawful rights and interests of foreign investors, regulates foreign investment administration, continues to optimize foreign investment environment, and advances a higher-level opening.

On December 30, 2019, MOFCOM and SAMR jointly promulgated the Measures for the Reporting of Foreign Investment Information, which became effective on January 1, 2020. Pursuant to the Measures for the Reporting of Foreign Investment Information, where a foreign investor carries out investment activities in China directly or indirectly, the foreign investor or the foreign-invested enterprise shall submit the investment information to the competent commerce department.

**<u>Regulations Related to M&A and Overseas Listings</u>**

On August 8, 2006, six PRC regulatory agencies, including the Ministry of Commerce, the State-owned Assets Supervision and Administration Commission, the SAT, the SAIC, the China Securities Regulatory Commission, or CSRC, and the SAFE, jointly issued the *Provisions on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors*, or the M&A Rules, which became effective on September 8, 2006 and was amended on June 22, 2009. The M&A Rules, among other things, require that (i) PRC subsidiaries or individuals obtain MOFCOM approval before they establish or control a special purpose vehicle, or SPV, overseas, provided that they intend to use the SPV to acquire their equity interests in a PRC company at the consideration of newly issued share of the SPV, or Share Swap, and list their equity interests in the PRC company overseas by listing the SPV in an overseas market; (ii) the SPV obtains MOFCOM's approval before it acquires the equity interests held by the PRC subsidiaries or PRC individual in the PRC company by Share Swap; and (iii) the SPV obtains CSRC approval before it lists overseas.

On February 17, 2023, the CSRC issued the Trial Measures and five application guidelines, or the Overseas Listing Rules, which became effective on March 31, 2023. According to the Trial Measures for the Administration of the Offshore Offering and Listing of Securities by Domestic Enterprises, among other things, after making initial applications with overseas stock markets for offerings or listings, all China-based companies shall file with the CSRC within three business days. Subsequent securities offerings of an issuer in the same overseas market where it has previously offered and listed securities shall be filed with the CSRC within three business days after the offering is completed. Subsequent securities offerings and listings of an issuer in other overseas markets than where it has offered and listed shall be filed with the CSRC within three business days after the applications are made. In addition, overseas offerings and listings are prohibited for such China-based companies when any of the following applies: (a) where such securities offering and listing is explicitly prohibited by provisions in PRC laws, administrative regulations and relevant state rules; (b) where the intended securities offering and listing may endanger national security as reviewed and determined by competent authorities under the State Council in accordance with law; (c) where the domestic company intending to make the securities offering and listing, or its controlling shareholders and the actual controller, have committed crimes such as corruption, bribery, embezzlement, misappropriation of property or undermining the order of the socialist market economy during the latest three years; (d) where the domestic company intending to make the securities offering and listing is suspected of committing crimes or major violations of laws and regulations, and is under investigation according to law, and no conclusion has yet been made thereof; (e) where there are material ownership disputes over equity held by the domestic company's controlling shareholder or by other shareholders that are controlled by the controlling shareholder and/or actual controller. The Overseas Listing Rules further stipulate that a fine between RMB 1 million and RMB 10 million may be imposed if a company fails to fulfill the filing requirements with the CSRC or conducts an overseas offering or listing in violation of the Overseas Listing Rules. According to the Notice by the China Securities Regulatory Commission of Launching the Information System for the Filing-Based Administration of the Overseas Offering and Listing of Domestic Enterprises published by the CSRC on February 17, 2023, existing listed companies are not required to make any filings until they conduct a new offering or financing transaction in the future. A company is regarded as an existing listed company if it (a) has already completed overseas listing or offering, or (b) has already obtained the approval for the offering or listing from overseas securities regulatory authorities or stock exchanges but has not completed such offering or listing before the effective date of the Overseas Listing Rules and also completes the offering or listing before September 30, 2023. On the effective date of the Overseas Listing Rules, PRC companies that have already submitted offering and listing applications but have not yet obtained the approvals from overseas securities regulators or exchanges shall make filings with the CSRC at a reasonable time before the completion of the offerings or listings. For those that have already obtained CSRC's approvals for overseas listings or offerings may continue their process without additional filings but shall make the filing pursuant to the Overseas Listing Rules if they cannot complete the offering or listing before the expiration of the original approval from CSRC.

**<u>Regulations on Anti-Monopoly and Competition</u>**

On April 25, 2024, the State Council Anti-Monopoly and Anti-Unfair Competition Committee issued the Antitrust Compliance Guidelines for Business Operators, which requires business operators to establish anti-monopoly compliance management systems under the PRC Anti-Monopoly Law to manage anti-monopoly compliance risks.

---

| |
|:---|
| 67 |
| *[**Table of Contents**](#Toc)* |

---

On May 6, 2024, the State Administration for Market Regulation (SAMR) released the Provisional Regulation on Prohibiting Unfair Competition Online, under which business operators should not use data or algorithms to hijack traffic or influence users' choices, or use technical means to illegally capture or use other business operators' data. Furthermore, (i) business operators are not allowed to fabricate or disseminate false or misleading information online to damage or potentially damage the business reputation or product goodwill of competitors, or (ii) use technical means to interfere with normal transactions among other business operators, impede or disrupt the normal operation of network products or services lawfully provided by other business operators, or disrupt the order of fair market competition by influencing user choices, restricting traffic flow, blocking access, downgrading search rankings, delisting products, or through other means. Business operators shall not use technical means to affect the business choices of other operators, impede or disrupt the normal operation of network products or services lawfully provided by trading counterparts, or disrupt the order of fair market transactions by restricting trading partners, sales regions or timeframes, or participation in promotional activities.

On February 7, 2021, the Anti-Monopoly Commission of the State Council published Antimonopoly Guidelines for the Platform Economy that specified circumstances where an activity of an internet platform will be identified as monopolistic act as well as concentration filing procedures for business operators. According to the PRC Anti-Monopoly Law, if a business operator carries out a concentration in violation of the law, the relevant authority shall order the business operator to terminate the concentration, dispose of the shares or assets or transfer the business within a specified time limit, or take other measures to restore the pre-concentration status, and impose a fine of up to RMB 500,000.

On June 24, 2022, the Standing Committee of the National People's Congress adopted the amended Anti-Monopoly Law, which increases the fines for illegal concentration of business operators to no more than ten percent of its last year's sales revenue if the concentration of business operator has or may have an effect of excluding or limiting competitions, or a fine of up to RMB 5 million if the concentration of business operator does not have an effect of excluding or limiting competition. The amended Anti-Monopoly Law also empowers the relevant authority to investigate a transaction where there is any evidence that the concentration has or may have the effect of eliminating or restricting competitions, even if such concentration does not reach the filing threshold.

On November 16, 2025, in order to support and guide platform operators to effectively prevent antitrust compliance risks, improve the antitrust compliance management mechanism, protect the legitimate rights and interests of relevant entities, maintain market fair competition order, and promote the healthy development of the platform economy, the State Administration for Market Regulation issued the "Guidelines for Antitrust Compliance of Internet Platforms (Draft for Comments)." The guidelines clarified the manners in which platform operators should identify, assess and manage antitrust risks and listed eight risk scenarios drawn from enforcement practice, including data transmission, algorithm usage, service pricing and traffic allocation. It also encouraged companies to carry out internal reviews, strengthen algorithm oversight, improve risk reporting mechanisms and cooperate with investigations when required.

**Regulations Relating to Cybersecurity and Privacy Protection**

The PRC Constitution states that PRC law protects the freedom and privacy of communications of citizens and prohibits infringement of these rights. In recent years, PRC government authorities have enacted legislation on the Internet use to protect personal information from any unauthorized disclosure. Under the Provisions on Regulating the Market Order of Internet-based Information Services which was promulgated by MIIT on December 29, 2011, an Internet content service operator may not collect any user personal information or provide any such information to third parties without the consent of a user, unless otherwise stipulated by laws and administrative regulations. An Internet content service operator must expressly inform the users of the method, content and purpose of the collection and processing of such user personal information and may only collect such information necessary for the provision of its services. An Internet content service operator is also required to properly keep the user personal information, and in case of any leak or likely leak of the user personal information, the Internet content service operator must take immediate remedial measures and, in severe circumstances, to make an immediate report to the telecommunication regulatory authority.

In addition, the Decision on Strengthening Network Information Protection, which was promulgated by the Decision of Strengthening Information Protection on Networks on December 28, 2012, provides that electronic information that is able to identify personal identities of citizens or is concerned with personal privacy of citizens is protected by law and shall not be unlawfully obtained or provided. Internet content service operators collecting or using personal electronic information of citizens shall specify purposes, manners and scopes of information collection and use, obtain the consent of citizens concerned, and strictly keep confidential personal information collected. Internet content service operators are prohibited from disclosing, tampering with, damaging, selling or illegally providing others with personal information collected. Technical and other measures are required to be taken by Internet content service operators to prevent personal information collected from unauthorized disclosure, damage or being lost. Internet content service operators are subject to legal liability, including warnings, fines, confiscation of illegal gains, revocation of licenses or filings, closing of websites concerned, public security administration punishment, criminal liabilities, or civil liabilities, if they violate relevant provisions on Internet privacy.

In April 10, 2019, the Ministry of Public Security promulgated the Guidelines for Internet Personal Information Security Protection, which establishes the management mechanism, security technical measures and business workflows for personal information security protection. On August 22, 2019, the CAC promulgated the Provisions on the Cyber Protection of Children's Personal Information which requires, among others, that network operators who collect, store, use, transfer and disclose personal information of children under the age of 14 shall establish special rules and user agreements for the protection of children's personal information, inform the children's guardians in a noticeable and clear manner, and shall obtain the consent of the children's guardians.

---

| |
|:---|
| 68 |
| *[**Table of Contents**](#Toc)* |

---

On November 28, 2019, the CAC, MIIT, the Ministry of Public Security and SAMR jointly promulgated the Measures for Determining Illegal and Non-compliant Collection and Use of Personal Information on Apps which provides guidance for the regulatory authorities to identify the illegal collection and use of personal information through mobile apps, and for the app operators to conduct self-examination and self-correction and social supervision by citizens.

On May 28, 2020, the NPC approved the Civil Code of the PRC or the Civil Code, which came into effect on January 1, 2021. Pursuant to the Civil Code, the personal information of a natural person shall be protected by the law. Any organization or individual that needs to obtain personal information of others shall obtain such information legally and ensure the safety of such information, and shall not illegally collect, use, process or transmit personal information of others, or illegally purchase or sell, provide or make public personal information of others. Furthermore, information processors shall not divulge or tamper with personal information collected or stored by them; without the consent of a natural person, information processors shall not illegally provide personal information of such person to others, except for information that has been processed so that specific persons cannot be identified and that cannot be restored. In addition, an information processor shall take technical measures and other necessary measures to ensure the security of the personal information that is collected and stored and to prevent the information from being divulged, tampered with or lost; where personal information has been or may be divulged, tampered with or lost, the information processor shall take remedial measures in a timely manner, inform the natural person concerned in accordance with the provisions and report the case to the relevant competent department.

On August 20, 2021, the SCNPC adopted the Personal Information Protection Law, which took effect on November 1, 2021. The Personal Information Protection Law includes the basic rules for personal information processing, the rules for cross-border provision of personal information, the rights of individuals in personal information processing activities, the obligations of personal information processors, and the legal responsibilities for illegal collection, processing, and use of personal information. As the first systematic and comprehensive law specifically for the protection of personal information in the PRC, the Personal Information Protection Law provides, among others, that (i) an individual's consent shall be obtained to use sensitive personal information, such as biometric characteristics and individual location tracking, (ii) personal information operators using sensitive personal information shall notify individuals of the necessity of such use and impact on the individual's rights, and (iii) where personal information operators reject an individual's request to exercise his or her rights, the individual may file a lawsuit with a People's Court.

On September 24, 2024, the State Council issued the Regulations on Network Data Security Management, which further regulate the internet data processing activities and emphasize the supervision and management of network data security, and further stipulate the obligations of internet platform operators, such as to establish a system for disclosure of platform rules, privacy policies and algorithmic strategies related to data. Specifically, the regulations require data processors to, among others, (i) adopt immediate remediation measures when finding that network products and services they use or provide have security defects and vulnerabilities, or threaten national security or endanger public interest, and (ii) follow a series of detailed requirements with respect to processing of personal information, management of important data and proposed overseas transfer of data. In addition, the draft regulations require data processors handling important data or the data processors to be listed overseas to complete an annual data security assessment and file a data security assessment report to applicable regulators. Such annual assessment, as required by the regulations, would encompass areas including, but not limited to, the status of important data processing, data security risks identified and the measures adopted, the effectiveness of data protection measures, the implementation of national data security laws and regulations, data security incidents that occurred and their handling, and a security assessment with respect to sharing and provision of important data overseas.

---

| |
|:---|
| 69 |
| *[**Table of Contents**](#Toc)* |

---

**<u>Regulation Relating to Value-added Telecommunications Services</u>**

***Licenses for Value-Added Telecommunications Services***

On February 6, 2016, the State Council issued the Regulations on Telecommunications of China, or the Telecommunications Regulations, to regulate telecommunications activities in China. The Telecommunications Regulations divide the telecommunications services into two categories, namely "infrastructure telecommunications services" and "value-added telecommunications services." Pursuant to the Telecommunications Regulations, operators of value-added telecommunications services must first obtain a Value-added Telecommunications Business Operating License, or VAT License, from the Ministry of Industry and Information Technology, or MIIT, or its provincial level counterparts. On July 3, 2017, MIIT promulgated the Administrative Measures for Operating Licenses of Telecommunications Services, which set forth more specific provisions regarding the types of licenses required to operate value-added telecommunications services, the qualifications and procedures for obtaining such licenses and the administration and supervision of such licenses.

According to the Catalog of Classification of Telecommunications Businesses effective from April 1, 2003, internet information services, also called internet content services, or ICP services, are deemed as a type of value-added telecommunications services. On December 28, 2015, MIIT issued the revised Catalogue of Telecommunication Services (2015 Edition), which took effect on March 1, 2016. According to the 2015 MIIT Catalog, internet information services, which include information release and delivery services, information search and query services, information community platform services, information real-times interactive services, and information protection and processing services, continues to be classified as a category of value-added telecommunication services. The State Council promulgated the Administrative Measures for Internet Information Services on September 25, 2000, and revised it on December 6, 2024, which sets forth more specific rules on the provision of ICP services. According to ICP Measures, any company that engages in the provision of commercial ICP services shall obtain a sub-category VAT License for Internet Information Services, or ICP license, from the relevant government authorities before providing any commercial internet content services within the PRC, and when the ICP services involve areas of news, publication, education, medical treatment, health, pharmaceuticals and medical equipment, and if required by law or relevant regulations, specific approval from the respective regulatory authorities must be obtained prior to applying for the ICP License from the MIIT or its provincial level counterpart. Pursuant to the above-mentioned regulations, "commercial ICP services" generally refers to provision of specific information content, online advertising, web page construction and other online application services through internet for profit making purpose. Operating websites is classified as commercial ICP services. Before we sold Zhejiang Farmmi Holdings Group Co., Ltd ,we through Nongyuan Network, the PRC VIE before, hold an ICP license that is valid until August 14, 2021. And according to the announcement from Zhejiang Communication Administration, the IPC license does not need to be renewed anymore.

***Foreign Investment in Value-Added Telecommunication Services***

The Regulations on Administration of Foreign-Invested Telecommunications Enterprises, or the FITE Regulations, which took effect on January 1, 2002 and amended on September 10, 2008, are the key regulations that regulate foreign direct investment in telecommunications companies in China. The FITE Regulations stipulate that the foreign investor of a telecommunications enterprise is prohibited from holding more than 50% of the equity interest in a foreign-invested enterprise that provides value-added telecommunications services. In addition, for a foreign investor to acquire any equity interest in a business providing value-added telecommunications services in China, it must demonstrate a positive track record and experience in providing such services.

---

| |
|:---|
| 70 |
| *[**Table of Contents**](#Toc)* |

---

On July 13, 2006, the MIIT issued the Notice of the Ministry of Information Industry on Strengthening the Administration of Foreign-Invested Operation of Value-Added Telecommunications Services, or the MIIT Circular 2006, which requires that (i) foreign investors can only operate a telecommunications business in China through establishing a telecommunications enterprise with a valid telecommunications business operation license; (ii) domestic license holders are prohibited from leasing, transferring or selling telecommunications business operation licenses to foreign investors in any form, or providing any resource, sites or facilities to foreign investors to facilitate the unlicensed operation of telecommunications business in China; (iii) value-added telecommunications services providers or their shareholders must directly own the domain names and registered trademarks they use in their daily operations; (iv) each value-added telecommunications services provider must have the necessary facilities for its approved business operations and maintain such facilities in the geographic regions covered by its license; and (v) all value-added telecommunications services providers should improve network and information security, enact relevant information safety administration regulations and set up emergency plans to ensure network and information safety. The provincial communications administration bureaus, as local authorities in charge of regulating telecommunications services, (i) are required to ensure that existing qualified value-added telecommunications service providers will conduct a self-assessment of their compliance with the MIIT Circular 2006 and submit status reports to the MIIT before November 1, 2006; and (ii) may revoke the value-added telecommunications business operation licenses of those that fail to comply with the above requirements or fail to rectify such non-compliance within specified time limits. Due to the lack of any additional interpretation from the regulatory authorities, it remains unclear what impact MIIT Circular 2006 will have on us or the other PRC internet companies with similar corporate and contractual structures. After the MOFCOM and NDRC amended the Catalog in March 2015, MIIT also issued the Circular on Removing the Restrictions on Shareholding Ratio Held by Foreign Investors in Online Data Processing and Transaction Processing (Operating E-commerce) Business on June 19, 2015, which amended the relevant provision in FITE Regulations by allowing foreign investors to own more than 50% of the equity interest in an operator of e-commerce business. However, foreign investors continue to be prohibited from holding more than 50% of the equity interest in a provider of other category of value-added telecommunications services except for e-commerce.

The vast majority of our business is processing and/or selling agricultural products, as well as selling our products on third-party e-commerce websites. Based on the advice of our PRC legal counsel, Zhejiang Zhiheng Law Firm, PRC laws and regulations allow foreign-owned entities to conduct such business directly, rather than through contractual VIE agreements. To comply with the above-mentioned foreign ownership restrictions, we operate our e-commerce websites in China through Nongyuan Network. Nongyuan Network is the holder of the domain names, trademarks and facilities necessary for daily operations of our e-commerce websites in compliance with the MIIT Circular 2006. Based on our PRC legal counsel's understanding of the current PRC law, rules and regulations, our corporate structure complies with all existing PRC laws and regulations. However, we were further advised by our PRC legal counsel that there are substantial uncertainties with respect to the interpretation and application of existing or future PRC laws and regulations and thus there is no assurance that Chinese governmental authorities would take a view consistent with the opinions of our PRC legal counsel.

***The Foreign Investment Law of PRC***

On January 19, 2015, MOFCOM published a discussion draft of the proposed Foreign Investment Law for public review and comments. On January 1, 2020, the Foreign Investment Law took effect, which purports to change the existing "case-by-case" approval regime to a "filing or approval" procedure for foreign investments in China. The MOFCOM, together with other relevant authorities, will determine a catalogue for special administrative measures, or the "negative list," which will consist of a list of industry categories where foreign investments are strictly prohibited and a list of industry categories where foreign investments are subject to certain restrictions. Foreign investments in business sectors outside of the "negative list" will only be subject to filing procedures, in contrast to the existing prior approval requirements, whereas foreign investments in the restricted industries must apply for approval from the foreign investment administration authority.

---

| |
|:---|
| 71 |
| *[**Table of Contents**](#Toc)* |

---

The Foreign Investment Law for defines "foreign investor," "foreign investment," "Chinese investor" and "actual control." A foreign investor is not only determined based on the place of its incorporation, but also on the conditions of the "actual control." The Foreign Investment Law specifically provides that entities established in China but "controlled" by foreign investors, such as via contracts or trust, will be treated as Foreign-invested enterprises, or FIEs, whereas foreign investment in China in the foreign investment restricted industries by a foreign investor may nonetheless apply for being, when approving market entry clearance by the foreign investment administration authority, treated as a PRC domestic investment if the foreign investor is determined by the foreign investment administration authority as being "controlled" by PRC subsidiaries and/or citizens. In this connection, "actual control" is broadly defined in the Foreign Investment Law to cover the following summarized categories: (i) holding 50% of more of the voting rights of the subject entity; (ii) holding less than 50% of the voting rights of the subject entity but having the power to secure at least 50% of the seats on the board or other equivalent decision making bodies, or having the voting power to materially influence the board, the shareholders' meeting or other equivalent decision making bodies; or (iii) having the power to exert decisive influence, via contractual or trust arrangements, over the subject entity's operations, financial matters or other key aspects of business operations. According to the Foreign Investment Law, VIEs would also be deemed as FIEs, if they are ultimately "controlled" by foreign investors, and be subject to restrictions on foreign investments. However, the Foreign Investment Law has not taken a position on what actions will be taken with respect to the existing companies with the "variable interest entity" structure, whether or not these companies are controlled by Chinese parties.

The Foreign Investment Law emphasizes the security review requirements, whereby all foreign investments concerning national security must be reviewed and approved in accordance with the security review procedure. In addition, the Foreign Investment Law imposes stringent ad hoc and periodic information reporting requirements on foreign investors and the applicable FIEs. In addition to the investment implementation report and investment amendment report that are required at each investment and alteration of investment specifics, an annual report is mandatory, and large foreign investors meeting certain criteria are required to report on a quarterly basis. Any company found to be non-compliant with these information reporting obligations may potentially be subject to fines and/or administrative or criminal liabilities, and the persons directly responsible may be subject to criminal liabilities.

Recently, the Chinese government has also been actively guiding the foreign investment to promote domestic economic development and industrial upgrading. To this end, the State Council issued the Notice on Several Measures for Actively and Effectively Using Foreign Investment to Promote Quality Economic Development (No. 19 [2018] of the State Council), which guides foreign investment to invest more in modern agriculture and ecological construction, among other industries. The key areas, such as optimizing tax policy, supporting innovation and encouraging mergers and acquisitions, are potentially good for the related industries in which our Company is involved, but the specific measures need to be refined and clarified, and the sustainability of the policy remains uncertain.

***Regulations Related to Intellectual Property Rights***

The State Council and the National Copyright Administration, or the NCAC, have promulgated various rules and regulations relating to the protection of software in China. Under these rules and regulations, software owners, licensees and transferees may register their rights in software with the NCAC or its local branches and obtain software copyright registration certificates. Although such registration is not mandatory under PRC law, software owners, licensees and transferees are encouraged to go through the registration process to enjoy the better protections afforded to registered software rights.

---

| |
|:---|
| 72 |
| *[**Table of Contents**](#Toc)* |

---

The *PRC Trademark Law*, adopted in 1982 and revised in 1993, 2001 and 2013 respectively, with its implementation rules adopted in 2002 and revised in 2014 and 2019, protects registered trademarks. The PRC Trademark Office of the State Administration for Industry and Commerce, or the SAIC, handles trademark registrations and grants a protection term of ten years to registered trademarks.

The MIIT amended its *Administrative Measures on China Internet Domain Names* in 2004. According to these measures, the MIIT is in charge of the overall administration of domain names in China. The registration of domain names in PRC is on a "first-apply-first-registration" basis. A domain name applicant will become the domain name holder upon the completion of the application procedure.

***Regulations Related to Employment***

On June 29, 2007, the Standing Committee of the National People's Congress, or SCNPC, adopted the *Labor Contract Law*, or LCL, which became effective as of January 1, 2008 and was revised in 2012. The LCL requires employers to enter into written contracts with their employees, restricts the use of temporary workers and aims to give employees long-term job security.

Pursuant to the LCL, employment contracts lawfully concluded prior to the implementation of the LCL and continuing as of the date of its implementation will continue to be performed. Where an employment relationship was established prior to the implementation of the LCL but no written employment contract was concluded, a contract must be concluded within one month after the LCL's implementation.

Pursuant to *the Social Insurance Law* promulgated by the SCNPC (effective from July 1, 2011 and revised on December 29, 2018), *the Regulations on Work-Related Injury Insurance* promulgated on December 20, 2010, *the Regulations on Unemployment Insurance promulgated* on January 22, 1999, *the Decision of the State Council on Establishing the Basic Medical Insurance System for Urban Employees* promulgated on December 14, 1998, and *the Interim Regulations on the Collection and Payment of Social Insurance Premiums* promulgated on January 22, 1999, an employer is required to contribute the social insurance for its employees in the PRC, including the basic pension insurance, basic medical insurance, unemployment insurance, maternity insurance and injury insurance.

On July 20, 2018, the General Office of the CCCPC and the General Office of the State Council issued *the Reform Plan for the Tax Collection and Administration System of State and Local Taxes*, or the Reform Plan. The Reform Plan clearly stipulates that from January 1, 2019, all social insurance premiums, such as basic old-age insurance premium, basic medical insurance premium, unemployment insurance premium, industrial injury insurance premium and maternity insurance premium, will be levied by the tax authorities. The Reform Plan makes the collection of social insurance fees more transparent and standardized and reduces a certain degree of flexibility that enterprises can enjoy before. For enterprises that have not paid all the related fees before, the Reform Plan will increase the financial burden of enterprises, which may even face administrative penalties and illegal risks. The details of how to levy social insurance fees need to be clarified.

Pursuant to *the Regulations on the Management of Housing Provident Fund* promulgated by the State Council on April 3, 1999, as amended on March 24, 2002 and March 24, 2019, employers are required to make contributions to their employees' housing provident fund accounts.

On August 1, 2025, the Supreme People's Court of China issued the "Interpretation (II) on Several Issues Concerning the Application of Law in the Trial of Labor Dispute Cases" (Judicial Interpretation No. 12 [2025]) effective on September 1, 2025. The judicial interpretation clarifies several issues in labor dispute cases, including the responsibility for employment, mixed employment, handling of labor disputes involving foreigners, and the payment of social insurance, with particular emphasis on further strictly limiting the requirements for restoring labor relations after an illegal termination of a labor contract.

**<u>Regulations Related to Foreign Currency Exchange and Dividend Distribution</u>**

***Foreign Currency Exchange***

The principal regulations governing foreign currency exchange in China are the *Foreign Exchange Administration Regulations*, as amended in August 2008. Under this regulation, the Renminbi is freely convertible for current account items, including the trade and service-related foreign exchange transactions and other current exchange transactions, but not for capital account items, such as direct investments, loans, repatriation of investments and investments in securities, unless the prior approval of the SAFE is obtained and prior registration with the SAFE is made.

Pursuant to the *Regulations on the Sale and Purchase of and Payment in Foreign Exchange* promulgated on June 20, 1996 by the People's Bank of China, foreign-invested enterprises in China may purchase or remit foreign currency for settlement of current account transactions without the approval of the SAFE. Foreign currency transactions under the capital account are still subject to limitations and require approvals from, or registration with, the SAFE and other relevant PRC governmental authorities.

---

| |
|:---|
| 73 |
| *[**Table of Contents**](#Toc)* |

---

In November 2012, SAFE promulgated *The State Administration of Foreign Exchange Notice on Further Improving and Adjusting Policies for the Administration of Foreign Exchange for Direct Investment*, which substantially amends and simplifies the current foreign exchange procedure. Pursuant to this circular, the opening of various special purpose foreign exchange accounts, such as pre-establishment expenses accounts, foreign exchange capital accounts and guarantee accounts, the reinvestment of Renminbi proceeds by foreign investors in the PRC, and remittance of foreign exchange profits and dividends by a foreign-invested enterprise to its foreign shareholders no longer require the approval or verification of SAFE, and multiple capital accounts for the same entity may be opened in different provinces, which was not possible previously. In addition, SAFE promulgated the *Provisions for Foreign Exchange Control in Connection with Direct Investment in China by Foreign Investors* in May 2013, which specifies that the administration by SAFE or its local branches over direct investment by foreign investors in the PRC shall be conducted by way of registration and banks shall process foreign exchange business relating to the direct investment in the PRC based on the registration information provided by SAFE and its branches.

In July 2014, SAFE decided to further reform the foreign exchange administration system in order to satisfy and facilitate the business and capital operations of foreign invested enterprises and issued the *Notice on Relevant Issues Concerning the Pilot Reform of the Foreign Exchange Capital Settlement Management for Foreign-Invested Enterprises in Certain Regions*, or *Circular* 36, on August 4, 2014. This circular suspends the application of Circular 142 in certain areas and allows a foreign-invested enterprise registered in such areas to use the Renminbi capital converted from foreign currency registered capital for equity investments within the PRC.

On March 30, 2015, SAFE released the *Notice on Reforming the Management of Foreign Exchange Capital Settlement for Foreign-Invested Enterprises*, or *Circular* 19, which has made certain adjustments to some regulatory requirements on the settlement of foreign exchange capital of foreign-invested enterprises, lifted some foreign exchange restrictions under Circular 142, and annulled Circular 142 and Circular 36. However, Circular 19 continues to, prohibit foreign-invested enterprises from, among other things, using Renminbi fund converted from its foreign exchange capitals for expenditure beyond its business scope, providing entrusted loans or repaying loans between non-financial enterprises.

On June 19, 2016, SAFE issued the *Notice on Reforming and Standardizing the Administration of Capital Account Settlement, or Circular 16*, which took effect on the same day. Compared to Circular 19, Circular 16 not only provides that, in addition to foreign exchange capital, foreign debt funds and proceeds remitted from foreign listings should also be subject to the discretional foreign exchange settlement, but also lifted the restriction, that foreign exchange capital under the capital accounts and the corresponding Renminbi capital obtained from foreign exchange settlement should not be used for repaying the inter-enterprise borrowings (including advances by the third party) or repaying the bank loans in Renminbi that have been sub-lent to the third party.

---

| |
|:---|
| 74 |
| *[**Table of Contents**](#Toc)* |

---

***Circular 37***

On July 4, 2014, SAFE promulgated the *Circular of the SAFE on Foreign Exchange Administration of Overseas Investments and Financing and Round-Trip Investments by Domestic Residents via Special Purpose Vehicles* or Circular 37, which replaced the former circular commonly known as Circular 75 promulgated by SAFE on October 21, 2005. Circular 37 requires PRC residents to register with local branches of SAFE in connection with their direct establishment or indirect control of an offshore entity, for the purpose of overseas investment and financing, with such PRC residents' legally owned assets or equity interests in domestic enterprises or offshore assets or interests, referred to in Circular 37 as a "special purpose vehicle." Circular 37 further requires amendment to the registration in the event of any significant changes with respect to the special purpose vehicle, such as increase or decrease of capital contributed by PRC individuals, share transfer or exchange, merger, division or other material event. In the event that a PRC shareholder holding interests in a special purpose vehicle fails to fulfill the required SAFE registration, the PRC subsidiaries of that special purpose vehicle may be prohibited from making profit distributions to the offshore parent and from carrying out subsequent cross-border foreign exchange activities, and the special purpose vehicle may be restricted in its ability to contribute additional capital into its PRC subsidiary. Furthermore, failure to comply with the various SAFE registration requirements described above could result in liability under PRC law for evasion of foreign exchange controls.

On February 13, 2015, the State Administration of Foreign Exchange (SAFE) issued the *Circular on Further Simplifying and Improving Policies for Foreign Exchange Administration for Direct Investment,* or Circular 13, which took effect on June 1, 2015. Circular 13 amended Circular 37 by requiring PRC residents or entities to register with qualified banks rather than SAFE or its local branch in connection with their establishment or control of an offshore entity established for the purpose of overseas investment or financing.

**<u>Regulations Related to Taxation</u>**

***Enterprise Income Tax***

Prior to January 1, 2008, entities established in the PRC were generally subject to a 30% national and 3% local enterprise income tax rate. Various preferential tax treatments promulgated by PRC tax authorities were available to foreign-invested enterprises.

*In March 2007, the National People's Congress enacted The Enterprise Income Tax Law of the People's Republic of China*, which was amended on February 24, 2017 and December 29, 2018, respectively. In December 2007, the State Council promulgated *the Regulations for the Implementation of the Enterprise Income Tax Law of the People's Republic of China, or the Implementation Regulations*, which was amended in 2019 and in 2024. The Enterprise Income Tax Law (i) reduces the top rate of enterprise income tax from 33% to a uniform 25% rate applicable to both foreign-invested enterprises and domestic enterprises and eliminates many of the preferential tax policies afforded to foreign investors, (ii) permits companies to continue to enjoy their existing tax incentives, subject to certain transitional phase-out rules and (iii) introduces new tax incentives, subject to various qualification criteria.

The main rules of the Implementation Regulations of the Enterprise Income Tax Law targeting foreign-invested enterprises include:

(i) foreign investors who use the profits distributed by resident enterprises in China for direct investment within China that meets the conditions during the period from January 1, 2025, to December 31, 2028, may offset 10% of the investment amount against the taxable amount of the foreign investors for that year. If the offset is insufficient for the year, it is allowed to be carried forward to future years;

(ii) foreign-invested enterprises and foreign enterprises that purchase domestic equipment for investment to offset corporate income tax should calculate the offset tax amount based on the actual corporate income tax and local income tax levied;

(iii) when calculating the taxable income, foreign-invested enterprises may not pre-deduct other items such as provisions, funds, and future expenses for income tax purposes, except for the bad debt provisions and funds that are allowed by regulations;

(iv) if a foreign-invested enterprise purchases goods through the issuance of fictitious value-added tax invoices, the payment for the purchased goods shall not be deducted as cost or expense when calculating the taxable income of the enterprise;

(v) foreign-invested projects approved for additional investment after April 1, 2002, that belong to encouraged projects may enjoy regular tax exemption and reduction preferential treatment;

(vi) foreign-invested enterprises that meet the conditions of small and micro-profit enterprises may also enjoy corresponding tax preferential policies, but they need to pay attention to the relevant regulations on restricted and prohibited industries by the state.

---

| |
|:---|
| 75 |
| *[**Table of Contents**](#Toc)* |

---

The Enterprise Income Tax Law also provides that enterprises organized under the laws of jurisdictions outside China with their "de facto management bodies" located within China may be considered PRC resident enterprises and therefore be subject to PRC enterprise income tax at the rate of 25% on their worldwide income. The Implementing Rules further define the term "de facto management body" as the management body that exercises substantial and overall management and control over the production and operations, personnel, accounts and properties of an enterprise. If an enterprise organized under the laws of jurisdiction outside China is considered a PRC resident enterprise for PRC enterprise income tax purposes, a number of unfavorable PRC tax consequences could follow. First, it would be subject to the PRC enterprise income tax at the rate of 25% on its worldwide income. Second, a 10% withholding tax would be imposed on dividends it pays to its non-PRC enterprise shareholders and with respect to gains derived by its non-PRC enterprise shareholders from transfer of its shares.

Prior to January 1, 2008, dividends derived by foreign enterprises from business operations in China were exempted from PRC enterprise income tax. However, such exemption was revoked by the Enterprise Income Tax Law and dividends generated after January 1, 2008 and payable by a foreign-invested enterprise in China to its foreign enterprise investors are subject to a 10% withholding tax, unless any such foreign investor's jurisdiction of incorporation has a tax treaty with China that provides for a preferential withholding arrangement.

Pursuant to the *Notice of the State Administration of Taxation on Negotiated Reduction of Dividends and Interest Rates*, which was issued on January 29, 2008 and supplemented and revised on February 29, 2008, and the *Notice on the Entry into Force and Implementation of the Arrangement Between the Mainland of China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income*, which became effective on December 8, 2006 and applies to income derived in any year of assessment commencing on or after April 1, 2007 in Hong Kong and in any year commencing on or after January 1, 2007 in the PRC, such withholding tax rate may be lowered to 5% if a Hong Kong enterprise is deemed the beneficial owner of any dividend paid by a PRC subsidiary by PRC tax authorities and holds at least 25% of the equity interest in that particular PRC subsidiary at all times within the 12-month period immediately before distribution of the dividends. Furthermore, the State Administration of Taxation promulgated the *Notice on the Interpretation and Recognition of Beneficial Owners in Tax Treaties* in October 2009, which stipulates that non-resident enterprises that cannot provide valid supporting documents as "beneficial owners" may not be approved to enjoy tax treaty benefits. Specifically, it expressly excludes an agent or a "conduit company" from being considered as a "beneficial owner" and a "beneficial owner" analysis shall be conducted on a case-by-case basis following the "substance-over-the-form" principle.

***Value-Added Tax and Business Tax***

Pursuant to applicable PRC tax regulations, any entity or individual conducting business in the service industry is generally required to pay a business tax at the rate of 5% on the revenues generated from providing such services. However, if the services provided are related to technology development and transfer, such business tax may be exempted subject to approval by the relevant tax authorities. Whereas, pursuant to the *Provisional Regulations on Value-Added Tax* of the PRC and its implementation regulations, unless otherwise specified by relevant laws and regulations, any entity or individual engaged in the sales of goods, provision of processing, repairs and replacement services and importation of goods into China is generally required to pay a value-added tax, or VAT, for revenues generated from sales of products, while qualified input VAT paid on taxable purchase can be offset against such output VAT.

In November 2011, the Ministry of Finance and the State Administration of Taxation promulgated the *Pilot Plan for Imposition of Value-Added Tax to Replace Business Tax*. In March 2016, the Ministry of Finance and the State Administration of Taxation further promulgated the *Pilot Measures for Replacing Business Tax with Value-Added Tax*, which became effective on May 1, 2016. Pursuant to the pilot plan and relevant notices, VAT is generally imposed in the modern service industries, including the VATS, on a nationwide basis. VAT of a rate of 6% applies to revenue derived from the provision of some modern services. Unlike business tax, a taxpayer is allowed to offset the qualified input VAT paid on taxable purchases against the output VAT chargeable on the modern services provided.

In April 2018, the Ministry of Finance and the State Administration of Taxation jointly issued the *Notice on Adjusting the Value-Added Tax Rates (Notice32 of Finance and Taxation, 2018).* The Notice clearly stipulates that, from May 1, 2018, for all taxpayers who have engaged in taxable sales of VAT or imported goods, where the original 17% and 11% tax rates were applied, the tax rates shall be adjusted to 16% and 10%, respectively. This can lighten the operation burden of enterprises to a certain extent.

---

| |
|:---|
| 76 |
| *[**Table of Contents**](#Toc)* |

---

**C. Organizational Structure**

Our current corporate structure is as follows:

![fami_20fimg35.jpg](fami_20fimg35.jpg)

---

| |
|:---|
| 77 |
| *[**Table of Contents**](#Toc)* |

---

***Farmmi, Inc. ("FAMI")***

FAMI was incorporated on July 28, 2015 under the Companies Law (as revised) of the Cayman Islands as an exempted company limited by shares. The authorized share capital of the Company is US$12,000,000,000, in such class or classes as the company's Board of Directors may designate from time to time. FAMI has full power and authority to carry out any business not prohibited by Cayman Islands law; provided, however, that the company may not operate the business of a bank, trust company, insurance business or company manager unless it obtains the proper licensure in the Cayman Islands for such businesses. As of the date of this report, FAMI is authorized to issue 4,500,000,000 Class A Ordinary Shares of US$2.40 par value each and 500,000,000 Class B Ordinary Shares of US$2.40 par value each. There are 13,811,335 Class A Ordinary Shares and 3,873 Class B Ordinary Shares issued and outstanding.

***Farmmi International Limited ("Farmmi International")***

Farmmi International is currently a holding company, and it may participate in offshore acquisition and trading of agricultural products in the future. Farmmi International was incorporated on August 20, 2015 in Hong Kong under the Companies Ordinance (Chapter 622) as a private company limited by shares. As a private company limited by shares, Farmmi International may not sell its shares publicly and may not have more than 50 members. The share capital of the Company is HK $10,000, consisting of 10,000 shares, HK $1.00 par value per share. As of the date of this report, Farmmi International has issued and outstanding 10,000 shares, all of which are held by Farmmi, Inc.

***Farmmi (Hangzhou) Enterprise Management Co., Ltd ("Farmmi Enterprise")***

Farmmi Enterprise is a subsidiary that manages Farmmi's fund and e-commerce business in China. It was incorporated on May 23, 2016 under the laws of the PRC with registered capital of $30 million. The operating period on the business license is from May 23, 2016 to May 22, 2036, when the business license can be renewed. Its business scope covers technology development, technology service: internet technology, computer software; enterprise management consultation, economic information consultation (except commodities agency), excluding matters forbidden and restricted by China. Farmmi International is its sole shareholder. Farmmi Enterprise is considered a wholly foreign owned enterprise ("WFOE") in China by virtue of Farmmi International's 100% ownership.

***Lishui Farmmi E-Commerce Co., Ltd ("Farmmi E-Commerce")***

We set up Farmmi E-Commerce with the plan to use it to operate online stores in the future. As an E-commerce company in Lishui, it enjoys beneficial tax policies. It was established on March 22, 2019 under the laws of the PRC with initial registered capital of RMB 5 million. The operating period on Farmmi E-Commerce's business license is from March 22, 2019 and there is no expiration date. The business scope of Farmmi E-Commerce covers technology development, technology service, technology consultancy and transfer of achievements: network technology, computer soft/hardware and electronic products; online sales; retail or wholesale of edible agricultural products (other than food and medicines), pre-packaged food and bulk food.

***Zhejiang Yitang Medical Service Co., Ltd ("Yitang Medical"**）*

We incorporated Yitang Medical on September 7, 2021, with initial registered capital of RMB 100 million.

***Zhejiang Yiting Medical Technology Co., Ltd ("Yiting Medical")***

We incorporated Yiting Medical on September 17, 2021, with initial registered capital of RMB 10 million.

***Farmmi (Hangzhou) Health Development Co., Ltd ("Farmmi Hangzhou Health Development")***

We incorporated Farmmi Hangzhou Health Development on September 17, 2021, with initial registered capital of US $300 million.

***Zhejiang Farmmi Healthcare Technology Co., Ltd ("Zhejiang Farmmi Healthcare")***

We incorporated Farmmi Medical Healthcare on September 18, 2021, with initial registered capital of RMB 500 million.

---

| |
|:---|
| 78 |
| *[**Table of Contents**](#Toc)* |

---

***Jiangxi Xiangbo Agriculture and Forestry Development Co., Ltd ("Jiangxi Xiangbo")***

On September 27, 2021, we acquired Jiangxi Xiangbo from Ganzhou Tengguang Agriculture and Forestry Development Co., Ltd for a total price of RMB 70 million. Together with Jiangxi Xiangbo, its 100% percent subsidiary Yudu County Yada Forestry Co., Ltd became the subsidiary of FAMI.

***Zhejiang Farmmi Ecological Agricultural Technology Co., Ltd ("Farmmi Eco-Agri Tech")***

We incorporated Farmmi Eco-Agri Tech , or Farmmi Eco Agri, on May 27, 2022, with initial registered capital of RMB 100 million.

***Zhejiang Suyuan Agricultural Technology Co., Ltd ("Suyuan")***

We incorporated Zhejiang Suyuan Agricultural Technology Co., Ltd on July 25, 2022, with initial registered capital of US$100 million.

---

| |
|:---|
| 79 |
| *[**Table of Contents**](#Toc)* |

---

***Farmmi USA Inc. ("Farmmi USA")***

On April 30, 2023, we incorporated a wholly-owned subsidiary in the United States, Farmmi USA Inc. ("Farmmi USA"). Farmmi USA engages in trading in the U.S.

***SuppChains Group Inc ("SuppChains")***

Farmmi USA formed SuppChains Group Inc, a California corporation in July 2024. Farmmi USA owns directly 75% of the outstanding shares of SuppChains, with the remaining 25% owned by Ttone Trucking Inc, a California company owned by Hui Xu, an unrelated third party. SuppChains mainly conducts warehousing and logistics services business in the U.S.

***SuppChains Transport Inc ("SuppChains Transport")***

SuppChains formed SuppChains Transport Inc, a California corporation and a wholly-owned subsidiary, in October 2024. SuppChains Transport mainly conducts warehousing and logistics services business in the U.S.

***Suppchains Oak Inc ("Suppchains Oak")***

On August 6, 2025, Suppchains Oak was established under the laws of the State of New Jersey. SuppChains owns 100% of the equity of Suppchains Oak. Suppchains Oak mainly conducts warehousing and logistics services business in the U.S.

***Bluesage Marketing Inc ("Bluesage")*** 

On January 13, 2026, Bluesage was incorporated under the laws of the State of California. Bluesage engages in digital marketing business.

**D. Property and Equipment**

We do not own any real property. We rent our offices in Lishui from our related parties, Zhejiang Tantech Bamboo Technology Co., Ltd,. We also rent office and warehouse spaces in the United States. The following is a list of our main properties we rent:

---

| | | | |
|:---|:---|:---|:---|
| <br>**Lessee** | <br>**Property** | **Land/Building**<br>**Use Term** | **Space**<br>**(sq. ft.)** |
| Zhejiang Farmmi Ecological Agricultural Technology Co., Ltd. | Right side of the 3rd floor, Building 1, No. 888 Tianning Street, Liandu District, Lishui, Zhejiang Province | March 1, 2023 - <br>February 29, 2028 | 5156 |
| Farmmi USA Inc. | 14210-14380 Telephone Avenue, Chino, California | August 1, 2024 - <br>September 30, 2026 | 315000 |
| Farmmi USA Inc. | 3 Montgomery Avenue, Robbinsville Township, New Jersey | September 1, 2025 -<br>February 28, 2031 | 183084 |
| Farmmi USA Inc. | 1100 Randolph Road, Somerset, New Jersey | April 1, 2025 - <br>June 30, 2030 | 49755 |

---

---

| |
|:---|
| 80 |
| *[**Table of Contents**](#Toc)* |

---

None of our property is affected by any environmental issues that may affect our use of the property. We do not currently have any material plans to construct, expand or improve our facilities.

**Item 4A. Unresolved Staff Comments**

None.

**Item 5. Operating and Financial Review and Prospects**

*The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes that appear in this report. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this report, particularly in "Risk Factors."*

---

| |
|:---|
| 81 |
| *[**Table of Contents**](#Toc)* |

---

**SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS**

This report contains forward-looking statements. All statements contained in this report other than statements of historical fact, including statements regarding our future results of operations and financial position, our business strategy and plans, and our objectives for future operations, are forward-looking statements. The words "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "expect," and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in the "Risk Factors" section. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

**<u>Business Overview</u>**

We currently produce and/or sell the following categories of agricultural products: Shiitake mushrooms, Mu Er, cotton, corn, forestry and other products. We do not grow fungi, but purchase dried edible fungi from third party suppliers, mainly from family farms, and two co-operatives representing family farms, Jingning Liannong Trading Co. Ltd ("JLT") and Qingyuan Nongbang Mushroom Industry Co., Ltd ("QNMI"), with whom we have worked with for many years. JLT and QNMI are two companies in Lishui area where our facilities are located. They are co-operatives representing family farms which plant and provide edible fungi. JLT and QNMI themselves do not have any facility and do not process any fungi. They are established to share resources such as procurement information and to enjoy the advantage of economy of scale. After we select and filter the dried edible fungi for specific size and better quality, we may further dehydrate them again, as deemed necessary, to ensure the uniform level of dryness of our products. We then package the fungi products for sale. The only products we process and package are edible fungi, which are processed and packaged at our own processing facilities. For other agricultural products, such as rice and edible oil, we purchase them from third-party suppliers and sell these products at our online store Farmmi Jicai. Mainly through distributors, we offer gourmet dried mushrooms to domestic and overseas retail supermarkets, produce distributors and foodservice distributors and operators. We have become an enterprise with advanced processing equipment and business management experience, and we pride ourselves on consistently producing quality mushrooms and serving our customers with a high level of commitment.

During the fiscal year ended September 30, 2024, 98.66% of our products were sold in China to domestic distributors and the remaining 1.34% were sold outside mainland China, including the U.S., Japan, Canada and other countries or regions, through distributors. We tested a few offline stores in Hangzhou, Zhejiang but closed them by March 2020 due to the impact of the COVID-19 outbreak. In addition, in order to enhance our e-commerce marketing presence, we developed our own e-commerce websites Farmmi Jicai (www.farmmi88.com) and Farmmi Liangpin Market (mobile application and mini program on WeChat; closed on December 31, 2020).

Our total revenues for the year ended September 30, 2025 decreased by $36.2 million or 56.4%, compared to the same period in 2024. We expect our sales of edible fungi products will grow in the coming years, as the consumption of fungi products in China has been rising significantly, and edible fungi has become one of the most important parts of planting industry. Meanwhile, although China has the most production of edible fungi, consumption of edible fungi per capita is significantly lower than other countries such as USA and Japan. Therefore, there is great potential for the sales of edible fungi in the Chinese market as well as the international markets. We believe our sales will grow in the future with our increased brand awareness, which will grow along with the demand for edible fungi products.

---

| |
|:---|
| 82 |
| *[**Table of Contents**](#Toc)* |

---

**<u>Growth Strategy</u>**

***Increasing our market share –*** the premium quality of our products has long been recognized by our customers. Consumers' increasing awareness of healthy dietary may lead to increased demand of our products. Our development plan mainly focuses on developing high-quality agricultural products market. Through our expansion to international market and enhancing stable relationship with suppliers, we expect to expand our product lines and improve our brand awareness and customer loyalty, to meet the demands of market and customers, and improve our sales performance.

***Expansion of our sources of supply, productivity and sales network –*** to meet the increasing demand, we emphasize cooperation with major suppliers as well as small family farms to ensure the quantity and quality of raw materials. While expanding supply resource, we also plan to increase our processing capability and upgrade production facilities to increase productivity. We have been actively participating in international trade exhibitions held in China and other countries, to expand our international sales network. We also intend to invest more in our online stores, continue to train our employees, and upgrade information technology and supply chain system, with the goal of making an integrated sales network with an international approach.

***Securing high quality raw materials with competitive price –*** to meet the increasing demand for our products, we have been increasing our cooperation with major suppliers, with whom we have been working together for many years, to secure the quality and quantity of our raw materials. We also have dedicated teams that constantly visit and communicate with the family farm suppliers, to monitor the quality and quantity of raw materials. By working closely with our suppliers throughout the planting seasons, we have been providing such suppliers technical support to secure the stable supply of our raw materials. With our deep understanding of the edible fungi market, we have been able to purchase raw materials of premium quality at favorable prices. Edible fungi can be stored for a long time after simple processing; therefore, we have been purchasing edible fungi when we expect their purchase price to increase and store them to fulfill future sales orders. This strategy has been proven effective and will continue to be used by us as a cost control method.

**<u>Factors Affecting Our Results of Operations</u>**

***Government Policy May Impact our Business and Operating Results***

We have not seen any impact of unfavorable government policy upon our business in recent years. However, our business and operating results will be affected by China's overall economic growth and government policies. Unfavorable changes in government policies could affect the demand for our products and could materially and adversely affect our results of operations. Our edible fungi products are currently eligible for certain favorable government tax incentive and other incentives, any future changes in the government's policy upon edible fungi industry may have a negative effect on our operations.

***Price Inelasticity of Raw Materials May Reduce Our Profit***

As a processor of edible fungi, we rely on a continuous and stable supply of edible fungi raw materials to ensure our operation and expansion. The price of edible fungi may be inelastic when we wish to purchase supplies, resulting in an increase in raw material prices and thus reduce our profit. In addition, although we compete primarily in the high-end market, which puts more emphasis on the flavor, texture and quality of our products, we risk losing customers by increasing our selling prices.

***Competition in Edible Fungi Industry***

Although we have a lot of competitive advantages, such as premium product quality, stable and experienced factory employees, favorable production locations within proximity of significant mushroom planting bases and strong relationships with our significant suppliers, we face a series of challenges.

Our products face competition from a number of companies operating in the vicinity. One of our largest competitors has high sales volume, which enables this competitor to purchase and sell edible fungi at a relatively lower price. Another major competitor has much larger plants and warehouses than we have and its main product is Mu Er mushrooms with different sorts and qualities. Competition from these two major competitors may prevent us from increasing our revenue.

---

| |
|:---|
| 83 |
| *[**Table of Contents**](#Toc)* |

---

On the other hand, although we believe we distinguish our Company from competitors on the basis of product quality, the edible fungi industry is fragmented and subject to relatively low barriers of entry. Many of our competitors can provide products at relatively lower prices to increase their supplies, which may affect our profit margins as we seek to compete with them.

***Economy and Politics***

Our ability to be successful in China depends in part on our awareness of trends in politics that may affect our company, including, for example, government initiatives that would either encourage or discourage programs and companies that produce healthy foods or efforts to increase export of agricultural products. In addition, we must be aware of political situations in destination countries of our products, particularly if such countries take action to stifle importation of food products from abroad.

**<u>Trend Information</u>**

We have noted the existence of the following trends since October 2021, all of which are likely to affect our business to the extent they continue in the future:

***China's edible fungi industry is growing, both in absolute terms and in market share.***

Through its development of enoki mushroom industrialization technology in the 1960s, Japan became the world leader in mushroom farming. As other countries' fungi farming technology improved, China began to supplant Japan and now became the largest worldwide edible mushroom producer. China's growth has outpaced worldwide production growth rates. While China's growth rates in the past much higher than world growth rates, it appears to be moving from rapid expansion to a more mature industry.

As the table below illustrates, our sales volume of Shiitake mushroom for the year ended September 30, 2025 was approximately 908 tons, representing a decrease of 588 tons as compared with 1,496 tons sales volume in fiscal 2024. The decrease in sales of Shiitake mushroom was due to market demand declined which reduced orders by customers. At the same time, our sales volume of Mu Er for the year ended September 30, 2025 was approximately 746 tons, representing a decrease of 420 tons, as compared with 1,186 tons sales volume in fiscal 2024. The sales volume of Mu Er decreased due to market demand declined which reduced orders by customers. As China's mushroom industry is moving from rapid expansion to a more mature stage, we expect the effect of industry growth on promoting our sales volume will decrease.

---

| | | |
|:---|:---|:---|
| <br>**Period** | **Shiitake**<br>**(tons)** | **Mu Er**<br>**(tons)** |
| Oct/24 | 292.10 | 1.50 |
| Nov/24 | 7.71 | 177.01 |
| Dec/24 | 64.90 | 82.74 |
| Jan/25 | 62.81 | 42.56 |
| Feb/25 | 62.35 | 60.49 |
| Mar/25 | 73.87 | 64.05 |
| Apr/25 | 83.21 | 50.29 |
| May/25 | 53.05 | 71.54 |
| Jun/25 | 62.82 | 65.60 |
| Jul/25 | 60.00 | 50.00 |
| Aug/25 | 40.00 | 40.00 |
| Sep/25 | 45.00 | 40.00 |
| Total sales volume for fiscal 2025 | 907.81 | 745.77 |
| Average unit selling price per ton for fiscal 2025 | $84756 | $88.612 |

---

---

| |
|:---|
| 84 |
| *[**Table of Contents**](#Toc)* |

---

***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.

---

| |
|:---|
| 85 |
| *[**Table of Contents**](#Toc)* |

---

In July 2025, the FASB issued ASU 2025-05, "Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets (ASU 2025-05)", simplifies credit loss calculations by introducing a practical expedient (available to all entities) that allows entities to assume current conditions won't change over an asset's life, removing the need for complex macroeconomic forecasts. Additionally, a new accounting policy election (for non-public business entities) allows these entities to consider post-balance sheet collection activity to estimate expected credit losses. ASU 2025-05 is effective for fiscal years beginning after December 15, 2025. Early adoptions is permitted. The Company's management does not believe the adoption of ASU 2025-05 will have a material impact on its financial statements and disclosures.

In September 2025, the FASB issued ASU 2025-06, "Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40) - Targeted Improvements to the Accounting for Internal-Use Software", the amendments in this Update remove all references to prescriptive and sequential software development stages (referred to as "project stages") throughout Subtopic 350-40. Therefore, an entity is required to start capitalizing software costs when both of the following occur: 1. Management has authorized and committed to funding the software project. 2. It is probable that the project will be completed and the software will be used to perform the function intended (referred to as the "probable-to-complete recognition threshold"). In evaluating the probable-to-complete recognition threshold, an entity is required to consider whether there is significant uncertainty associated with the development activities of the software (referred to as "significant development uncertainty"). The two factors to consider in determining whether there is significant development uncertainty are whether: 1. The software being developed has technological innovations or novel, unique, or unproven functions or features, and the uncertainty related to those technological innovations, functions, or features, if identified, has not been resolved through coding and testing. 2. The entity has determined what it needs the software to do (for example, functions or features), including whether the entity has identified or continues to substantially revise the software's significant performance requirements. The amendments in this Update specify that the disclosures in Subtopic 360- 10, Property, Plant, and Equipment—Overall, are required for all capitalized internal-use software costs, regardless of how those costs are presented in the financial statements. Additionally, the amendments clarify that the intangibles disclosures in paragraphs 350-30-50-1 through 50-3 are not required for capitalized internal-use software costs. Furthermore, the amendments in this Update supersede the website development costs guidance and incorporate the recognition requirements for website-specific development costs from Subtopic 350-50 into Subtopic 350-40. 4 within those annual reporting periods. Early adoption is permitted as of the beginning of an annual reporting period. The amendments in this Update permit an entity to apply the new guidance using any of the following transition approaches: 1. A prospective transition approach 2. A modified transition approach that is based on the status of the project and whether software costs were capitalized before the date of adoption 3. A retrospective transition approach. Under a prospective transition approach, an entity should apply the amendments in this Update to new software costs incurred as of the beginning of the period of adoption for all projects, including in-process projects. Under a modified transition approach, an entity should apply the amendments in this Update on a prospective basis to new software costs incurred (for all projects, including costs incurred for in-process projects), except for in-process projects that, as of the date of adoption, the entity determines do not meet the capitalization requirements under the amendments but meet the capitalization requirements under current guidance. For those in-process projects, an entity should derecognize any capitalized costs through 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 date of adoption. Under a retrospective transition approach, an entity 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 first period presented.

In September 2025, the FASB issued ASU 2025-07, "Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606) - Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract", the amendments in this Update exclude from derivative accounting nonexchange-traded contracts with underlyings that are based on operations or activities specific to one of the parties to the contract. However, this scope exception does not apply to (1) variables based on a market rate, market price, or market index, (2) variables based on the price or performance of a financial asset or financial liability of one of the parties to the contract, (3) contracts (or features) involving the issuer's own equity that are evaluated under the guidance in Subtopic 815-40, Derivatives and Hedging—Contracts in Entity's Own Equity, and (4) call options and put options on debt instruments. 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. Early adoption is permitted. An entity is permitted to apply the amendments in this Update either (1) prospectively to new contracts entered into on or after the date of adoption or (2) on a modified retrospective basis through a cumulative-effect adjustment to the opening balance of retained earnings as of the beginning of the annual reporting period of adoption for contracts existing as of the beginning of the annual reporting period of adoption. If an entity applies the modified retrospective transition method described in the preceding paragraph, upon adoption the entity may elect on an instrument by-instrument basis to (1) measure contracts previously accounted for as derivatives that are no longer accounted for as derivatives in their entirety under the amendments in this Update at fair value with changes in fair value recognized in earnings and (2) stop applying the fair value option for contracts that contained embedded features that otherwise would have been bifurcated but are no longer accounted for as derivatives under the amendments in this Update.

---

| |
|:---|
| 86 |
| *[**Table of Contents**](#Toc)* |

---

The amendments in this Update clarify that an entity should apply the guidance in Topic 606, including the guidance on noncash consideration in paragraphs 606-10-32-21 through 32-24, to a contract with share-based noncash consideration (for example, shares, share options, or other equity instruments) from a customer for the transfer of goods or services. The guidance in other Topics (including Topic 815 on derivatives and hedging and Topic 321 on equity securities) does not apply to share-based noncash consideration from a customer for the transfer of goods or services unless and until the entity's right to receive or retain the share-based noncash consideration is unconditional under Topic 606. 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. Early adoption is permitted. An entity is permitted to apply the amendments in this Update either (1) prospectively to new contracts entered into on or after the date of adoption, including modified contracts accounted for as separate contracts in accordance with paragraph 606-10-25-12, or (2) on a modified retrospective basis through a cumulative-effect adjustment to the opening balance of retained earnings as of the beginning of the annual reporting period of adoption for contracts existing as of the beginning of the annual reporting period of adoption.

In November 2025, the FASB issued ASU 2025-08, "Financial Instruments—Credit Losses (Topic 326) Purchased Loans", the amendments in this update expand the population of acquired financial assets subject to the gross-up approach in Topic 326. In accordance with the amendments in this Update, loans (excluding credit cards) acquired without credit deterioration and deemed "seasoned" (defined below) are purchased seasoned loans and accounted for using the gross-up approach at acquisition. Specifically, after an entity determines that a loan is a non-PCD asset based on its assessment of credit deterioration experienced since origination, the entity should apply the guidance described in the amendments to determine whether the loan is seasoned and, therefore, should be accounted for using the gross-up approach. All non-PCD loans (excluding credit cards) that are acquired in a business combination are deemed seasoned. Other non-PCD loans (excluding credit cards) are seasoned if they were purchased at least 90 days after origination and the acquirer was not involved in the origination of the loans. 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 should be applied prospectively to loans that are acquired on or after the initial application date. Early adoption is permitted in an interim or annual reporting period in which financial statements have not yet been issued or made available for issuance. If an entity adopts the amendments in an interim reporting period, it should apply the amendments as of the beginning of that interim reporting period or the beginning of the annual reporting period that includes that interim reporting period.

In November 2025, the FASB issued ASU 2025-09, "Derivatives and Hedging (Topic 815) Hedge Accounting Improvements", Issue 1: Similar Risk Assessment for Cash Flow Hedges - the amendments in this Update expand the hedged risks permitted to be aggregated in a group of individual forecasted transactions in a cash flow hedge by changing the requirement to designate a group of individual forecasted transactions from having a shared risk exposure to having a similar risk exposure. Entities are required to assess risk similarity both at hedge inception and on an ongoing basis. The amendments also clarify that a group of individual forecasted transactions can be considered to have a similar risk exposure if the derivative used as the hedging instrument is highly effective against each hedged risk in the group. In addition, in some cases, entities are permitted to perform an ongoing qualitative assessment of whether a group of individual forecasted transactions has a similar risk exposure. The amendments in this Update improve GAAP by expanding the hedged risks permitted to be aggregated in a group of individual forecasted transactions, thereby enabling entities to apply hedge accounting to potentially broader portfolios of forecasted transactions. Entities that aggregate larger groups of individual forecasted transactions in accordance with the amendments can achieve hedge accounting in a more efficient, cost-effective manner while reducing the risk of missed forecasts for highly effective economic hedges. Furthermore, the amendments improve operability and foster consistent application of the similar risk assessment. Therefore, an entity's financial statements can provide more relevant information to investors about the entity's risk management activities related to cash flow hedges of groups of forecasted transactions. 4 The amendments in this Update improve GAAP because the application of hedge accounting will not be limited by whether the execution of the nonfinancial purchase or sale transaction is in the spot or forward market. Relative to current GAAP, which limits designation of nonfinancial components to those that are contractually specified, a model based on the clearly-and-closely-related criteria permits hedge accounting for eligible components of forecasted spot-market transactions, forward-market transactions, and subcomponents of explicitly referenced components in an agreement's pricing formula. Furthermore, the amendments also may enable entities to reduce missed forecasts for highly effective economic hedges, more closely aligning hedge accounting with the economics of entities' risk management activities. The amendments in this Update also clarify that entities may designate a variable price component in a contract that is accounted for as a derivative as the hedged risk if all other hedge criteria are satisfied. That clarification improves GAAP because it resolves diversity in practice about whether hedge accounting may be applied in those situations and allows hedge accounting to be applied to highly effective economic hedges. Issue 4: Net Written Options as Hedging Instruments The amendments in this Update on the use of net written options as hedging instruments improve GAAP by updating the hedge accounting guidance to accommodate differences in the loan and swap markets that developed after the cessation of the London Interbank Offered Rate. Specifically, the amendments in this Update eliminate the requirement to apply the net written option test to a compound derivative comprising a swap and a written option designated as the hedging instrument in a cash flow hedge or a fair value hedge of interest rate risk. Issue 5: Foreign-Currency-Denominated Debt Instrument as Hedging Instrument and Hedged Item (Dual Hedge) The amendments in this Update eliminate the recognition and presentation mismatch related to a dual hedge strategy (that is, a hedge for which a foreign currency-denominated debt instrument is both designated as the hedging instrument in a net investment hedge and designated as the hedged item in a fair value hedge of interest rate risk). The amendments require that an entity exclude the debt instrument's fair value hedge basis adjustment from the net 5 investment hedge effectiveness assessment. As a result, an entity immediately recognizes in earnings the gains and losses from the remeasurement of the debt instrument's fair value hedge basis adjustment at the spot exchange rate. Entities are prohibited from applying this guidance by analogy to other circumstances. The amendments in this Update improve GAAP by enabling entities that utilize dual hedging strategies to reflect the economic offset of changes attributable to both interest rate risk and foreign exchange risk. For public business entities, the amendments in this Update are effective for annual reporting periods beginning after December 15, 2026, and interim periods within those annual reporting periods. For entities other than public business entities, the amendments are effective for annual reporting periods beginning after December 15, 2027, and interim periods within those annual reporting periods. Early adoption is permitted on any date on or after the issuance of this Update. Entities should apply the amendments in this Update on a prospective basis for all hedging relationships. An entity may elect to adopt the amendments in this Update for hedging relationships that exist as of the date of adoption. Upon adoption of the amendments in this Update, entities are permitted to modify certain critical terms of certain existing hedging relationships without dedesignating the hedge.

---

| |
|:---|
| 87 |
| *[**Table of Contents**](#Toc)* |

---

In December 2025, the FASB issued ASU 2025-10, "Government Grants (Topic 832) Accounting for Government Grants Received by Business Entities", The amendments in this Update establish the accounting for a government grant received by a business entity, including guidance for (1) a grant related to an asset and (2) a grant related to income. A grant related to an asset is a government grant, or part of a government grant, that is conditioned on the purchase, construction, or acquisition of an asset (for example, a long-lived asset or inventory). A grant related to income is a government grant, or part of a government grant, other than a grant related to an asset (for example, a grant that reimburses a business entity for operating expenses). The amendments in this Update require that a government grant received by a business entity should not be recognized until: 1. It is probable that (a) a business entity will comply with the conditions attached to the grant and (b) the grant will be received. 2. A business entity meets the recognition guidance for a grant related to an asset or a grant related to income. 3 The amendments in this Update require that a grant related to an asset be recognized on the balance sheet as a business entity incurs the related costs for which the grant is intended to compensate, either as: 1. Deferred income (the deferred income approach) 2. An adjustment to the cost basis in determining the carrying amount of the asset (the cost accumulation approach). A grant related to income and a grant related to an asset for which the deferred income approach is elected should be recognized in earnings on a systematic and rational basis over the periods in which a business entity recognizes as expenses the costs for which the grant is intended to compensate. When a business entity elects the cost accumulation approach for a grant related to an asset, there is no separate subsequent recognition of the government grant proceeds in earnings. The carrying amount of the asset that reflects the government grant proceeds would be used to determine depreciation or other subsequent accounting for that asset. The amendments in this Update require that a business entity present a grant related to income and a grant related to an asset for which the deferred income approach is elected as part of earnings either (1) separately under a general heading such as other income or (2) deducted from the related expense. In addition, the amendments in this Update require, consistent with current disclosure requirements, that a business entity provide disclosures, including the nature of the government grant received, the accounting policies used to account for the grant, and significant terms and conditions of the grant. Under a modified prospective approach, prior-period results should not be restated and there is no cumulative-effect adjustment. 2. A modified retrospective approach to both: a. Government grants that are entered into on or after the beginning of the earliest period presented b. Government grants that are not complete as of the beginning of the earliest period presented. A government grant is complete when substantially all of the government grant proceeds have been recognized before the beginning of the earliest period presented. Under a modified retrospective approach, all prior period results should be restated for government grants that are not complete as of the beginning of the earliest period presented through a cumulative-effect adjustment to the opening balance of retained earnings as of the beginning of the earliest period presented. 3. A retrospective approach to all government grants through a cumulative effect adjustment to the opening balance of retained earnings as of the beginning of the earliest period presented.

In December 2025, the FASB issued ASU 2025-11, "Interim Reporting (Topic 270) Narrow-Scope Improvements", the amendments in this Update clarify interim disclosure requirements and the applicability of Topic 270. The amendments in this Update result in a comprehensive list of interim disclosures that are required by GAAP. In developing the list of disclosures required by other Topics, the Board focused on identifying the interim disclosures that are currently required under GAAP. The objective of the amendments is to provide clarity about the current requirements, rather than evaluate whether to expand or reduce interim disclosure requirements. The amendments in this Update also include a disclosure principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. The intent of the disclosure principle, which is modeled after a previous SEC disclosure requirement, is to help entities determine whether disclosures not specified in Topic 270 should be provided in interim reporting periods. The amendments in this Update also clarify the applicability of Topic 270, the types of interim reporting, and the form and content of interim financial statements in accordance with GAAP. The Board expects that these clarifications will enhance consistency in interim reporting for all entities. The Board considers the amendments in this Update to be necessary to reflect the development of interim reporting over time. The amendments in this Update are effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, for public business entities and for interim reporting periods within annual reporting periods beginning after December 15, 2028, for entities other than public business entities. Early adoption is permitted for all entities. The amendments in this Update can be applied either (1) prospectively or (2) retrospectively to any or all prior periods presented in the financial statements.

In December 2025, the FASB issued ASU 2025-12, "Codification Improvements", thirty-three issues are addressed in this Update. Generally, the amendments in this Update are not intended to result in significant changes for most entities. However, the Board recognizes that changes to guidance may result in accounting changes for some entities. Therefore, the Board is providing transition guidance for the amendments. 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. Early adoption is permitted in both interim and annual reporting periods in which financial statements have not yet been issued or made available for issuance. If an entity adopts the amendments in this Update in an interim period, it must adopt them as of the beginning of the annual reporting period that includes that interim reporting period. An entity may elect to early adopt the amendments on an issue-by-issue basis. For example, an entity may decide to early adopt certain amendments and adopt the remaining amendments at the effective date. An entity should apply the amendments in this Update (except for the amendments to Topic 260, Earnings Per Share, related to Issue 4) using one of the following transition methods: 1. Prospectively to all transactions recognized on or after the date that the entity first applies the amendments 2. Retrospectively to the beginning of the earliest comparative period presented. An entity should adjust 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 comparative period presented. An entity may elect the transition method on an issue-by-issue basis. For example, it may apply certain amendments prospectively while applying others retrospectively. For the amendments in this Update to Topic 260 (that is, Issue 4), an entity should apply the amendments retrospectively to each prior reporting period presented in the period of adoption.

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 consolidated financial position, statements of operations, cash flows, and disclosures.

---

| |
|:---|
| 88 |
| *[**Table of Contents**](#Toc)* |

---

**Results of Operations for the Years Ended September 30, 2025 and 2024**

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the Years Ended September 30,**  | **For the Years Ended September 30,**  | **Variance**  | **Variance**  |
|  | **2025**  | **2024**  | **Amount**  | **%**  |
| Revenue | $27971360 | $64131332 | $(36159972) | (56.4)% |
| Cost of revenues | (27169837) | (60257618) | (33087781) | (54.9)% |
| Gross profit | 801523 | 3873714 | (3072191) | (79.3)% |
| Impairment loss for biological assets | (8868597) |  | 8868597 | 100.0% |
| Allowance for credit losses | (45112391) | (418661) | 44693730 | 10675.4% |
| Selling and distribution expenses | (309085) | (135848) | 173237 | 127.5% |
| General and administrative expenses | (2627826) | (2523520) | 104306 | 4.1% |
| **(Loss) income from operations**  | (56116376) | 795685 | (56912061) | (7152.6)% |
| Interest income | 10517 | 3887 | 6630 | 170.6% |
| Interest expense | (418313) | (1690551) | (1272238) | (75.3)% |
| Amortization of debt issuance costs | (294699) | (60301) | (234398) | (388.7)% |
| Government grant | 9345 |  | 9345 | 100.0% |
| Other income, net | 1521887 | 265429 | 1256458 | 473.4% |
| Gain (loss) on disposal of subsidiaries | 1901693 | (3941657) | 5843350 | 148.2% |
| **Loss before income taxes**  | (53385946) | (4627508) | 48758438 | 1053.7% |
| Income tax expenses | (42) | (264) | (222) | (84.1)% |
| **Net loss**  | $(53385988) | $(4627772) | $48758216 | 1053.6% |

---

Our revenue is generated from processing, distributing, and trading dried Shiitake mushrooms, Mu Er (also known as Auricularia heimuer or black ear fungus), other edible fungi, other agricultural products trading business (e.g., tapioca, corn, cotton, and cornstarch), and logistic services. The Company obtains control over these commodities as a principal from its suppliers before selling these commodities to its customers.

The following table sets forth the breakdown of our revenues for the years ended September 30, 2025 and 2024, respectively:

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Years Ended September 30,** | **For the Years Ended September 30,** | **For the Years Ended September 30,** | **For the Years Ended September 30,** | **Variance** | **Variance** | **Variance** |
|  | **2025** | **%** | **2024** | **%** | **Amount** | **%** | **%** |
| Shiitake | $10667870 | 38.1% | $17791882 | 27.7% | $(7124012) | (40.0 | (40.0)% |
| Mu Er | 9162453 | 32.8% | 14820286 | 23.1% | (5657833) | (38.2 | (38.2)% |
| Logistic services | 7326921 | 26.2% | 9400 |  | 7317521 |  | 77846.0% |
| Corn | 784933 | 2.8% | 30971188 | 48.4% | (30186255) | (97.5 | (97.5)% |
| Other edible fungi  | 29183 | 0.1% | 31493 | 0.0% | (2310) | (7.3 | (7.3)% |
| Red dates | - | - | 507083 | 0.8% | (507083) | (100.0 | (100.0)% |
| Total | $27971360 | 100.0% | $64131332 | 100.0% | $(36159972) | (56.4 | (56.4)% |

---

Total revenues for the year ended September 30, 2025 decreased by $36.2 million, or 56.4%, to $28.0 million from $64.1 million for the year ended September 30, 2024.

The trading of agriculture products (i.e. corn, and red dates) was mainly based on market opportunity of matching suppliers and customers. Hence, the sales volume may fluctuate according to market demand and supply and there is no pattern of such agriculture product trading.

---

| |
|:---|
| 89 |
| *[**Table of Contents**](#Toc)* |

---

Revenue from sales of Shiitake decreased by $7.1 million, or 40.0%, to $10.7 million for the year ended September 30, 2024 from $17.8 million for the same period of last year, mainly due to the decrease in sales volume from 1,496 tons for the year ended September 30, 2024 to 908 tons for the year ended September 30, 2025, which resulted in a decrease of $7.0 million in revenue from sales of Shiitake. The decrease in sales volume of Shiitake was caused by reduced customers' orders which resulted by the decrease in market demand for Shiitake. The impact of average unit sales price of Shiitake on the revenue from sales of Shiitake was minimal, the average unit sales price of Shiitake was $11,751 per ton for the year ended September 30, 2025 as compared to $11,895 per ton for the same period of last year, which resulted in a decrease of $0.1 million in revenue from sales of Shiitake.

Revenue from sales of Mu Er decreased by $5.6 million, or 38.1%, to $9.2 million for the year ended September 30, 2025 from $14.8 million for the same period of last year, mainly due to the decreased sales volume. Sales volume of Mu Er decreased to 746 tons for the year ended September 30, 2025 from 1,186 tons for the same period of last year, which resulted in a decrease of $5.5 million in revenue from sales of Mu Er. The decrease in sales volume of Mu Er was caused by reduced customers' orders which resulted by the decrease in market demand for Mu Er. The impact of average unit sales price of Mu Er on the revenue from sales of Mu Er was minimal, the average unit sales price of Mu Er was $12,286 per ton for the year ended September 30, 2025 as compared to $12,501 per ton for the same period of last year, which resulted in a decrease of $0.2 in revenue from sales of Mu Er.

Revenue from logistic services increased by $7.3 million, or 77,846%, to $7.3 million for the year ended September 30, 2025 from $9,400 for the same period of last year. On December 12, 2024, the Company signed an Overseas Warehouse Distribution Service Agreement with a third party, to provide "one piece shipping service". "One piece shipping service" refers to the overseas warehousing services, in-warehouse operations, final logistics services, and other related value-added services provided by the Company to the third party using "Warehouse Management System" (hereinafter referred to as "WMS System"). WMS system refers to a platform developed by the third party Company and rent by the Company, aimed at providing online order management for the third party. The functions supported by this information system may include but are not limited to goods management, warehousing distribution and inventory management, intelligent stocking analysis, logistics order management, settlement management, report statistics, return management, logistics optimization, logistics distribution status management, etc. Revenue from logistic services was related to the "one piece shipping service" provided by the Company since December 2024.

Revenue from sales of corn decreased by $30.2 million, or 97.5%, to $0.8 million for the year ended September 30, 2025 from $31.0 million for the same period of last year. The decrease was mainly attributable to the decrease in trading volume for the year ended September 30, 2025 as compared to the same period of last year.

Revenue from sales of red dates decreased by $0.5 million, or 100%, to $0.5 million for the year ended September 30, 2025 from nil for the same period of last year. The decrease was mainly attributable to no trading of red dates in fiscal 2025.

***Cost of revenue***

The following table sets forth the breakdown of the Company's cost of revenue for the years ended September 30, 2025 and 2024, respectively:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Years Ended September 30,** | **For the Years Ended September 30,** | **For the Years Ended September 30,** | **For the Years Ended September 30,** | **Variance** | **Variance** |
|  | **2025** | **%** | **2024** | **%** | **Amount** | **%** |
| Shiitake | $9396225 | 34.6% | $15686337 | 26.0% | $(6290112) | (40.1)% |
| Mu Er | 8163704 | 30.0% | 13095015 | 21.7% | (4931311) | (37.7)% |
| Logistic services | 8805651 | 32.4% | 4480 |  | 8801171 | 196454.7% |
| Corn | 784608 | 2.9% | 30943638 | 51.5% | (30159030) | (97.5)% |
| Other edible fungi  | 19649 | 0.1% | 21734 | 0.0% | (2085) | (9.6)% |
| Red dates | - | - | 506414 | 0.8% | (506414) | 100.0% |
| Total | $27169837 | 100.0% | $60257618 | 100.0% | $(33087781) | (54.9)% |

---

Cost of revenues decreased by $33.1 million, or 54.9%, to $27.2 million for the year ended September 30, 2025 from $60.3 million for the same period of last year. As illustrated in the table above, the decrease was mainly attributed by the cost of revenue associated with trading of corn and red dates, and the decrease in sales of shiitake and Mu Er, the decrease was partially offset by the increase in cost of revenue associated with logistic services.

---

| |
|:---|
| 90 |
| *[**Table of Contents**](#Toc)* |

---

***Gross Profit***

The following table sets forth the breakdown of gross profit for the years ended September 30, 2025 and 2024, respectively:

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Years Ended September 30,** | **For the Years Ended September 30,** | **For the Years Ended September 30,** | **For the Years Ended September 30,** | **For the Years Ended September 30,** | **Variance** | **Variance** |
|  | **2025** | **%** | **%** | **2024** | **%** | **Amount** | **%** |
| Shiitake | $1271645 |  | 158.7% | $2105545 | 54.4% | $(833900) | (39.6)% |
| Mu Er | 998749 |  | 124.6% | 1725271 | 44.5% | (726522) | (42.1)% |
| Logistic services | (1478730) | (184.5 | (184.5)% | 4920 | 0.1% | (1483650) | (30155.5)% |
| Corn | 325 |  | 0.0% | 27550 | 0.7% | (27225) | (98.8)% |
| Other edible fungi  | 9534 |  | 1.2% | 9759 | 0.3% | (225) | (2.3)% |
| Red dates | - |  | - | 669 | 0.0% | (669) | (100.0)% |
| Total | $801523 |  | 100.0% | $3873714 | 100.0% | $(3072191) | (79.3)% |

---

Overall gross profit decreased by $3.1 million, or 79.3%, to $0.8 million for the year ended September 30, 2025 from $3.9 million for the same period of last year. The decreased gross profit was caused by a decrease in gross profits of shiitake by $0.8 million and Mu Er by $0.7 million, as well as gross loss incurred by logistic services due to gestation period of aforementioned "one piece shipping service" commenced since December 2024.

***Impairment loss for biological assets***

Impairment loss for biological assets was approximately $8.9 million for the year ended September 30, 2025, representing an increase of approximately $8.9 million, or 100%, from nil for the same period of last year. The carrying amount of the biological assets was compared to the future discounted net cash flows expected to be generated by the biological assets and the Company determined that the carrying amount of the biological assets exceeded its fair value and impairment loss was recognized.

***Allowance for** **credit losses***

Allowance for credit losses were approximately $45.1 million for the year ended September 30, 2025, representing an increase of approximately $44.7 million, or 10,675.4%, from approximately $0.4 million for the same period of last year. The increase was mainly attributable to allowance of approximately $34.4 million for accounts receivable due to deterioration ageing of certain receivables, allowance of approximately $10.1 million for advances to suppliers due to deterioration ageing of certain advances to suppliers, allowance of approximately $0.7 million for other current assets due to deterioration ageing of other current assets, and allowance made for due from related parties of $96,754.

***Selling and distribution expenses***

Selling and distribution expenses increased by $0.2 million, or 127.5%, to approximately $0.3 million for the year ended September 30, 2025 from approximately $0.1 million for the same period of last year. The increase was primarily attributable to selling and distribution expenses incurred for the "one piece shipping service" since December 2024.

***General and administrative expenses***

General and administrative expenses increased by approximately $0.1 million, or 4.1%, to approximately $2.6 million for the year ended September 30, 2025 from approximately $2.5 million for the same period of last year. The increase was primarily attributable to the increase in staff and related expenses of approximately $0.4 million incurred for the "one piece shipping service" since December 2024 and increase in certain professional legal and auditing expenses of approximately $0.3 million, as partially offset by decrease in research and development expenses of approximately $0.6 million.

***Interest expense***

Interest expense decreased by $1.3 million, or 75.3%, to approximately $0.4 million for the year ended September 30, 2025 from $1.7 million for the same period of last year. The interest expenses incurred for the year ended September 30, 2024 was primarily attributable to interest expenses and fees charged by convertible promissory notes which was fully repaid on July 30, 2024 and, as a result, the interest expenses for the year ended September 30, 2025 decreased significantly.

***Amortization of debt issuance costs***

Amortization of debt issuance costs increased by $0.2 million, or 388.7%, to $0.3 million for the year ended September 30, 2025 from $60,301 for the same period of last year. On July 30, 2024, the Company and Atlas Sciences, LLC, ("Atlas"), entered into an agreement. Pursuant to the agreement, the Company agreed to issue Atlas an unsecured promissory note in the original principal amount of $5,355,000 for $5,000,000 in gross proceeds. The debt discount was amortized over the term of the promissory note and, for the year ended September 30, 2025, the Company recorded amortization of debt issuance cost of $0.3 million in other expenses.

---

| |
|:---|
| 91 |
| *[**Table of Contents**](#Toc)* |

---

***Other income***

Other income increased by approximately $1.3 million, or 473.4%, to approximately $1.5 million for the year ended September 30, 2025 from approximately $0.3 million for the same period of last year. The increase was mainly due to four subsidiaries was set up in the USA and leased three warehouses in earning warehouse sub-lease rental income.

***Gain** **(loss)** **on disposal of subsidiaries***

On March 31, 2025, an agreement was signed to divest 100% interest in Farmmi Food and Farmmi Supply Chain to a third party for a total cash consideration of RMB20,000 ($2,754). In June 2025, agreements was signed to divest 100% interest in Farmmi Biotech, Guoning Zhonghao and Ningbo Farmmi Trade to third parties for a total cash consideration of RMB10,000 ($1,405), RMB10,000 ($1,405), and RMB5,000 ($702), respectively. The gain on disposal of these subsidiaries was $1.0 million for the year ended September 30, 2025.

On January 31, 2024, an agreement was signed to divest 100% interest in Hangzhou Nongyuan Network Technology Co., Ltd. ("Nongyuan Network"), Zhejiang Farmmi Holdings Group Co., Ltd. ("Farmmi Holdings"), and Zhejiang Farmmi Agricultural Technology Group Co., Ltd. ("Farmmi Agricultural") to a third party for a total cash consideration of RMB43.1 million ($6.0 million). The loss on disposal of these subsidiaries was $3.9 million for the year ended September 30, 2024.

***Income taxes***

For the years ended September 30, 2025 and 2024, our income tax expense was $42 and $264 respectively. The income tax expenses for the years ended September 30, 2025 and 2024 were as a result of certain PRC subsidiaries that have taxable income from operations.

***Net loss***

As a result of the factors described above, our net loss was approximately $53.4 million for the year ended September 30, 2025, from net income of $4.6 million for the same period of last year.

**Results of Operations for the Years Ended September 30, 2024 and 2023**

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the year ended September 30,**  | **For the year ended September 30,**  | **Variance**  | **Variance**  |
|  | **2024**  | **2023**  | **Amount**  | **%**  |
| Revenue | $64131332 | $110364887 | $(46233555) | (41.9)% |
| Cost of revenues | (60257618) | (106078132) | (45820514) | (43.2)% |
| Gross profit | 3873714 | 4286755 | (413041) | (9.6)% |
| Allowance for doubtful debts | (418661) | 32007 | 450668 | 1408.0% |
| Selling and distribution expenses | (135848) | (145292) | (9444) | (6.5)% |
| General and administrative expenses | (2523520) | (2132095) | 391425 | 18.4% |
| Income from operations | 795685 | 2041375 | (1245690) | (61.0)% |
| Change in fair value of derivative liability |  | 873767 | (873767) | (100.0)% |
| Interest income | 3887 | 743858 | (739971) | (99.5)% |
| Interest expense | (1690551) | (650813) | (1039738) | (159.8)% |
| Amortization of debt issuance costs | (60301) | (1691609) | 1631308 | 96.4% |
| Government grant |  | 1439208 | (1439208) | (100.0)% |
| Other income, net | 265429 | 101520 | 163909 | 161.5% |
| Loss on disposal of subsidiaries | (3941657) | - | (3941657) | (100.0)% |
| (Loss) income before income taxes | (4627508) | 2857306 | (7484814) | (262.0)% |
| Income tax expenses | (264) | (313493) | (313229) | (99.9)% |
| Net (loss) income | $(4627772) | $2543813 | $(7171585) | (281.9)% |

---

---

| |
|:---|
| 92 |
| *[**Table of Contents**](#Toc)* |

---

Our revenue is generated from the following major product categories: Shiitake, Mu Er, bulk trading and other products. Since June 2021, the Company's operations were expanded into bulk agricultural commodity trading, such as cotton and corn bulk trading, The Company obtains control over these commodities as a principal from its suppliers before selling these commodities to its customers.

The following table sets forth the breakdown of our revenues for the years ended September 30, 2024 and 2023, respectively:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the years ended September 30,** | **For the years ended September 30,** | **For the years ended September 30,** | **For the years ended September 30,** | **Variance** | **Variance** |
|  | **2024** | **%** | **2023** | **%** | **Amount** | **%** |
| Tapioca |  |  | $39977734 | 36.2% | $(39977734) | 100.0% |
| Corn | $30971188 | 48.4% | 27430969 | 24.9% | 3540219 | 12.9% |
| Shiitake | 17791882 | 27.7% | 19655465 | 17.8% | (1863583) | (9.5)% |
| Mu Er | 14820286 | 23.1% | 16301157 | 14.8% | (1480871) | (9.1)% |
| Cotton |  | 0.0% | 5547927 | 5.0% | (5547927) | (100.0)% |
| Red dates | 507083 | 0.8% |  |  | 507083 | 100.0% |
| Cornstarch |  | 0.0% | 1338782 | 1.2% | (1338782) | (100.0)% |
| Other edible fungi  | 31493 | 0.0% | 112853 | 0.1% | (81360) | (72.1)% |
| Logistic services | 9400 | 0.0% | - | - | 9400 | 100.0% |
| Total | $64131332 | 100.0% | $110364887 | 100.0% | $(46233555) | (41.9)% |

---

Total revenues for the year ended September 30, 2024 decreased by $46.2 million, or 41.9%, to $64.1 million from $110.4 million for the year ended September 30, 2023.

The trading of agriculture products (i.e. tapioca, corn, cotton, red dates and cornstarch) was mainly based on market opportunity of matching suppliers and customers. Hence, the sales volume may fluctuate according to market demand and supply and there is no pattern of such agriculture product trading.

Revenue from sales of tapioca decreased by $40.0 million, or 100%, to nil for the year ended September 30, 2024 from $40.0 million for the same period of last year. The decrease was mainly attributable to no trading of tapioca for the year ended September 30, 2024.

---

| |
|:---|
| 93 |
| *[**Table of Contents**](#Toc)* |

---

Revenue from sales of corn increased by $3.5 million, or 12.9%, to $31.0 million for the year ended September 30, 2024 from $27.4 million for the same period of last year. The increase was mainly attributable to the increase in trading volume for the year ended September 30, 2024 as compared to the same period of last year.

Revenue from sales of Shiitake decreased by $1.9 million, or 9.5%, to $17.8 million for the year ended September 30, 2024 from $19.7 million for the same period of last year, mainly due to the decrease in sales volume from 1,635 tons for the year ended September 30, 2023 to 1,496 tons for the year ended September 30, 2024, which resulted in a decrease of $1.7 million in revenue from sales of Shiitake. The decrease in sales volume of Shiitake was caused by reduced customers' orders which resulted by the decrease in market demand for Shiitake. The impact of average unit sales price of Shiitake on the revenue from sales of Shiitake was minimal, the average unit sales price of Shiitake was $11,895 per ton for the year ended September 30, 2024 as compared to $12,024 per ton for the same period of last year, which resulted in a decrease of $0.2 million in revenue from sales of Shiitake.

Revenue from sales of Mu Er decreased by $1.5 million, or 9.1%, to $14.8 million for the year ended September 30, 2024 from $16.3 million for the same period of last year, mainly due to the decreased sales volume. Sales volume of Mu Er decreased to 1,186 tons for the year ended September 30, 2024 from 1,303 tons for the same period of last year, which resulted in a decrease of $1.5 million in revenue from sales of Mu Er. The decrease in sales volume of Mu Er was caused by reduced customers' orders which resulted by the decrease in market demand for Mu Er. The impact of average unit sales price of Mu Er on the revenue from sales of Mu Er was minimal, the average unit sales price of Mu Er was $12,501 per ton for the year ended September 30, 2024 as compared to $12,508 per ton for the same period of last year.

Revenue from sales of cotton decreased by $5.5 million, or 100%, to nil for the year ended September 30, 2024 from $5.5 million for the same period of last year. The decrease was mainly attributable to no trading of cotton in fiscal 2024.

Revenue from sales of red dates increased by $0.5 million, or 100%, to $0.5 million for the year ended September 30, 2024 from nil for the same period of last year. The increase was mainly attributable to trading opportunity of red dates for the year ended September 30, 2024, which no such trading for the same period of last year.

Revenue from sales of cornstarch decreased by $1.3 million, or 100%, to nil for the year ended September 30, 2024 from $1.3 million for the same period of last year. The decrease was mainly attributable to no trading of cornstarch in fiscal 2024.

***Cost of revenue***

The following table sets forth the breakdown of the Company's cost of revenue for the years ended September 30, 2024 and 2023, respectively:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the years ended September 30,** | **For the years ended September 30,** | **For the years ended September 30,** | **For the years ended September 30,** | **Variance** | **Variance** |
|  | **2024** | **%** | **2023** | **%** | **Amount** | **%** |
| Tapioca |  |  | $39924566 | 37.7% | $(39924566) | 100.0% |
| Corn | $30943638 | 51.5% | 27412575 | 25.8% | 3531063 | 12.9% |
| Shiitake | 15686337 | 26.0% | 17541012 | 16.5% | (1854675) | (10.6)% |
| Mu Er | 13095015 | 21.7% | 14238307 | 13.4% | (1143292) | (8.0)% |
| Cotton |  |  | 5539602 | 5.2% | (5539602) | (100.0)% |
| Red dates | 506414 | 0.8% |  |  | 506414 | 100.0% |
| Cornstarch |  |  | 1336902 | 1.3% | (1336902) | (100.0)% |
| Other edible fungi  | 21734 | 0.0% | 85168 | 0.1% | (63434) | (74.5)% |
| Logistic services | 4480 | 0.0% | - | - | 4480 | 100.0% |
| Total | $60257618 | 100.0% | $106078132 | 100.0% | $(45820514) | (43.2)% |

---

Cost of revenues decreased by $45.8 million, or 43.2%, to $60.3 million for the year ended September 30, 2024 from $106.1 million for the same period of last year. As illustrated in the table above, the decrease was mainly attributed by the cost of revenue associated with trading of tapioca, cotton and cornstarch, the decrease was partially offset by the increase in cost of revenue associated with trading of corn and red dates.

---

| |
|:---|
| 94 |
| *[**Table of Contents**](#Toc)* |

---

***Gross Profit***

The following table sets forth the breakdown of gross profit for the years ended September 30, 2024 and 2023, respectively:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the years ended September 30,** | **For the years ended September 30,** | **For the years ended September 30,** | **For the years ended September 30,** | **Variance** | **Variance** |
|  | **2024** | **%** | **2023** | **%** | **Amount** | **%** |
| Tapioca |  |  | $53168 | 1.2% | $(53168) | 100.0% |
| Corn | $27550 | 0.7% | 18394 | 0.4% | 9156 | 49.8% |
| Shiitake | 2105545 | 54.4% | 2114453 | 49.3% | (8908) | (0.4)% |
| Mu Er | 1725271 | 44.5% | 2062850 | 48.1% | (337579) | (16.4)% |
| Cotton |  |  | 8325 | 0.2% | (8325) | (100.0)% |
| Red dates | 669 | 0.1% |  |  | 669 | 100.0% |
| Corn starch |  |  | 1880 | 0.0% | (1880) | (100.0)% |
| Other edible fungi  | 9759 | 0.3% | 27685 | 0.6% | (17926) | (64.7)% |
| Logistic services | 4920 | 0.1% | - | - | 4920 | 100.0% |
| Total | $3873714 | 100.0% | $4286755 | 100.0% | $(413041) | (9.6)% |

---

Overall gross profit decreased by $0.4 million, or 9.8%, to $3.9 million for the year ended September 30, 2024 from $4.3 million for the same period of last year. The decreased gross profit was caused by a decrease in gross margin of Mu Er to 11.6% for the year ended September 30, 2024 from 12.7% for the same period of last year and no trading opportunity of tapioca for the year ended September 30, 2024, as compared to the prior year. The decrease in gross margin of Mu Er was mainly attributable to the increase in procurement cost of Mu Er as the suppliers increased the prices of Mu Er due to higher farming costs.

***Allowance for receivables, inventories, and long-term investments***

Allowance for receivables, inventories, and long-term investments were approximately $0.4 million for the year ended September 30, 2024, representing an increase of approximately $0.5 million, or 1,408.0%, from $32,007 for the same period of last year. The increase was mainly attributable to allowance of approximately $0.3 million for receivables which was primarily due to the ageing of certain receivables over one year, and impairment allowance of approximately $0.1 million for long-term investments as the carrying amount of certain long-term investments exceeded its fair value.

***Selling and distribution expenses***

Selling and distribution expenses decreased by $9,444, or 6.5%, to approximately $0.1 million for the year ended September 30, 2024 from approximately $0.1 million for the same period of last year. The decrease was primarily due to a decrease in warehouse expenses of $33,965 due to the reduction in trading opportunities of agricultural products which, in turn, reduced the need of warehousing those agricultural products, the decrease was partially offset by an increase in shipping expenses by $28,445 which was due to an increase in shipping charges.

***General and administrative expenses***

General and administrative expenses increased by approximately $0.4 million, or 18.4%, to approximately $2.5 million for the year ended September 30, 2024 from approximately $2.1 million for the same period of last year. The increase was primarily attributable to the increase of approximately $0.3 million in leasing expenses as a subsidiary was newly set up in the USA in commencing warehouse renting business, and approximately $0.2 million incurred in research and development expenses.

***Change in fair value of derivative liability***

On September 26, 2022, the Company completed a $6.42 million convertible promissory note with an institutional investor (the "Investor"). Pursuant to the Securities Purchase Agreement, dated as of September 26, 2022, the Company issued and sold to the Investor a convertible promissory note of $6.42 million due on September 25, 2023, convertible into ordinary shares, $0.025 par value per share, at a discount of $0.42 million. Upon issuance, this convertible promissory note converts at the 80% of the market price. The Company accounted for this conversion feature as a derivative liability. In connection herewith, the Company recorded a derivative liability of $3.87 million and a debt discount of $3.87 million upon issuance of this convertible promissory note. The change in fair value of derivative liability of $0.9 million was recorded in other income for the year ended September 30, 2023. No other income was recognized for the year ended September 30, 2024.

***Interest income***

Interest income decreased by $0.7 million, or 99.5%, to $3,887 for the year ended September 30, 2024 from $0.7 million for the same period of last year. For the year ended September 30, 2023, interest earned was mainly attributed to 6.5% per annum interest earned on a deposit of RMB 50 million ($7.0 million) from a third party. On November 5, 2021, one of our subsidiaries signed an Equity Transfer Framework Agreement to invest 15.97% interest in an entity, Shanghai Jiaoda Onlly Co., Ltd, from four third parties for a total consideration of RMB 509.6 million (approximately $71.6 million). On November 5, 2021, the Company paid a deposit of RMB 50 million ($7.0 million) as a prepayment for the acquisition. However, the Company decided to withdraw from the investment due to the adjustment of its business strategy and a third party is willing to undertake the above-mentioned investment. Upon consummation of the investment by that third party, the above-mentioned deposit will be returned to the Company from the seller and the Company charged that third party with an interest of 6.5% per annum on that deposit counting from the payment date. No interest income was recognized for the year ended September 30, 2024.

---

| |
|:---|
| 95 |
| *[**Table of Contents**](#Toc)* |

---

***Interest expense***

Interest expense increased by approximately $1.0 million, 159.8%, to approximately $1.7 million for the year ended September 30, 2024 from approximately $0.7 million for the same period of last year. The increase in interest expense was primarily attributable to the interest expenses incurred on the convertible promissory notes and loans.

***Amortization of debt issuance costs***

Amortization of debt issuance costs decreased by $1.6 million, or 96.4%, to nil for the year ended September 30, 2024 from $1.7 million for the same period of last year. On September 26, 2022, the Company completed a $6.42 million convertible promissory note with an institutional investor (the "Investor"). Pursuant to the Securities Purchase Agreement, dated as of September 26, 2022, the Company issued and sold to the Investor a convertible promissory note of $6.42 million due on September 25, 2023, convertible into ordinary shares, $0.025 par value per share, at a discount of $0.42 million. Upon issuance, this convertible promissory note converts at the 80% of the market price. The Company accounted for this conversion feature as a derivative liability. The debt discount was amortized over the term of the convertible promissory note and, for the year ended September 30, 2023, the Company recorded amortization of debt issuance cost of $1.7 million for the year ended September 30, 2023.

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 Company issued to the Investor an unsecured promissory note dated July 30, 2024 in the original principal amount of $5,355,000 (the "Note") for $5,000,000 in gross proceeds. The Company recorded amortization of $60,301 debt issuance costs for the year ended September 30, 2024.

***Government grant***

Government grant decreased by $1.4 million, or 100%, to nil for the year ended September 30, 2024 from $1.4 million for the same period of last year. Government grant was received from district government in respect of fund raised from capital market for the year ended September 30, 2023. No such government grant for the year ended September 30, 2024.

***Other income***

Other income increased by approximately $0.2 million, or 161.5%, to approximately $0.3 million for the year ended September 30, 2024 from $0.1 million for the same period of last year. The increase was mainly due to that a subsidiary was newly set up in the USA in earning warehouse sub-lease renting income.

***Loss on disposal of subsidiaries***

On January 31, 2024, Zhejiang Suyuan Agricultural Technology Co., Ltd ("Suyuan"), a wholly owned subsidiary of the Company, entered into a share transfer agreement with Lishui Chida Logistics Co., Ltd, an unrelated third party. Under the agreement, Suyuan agreed to sell 100% of the equity of its wholly owned subsidiary, Zhejiang Farmmi Holdings Group Co., Ltd ("Farmmi Holding"), to the buyer for RMB 43.1 million (approximately $6.0 million). The sale of Farmmi Holding was intended to streamline the business operations of certain of the Company's subsidiaries in China and reduce the costs associated with maintaining Farmmi Holding and its wholly owned subsidiary, Zhejiang Farmmi Agricultural Science and Technology Group Co., Ltd ("Farmmi Agriculture").

As previously reported, prior to January 2023, Hangzhou Nongyuan Network Technology Co., Ltd ("Nongyuan Network" or "VIE"), through a series of VIE agreements with Farmmi Agriculture, operated the e-commerce websites and online sales of agriculture products for the Company's subsidiaries in China. Such contractual arrangements enabled Farmmi Agriculture to have effective control over and receive substantially all of the economic benefits of Nongyuan Network. After January 2023, the e-commerce platform operations have been halted. After the share transfer, Farmmi Agriculture's contractual arrangements with Nongyuan Network would be transferred to the buyer.

Prior to the entry into the agreement, all of the business operations, customers and suppliers of Farmmi Holding and Farmmi Agriculture had been transferred to other operating subsidiaries of the Company. The purchase price to be paid by the buyer to Suyuan reflects the aggregate value of all the assets of the disposed entities.

---

| |
|:---|
| 96 |
| *[**Table of Contents**](#Toc)* |

---

On September 18, 2024, Farmmi International Limited ("Farmmi International"), a wholly owned subsidiary of the Registrant, entered into a share transfer agreement with Lishui Jiuanju Trading Co., Ltd ("Jiuanju"), an unrelated third party. Under the agreement, Farmmi International agreed to sell 100% of the equity of its wholly owned subsidiary, Farmmi (Hangzhou) Ecology Agriculture Development Co., Ltd ("Farmmi Ecology"), to the buyer for RMB 12,000 (approximately $1,700). The sale of Farmmi Ecology was intended to streamline the business operations of the Company's subsidiaries in China and reduce the costs associated with maintaining Farmmi Ecology. Prior to the entry into the agreement, Farmmi Ecology's 5% equity interest in Zhejiang Yitang Medical Service Co., Ltd, a wholly owned subsidiary of the Company, had been transferred to Farmmi (Hangzhou) Health Development Co., Ltd, a subsidiary of the Company. The purchase price to be paid by the buyer to Farmmi International was determined based on the fair value of Farmmi Ecology.

On September 23, 2024, Farmmi International entered into a share transfer agreement with Jiuanju, pursuant to which Farmmi International agreed to sell 100% of the equity of its wholly owned subsidiary, Lishui Farmmi Technology Co., Ltd ("Farmmi Technology"), to the buyer for RMB 620,000 (approximately $88,070). The sale of Farmmi Technology was intended to streamline the business operations of the Company's subsidiaries in China and reduce the costs associated with maintaining Farmmi Technology. Prior to the entry into the agreement, Farmmi Technology's 50% equity interest in Zhejiang Farmmi Ecological Agricultural Technology Co., Ltd, a wholly owned subsidiary of the Company, had been transferred to Farmmi (Hangzhou) Enterprise Management Co., Ltd, a subsidiary of the Company. The purchase price to be paid by the buyer to Farmmi International was determined based on the fair value of Farmmi Technology.

As a result of the aforementioned disposal, the loss on disposal of subsidiaries was $3.9 million for the year ended September 30, 2024.

***Income tax expenses***

For the years ended September 30, 2024 and 2023, our income tax expense was $264 and approximately $0.3 million respectively. The income tax expenses for the years ended September 30, 2024 and 2023 were as a result of certain PRC subsidiaries that have taxable income from operations.

***Net (loss) income***

As a result of the factors described above, our net loss was approximately $4.6 million for the year ended September 30, 2024, from net income of $2.5 million for the same period of last year.

---

| |
|:---|
| 97 |
| *[**Table of Contents**](#Toc)* |

---

**Liquidity and Capital Resources**

We are a holding company incorporated in the Cayman Islands. We may need dividends and other distributions on equity from our PRC subsidiaries to satisfy our liquidity requirements. Current PRC regulations permit our PRC subsidiaries to pay dividends to us only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, our PRC subsidiaries are required to set aside at least 10% of their respective accumulated profits each year, if any, to fund certain reserve funds until the total amount set aside reaches 50% of their respective registered capital. Our PRC subsidiaries may also allocate a portion of their after-tax profits based on PRC rules and regulations to employee welfare and bonus funds at their discretion. These reserves are not distributable as cash dividends.

Further, although instruments governing the current debts incurred by our PRC subsidiaries do not have restrictions on their abilities to pay dividends or make other payments to us, the lender may impose such restriction in the future. As a result, our ability to distribute dividends largely depends on earnings from our PRC subsidiaries and their ability to pay dividends out of earnings. Management believes that our current cash, cash flows provided by operating activities, and access to loans will be sufficient to meet our working capital needs for at least the next 12 months. We intend to continue to carefully execute our growth plans and manage market risk.

As of September 30, 2025, we had cash of $0.8 million. As of September 30, 2025, advances to suppliers amounted to $46.3 million and is expected to be fully utilized by September 2026. We made these advances based on the sales orders we received and expect to receive in the future months. As of September 30, 2025, we had accounts receivable of $13.1 million and we expect to collect the remaining balance by September 2026. Our current liabilities amounted to $10.0 million as of September 30, 2025, in comparison to $10.1 million as of September 30, 2024.

***Indebtedness.*** As of September 30, 2025, we have promissory notes of $2.5 million, and long-term loan of $1.8 million. Beside these debts, we did not have any debts, finance leases or purchase commitments, guarantees or other material contingent liabilities.

***Off-Balance Sheet Arrangements.*** We have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. Moreover, we do not have any variable interest in any unconsolidated entity that we provide financing, liquidity, market risk or credit support to or engages in hedging or research and development services with us.

---

| |
|:---|
| 98 |
| *[**Table of Contents**](#Toc)* |

---

***Capital Resources.*** The primary drivers and material factors impacting our liquidity and capital resources include our ability to generate sufficient cash flows from our operations and renew commercial bank loans, as well as proceeds from equity and debt financing, to ensure our future growth and expansion plans. As of September 30, 2025, we had total assets of $147.0 million, which includes notes receivables of $59.6 million, advances to suppliers of $46.3 million, accounts receivable of $13.1 million and inventory of $1.5 million, working capital of $831.2 million and total equity of $123.9 million.

**Working Capital.** Total working capital as of September 30, 2025 amounted to $83.2 million, compared to $151.9 million as of September 30, 2024.

***Capital Needs.*** Our capital needs include our daily working capital needs and capital needs to finance the expansion of our business. Our management believes that income generated from our current operations can satisfy our daily working capital needs over the next 12 months. We may also raise additional capital through public offerings or private placements to finance our business development and to consummate any merger or acquisition, if necessary.

***Cash flows***

The following table sets forth summary of our cash flows from continuing operations for the years ended September 30, 2025, 2024, and 2023.

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Years Ended September 30,**  | **For the Years Ended September 30,**  | **For the Years Ended September 30,**  |
|  | **2025** | **2024** | **2023** |
| Net cash provided by (used in) operating activities | $52461825 | $(16775531) | $(75754162) |
| Net cash (used in) provided by investing activities | (59702705) | 2068359 | 35896193 |
| Net cash provided by (used in) financing activities | 7561982 | 1827370 | 11017942 |
| Effect of exchange rate changes on cash | (3526) | 576589 | 462261 |
| Net increase (decrease) in cash | 317576 | (12303213) | (28377766) |
| Cash and restricted cash, beginning of year | 486522 | 12789735 | 41167501 |
| Cash and restricted cash, end of year | $804098 | $486522 | $12789735 |

---

***Operating activities***

Net cash provided by operating activities was $52.5 million for the year ended September 30, 2025, which mainly consisted of a decrease of $62.8 million in advances to suppliers due to the refund of advances by certain suppliers, allowance for credit loss of $34.4 million for accounts receivable and $10.1 million for advances to suppliers due to deterioration of ageing, as mainly offset by net loss of $53.4 million.

Net cash used in operating activities was $16.8 million for the year ended September 30, 2024, which mainly consisted of an increase of $9.3 million in advances to suppliers for purchasing mushrooms, corn, cotton, red dates and soybean in anticipation of sales orders and an increase of $10.6 million in accounts receivable due to sales, as mainly offset by an increase in accounts payable of $3.0 million.

Net cash used in operating activities was $75.8 million for the year ended September 30, 2023, which mainly consisted of an increase of $71.3 million in advances to suppliers for purchasing mushrooms, corn, cotton, red dates and soybean in anticipation of sales orders and an increase of $9.0 million in accounts receivable due to sales, as mainly offset by net income of $2.5 million and collection of notes receivables of $3.6 million.

---

| |
|:---|
| 99 |
| *[**Table of Contents**](#Toc)* |

---

***Investing activities***

Net cash used in investing activities was $59.7 million for the year ended September 30, 2025, which mainly consisted of purchase of long-term investments of $59.7 million, proceeds from disposal of subsidiaries, net of cash, $60,538 and purchase of property and equipment of $16, 667.

Net cash provided by investing activities was $2.1 million for the year ended September 30, 2024, which mainly consisted of proceeds from disposal of subsidiaries.

Net cash provided by investing activities was $35.9 million for the year ended September 30, 2023, which mainly consisted of collection of $35.4 million fixed term deposit and $7.5 million from withdrawn acquisition, as offset by $7.1 million used in long-term investment.

***Financing activities***

Net cash provided by financing activities was $7.6 million for the year ended September 30, 2025, which mainly consisted of issuance of ordinary shares of $9.9 million, and proceeds of $4.4 million from promissory notes, as partially offset by repayment of $4.8 million to a third-party loan and repayment of $2.6 million promissory notes.

Net cash provided by financing activities was $1.8 million for the year ended September 30, 2024, which mainly consisted of proceeds of $5.0 million from promissory notes, $2.2 million borrowing from a third party and $0.8 million net proceeds from share issuance, as mainly offset by repayment of $6.1 million convertible promissory notes.

Net cash provided by financing activities was $11.0 million for the year ended September 30, 2023, which mainly consisted of net proceeds of $7.9 million from issuance of ordinary shares and borrowing of $4.8 million loans, as mainly offset by repayment of $1.7 million loans.

**<u>Tabular Disclosure of Contractual Obligations</u>**

We have certain potential commitments that include future estimated payments. Changes in our business needs, cancellation provisions, changing interest rates, and other factors may result in actual payments differing from the estimates. We cannot provide certainty regarding the timing and amounts of payments.

The following table presents the company's material contractual obligations as of September 30, 2025:

---

| | | | |
|:---|:---|:---|:---|
| <br>**Contractual obligations**  |<br>**Total**  | **Less than** <br>**1 year**  | **More than** <br>**5 years**  |
| Promissory notes | $2519134 | $2519134 | **-** |
| Long-term loans | 1809780 |  | **-** |
| Operating lease obligations | 22282865 | 7025712 | 1002553 |
| Total | $26611779 | $9544846 | $1002553 |

---

(1) As of September 30, 2025, the Company had outstanding promissory notes of $2.5 million (see Note 11 of the notes to consolidated financial statements for details).

(2) As of September 30, 2025, the Company had outstanding long-term loan of $1.8 million (see Note 12 of the notes to consolidated financial statements for details).

(3) As of September 30, 2025, the Company had operating lease commitment of $22.3 million (see Note 16 of the notes to consolidated financial statements for details).

---

| |
|:---|
| 100 |
| *[**Table of Contents**](#Toc)* |

---

**Item 6. Directors, Senior Management and Employees**

**A. Directors and Senior Management**

The following table provides information regarding our executive officers and directors as of the date of this report:

---

| | | |
|:---|:---|:---|
| **Name** | **Age** | **Position(s)** |
| Yefang Zhang | 59 | Chief Executive Officer and Chairwoman of Board of Directors |
| Chenyang Wang | 38 | Director |
| Zhimin Lu | 51 | Chief Financial Officer |
| Qinyi Fu | 41 | Director (Independent) |
| Hongdao Qian | 63 | Director (Independent) |
| Hui Ruan | 58 | Director (Independent) |

---

The business address of all such senior management and directors is F3 Building No. 1, 888 Tianning Street, Liandu District, Lishui City, Zhejiang Province, People's Republic of China 323000.

***Yefang Zhang.*** Ms. Zhang has been our Chairwoman and CEO since July 2015. Ms. Zhang has been the sole shareholder and the director of FarmNet Limited since its incorporation in July 2015. Ms. Zhang has been the general manager of Farmmi International since August 2015. Ms. Zhang was the sole director of EN Energy Group Inc. ('CNEY") from November 23, 2018 to August 26, 2019, she held 100% shares of CNEY though Global Clean Energy Limited in which she is the sole director either, Ms. Zhang was the executive director of FLS Mushroom from March 2011 to September 2016. Since 2013, Ms. Zhang has been a director of Tantech Holdings Ltd ("Tantech"), a NASDAQ Capital Market listed company, Tanbsok Group Ltd and USCNHK Group Limited. Ms. Zhang was also a director of Zhengjiang Tantech Bamboo Technology Co., Ltd from January 2011 to May 2016. Ms. Zhang has been a director of Daxing'anling Hualin Investment Management Ltd. From 1994 to 1997, she served as Vice General Manager of Lishui Jingning Huali Co., Ltd, which has been dissolved. From 1991 to 1994, she was a teacher at Wenzhou Wencheng Huangtan Middle School. She earned her degree of junior college in Geography from Wenzhou Normal College in July 1991. Ms. Zhang has extensive knowledge and experience in company management and food industry. We have appointed Ms. Zhang to be a director due to her strong understanding of our industry and business. Ms. Zhang is the wife of our former director, Mr. Zhengyu Wang.

---

| |
|:---|
| 101 |
| *[**Table of Contents**](#Toc)* |

---

***Chenyang Wang***. Ms. Wang has been our director since January 2025. She has served as the Manager of the Securities Affairs Department of the Company responsible for the Company's corporate reporting and compliance matters since May 2018. Prior to joining the Company, Ms. Wang was an Investment Manager with Zhejiang Yangzhechen Assets Management Co., Ltd. from October 2016 to April 2018. From October 2010 to April 2012, she was a researcher at Zhejiang Bohan Investment Management Co., Ltd. Ms. Wang earned her Master's degree in Finance from Nankai University, China, in 2018, a Bachelor of Financial Management from Renmin University of China in 2021 and a Bachelor of Financial Engineering from South–Central Minzu University, China, in 2011.

***Zhimin Lu.*** Prior to being appointed as the Registrant's CFO, Mr. Zhimin Lu served as the chief financial officer of Zhongjian Heneng (Shanghai) Trading Co., Ltd, Shanghai Yunmihui Supply Chain Group Co., Ltd and Jiangsu Paidile Packaging Technology Co., Ltd, three affiliated companies, from August 2021 to August 2023. Mr. Lu had served as the assistant chief financial officer and a finance manager with Shanghai Only Vision Enterprise Group Co., Ltd from February 2018 to December 2020. He was a finance manager with Shanghai Sunsystem Electric Co., Ltd from August 2005 to April 2016. From April 2002 to December 2003, Mr. Lu was an accounting supervisor at Shanghai Aurora Office Automation Sales Co., Ltd. Mr. Lu holds an intermediate level accountant qualification certificate. He received his Bachelor degree in Accounting from the Shanghai Lixin University of Accounting and Finance in 2014 and an Associate degree in Accounting from Chongqing Technology and Business University in 1996.

***Qinyi Fu.*** Mr. Fu has been our independent director since June 2021. Mr. Fu is a PRC Certified Public Accountant. He has been a partner at Da Hua Certified Public Accountants since June 2018. Prior to joining Da Hua Certified Public Accountants, he was a partner at Ruihua Certified Public Accountants from December 2015 to May 2018, a manager in Deloitte China Certified Public Accountants from January 2012 to December 2015, and an auditor in Ernst & Young China Certified Public Accountants from September 2010 to January 2012. Since October 2018, Mr. Fu has been an independent director at Blue Hat Interactive Entertainment Technology (NASDAQ: BHAT) and a member of its audit committee. Mr. Fu received his bachelor's degree in international economics and trade in July 2007 and his master's degree in international economics in July 2010, both from Xiamen University.

---

| |
|:---|
| 102 |
| *[**Table of Contents**](#Toc)* |

---

***Hongdao Qian.*** Mr. Qian has been our independent director since July 2017. Mr. Qian has been a professor on the faculty of the Guanghua Law School at Zhejiang University since September 2005. His research, writing and teaching focuses on corporate governance, economic analysis of law and Western jurisprudence. Prior to joining Guanghua Law School, Mr. Qian was a Professor at the Institute of Law, China Academy of Social Sciences; a Lecturer in Economics at Peking University and a Prosecutor in the People's Procuratorate of Zhejiang Province. Mr. Qian currently is an independent director of Tantech, a Nasdaq listed company and a related party of us. He is also an independent director of Zhejiang Sunflower Light Energy Science & Technology LLC, a public company listed on Shenzhen Stock Exchange in China, Zhejiang Kema Moca Material Limited Company, a public company listed on National Equities Exchange and Quotations in China and OuBao Security Technology Co., Ltd, a private company. Mr. Qian currently serves as Vice Chairman of the Chinese Society of Comparative Law, Executive Subeditor of the China Academic Yearbook and President of the China Rule of Law Research Institute, where he has organized a team of scholars to create China's first Rule of Law index using empirical methods. Mr. Qian earned his bachelor of law from Jilin University in 1986, his master of law from North-West University of Politics and Law in 1994 and his doctor of law from Peking University in 1997. Mr. Qian was a visiting scholar at Waseda University in Japan, Stanford University in California and both Oxford and Cambridge Universities in England. Mr. Qian has been appointed as a director because of his expertise in economics and law.

***Hui Ruan.*** Dr. Ruan has been our independent director since June 2020. Dr. Hui Ruan has been an associate professor and a supervisor of master's degree program at the College of Biosystems Engineering and Food Science of Zhejiang University in China from 2003. Dr. Ruan has been a member of the youth committee of the Chinese Institute of Food Science and Technology since 2007. From 2005 to 2006, he cooperated with a number of universities in U.S. to conduct research as a visiting scholar. Dr. Ruan has received a second prize of National science and technology improvement award and a first prize of Zhejiang science and technology improvement award. He is awarded more than 60 patents and published over 100 papers. Dr. Ruan has been a peer review expert at Chinese national natural science fund, three provincial natural science funds, and several international journals including *Carbohydrate Polymer*, *Journal of Food Science* and *New Biotechnology*. Dr. Ruan received his doctoral degree in food science and engineering from Zhejiang University in 2003, his master degree of physiology from Hangzhou University in 1995, and his bachelor degree of biology from Hangzhou University in 1990. Dr. Ruan has been appointed as a director because of his rich academic experiences in food science.

***Election of Officers***

Our executive officers are elected by, and serve at the discretion of, our Board of Directors. Our Chief Executive Officer and Chairwoman of our Board of Directors, Yefang Zhang, is married to Zhengyu Wang, a former director of the Company who resigned as a director of the Company in January 2025.

**B. Compensation**

**EXECUTIVE COMPENSATION**

Our compensation committee has not started approving our salary and benefit policies. Our Board of Directors determined the compensation to be paid to our executive officers based on our financial and operating performance and prospects, and contributions made by the officers' to our success. Each of the named officers will be measured by a series of performance criteria by the Board of Directors, or the compensation committee on a yearly basis. Such criteria will be set forth based on certain objective parameters such as job characteristics, required professionalism, management skills, interpersonal skills, related experience, personal performance and overall corporate performance.

Our Board of Directors has not adopted or established a formal policy or procedure for determining the amount of compensation paid to our executive officers. The Board of Directors will make an independent evaluation of appropriate compensation to key employees, with input from management. The Board of Directors has oversight of executive compensation plans, policies and programs.

---

| |
|:---|
| 103 |
| *[**Table of Contents**](#Toc)* |

---

**<u>Summary Executive Compensation Table</u>**

The following table presents summary information regarding the total compensation awarded to, earned by, or paid to each of the named executive officers for services rendered to us for the years ended September 30, 2025 and 2024.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| <br>**Name and Principal Position** | <br>**Fiscal**<br>**Year** |<br>**Salary**<br>**($)** |<br>**Bonus**<br>**($)<sup>(1)</sup>** | **All Other**<br>**Compensation**<br>**($)<sup>(2)</sup>** |<br>**Total**<br>**($)** |
| Yefang Zhang<sup>(3)</sup> | 2025 | 148700 |  |  | 148700 |
| *Chief Executive Officer* | 2024 | 162857 |  |  | 162857 |
| Dehong Zhang<sup>(4)</sup> | 2025 | 45338 |  | 2134 | 47472 |
| *Former Chief Operating Officer* | 2024 | 46772 |  |  | 46772 |
| Zhimin Lu<sup>(5)</sup> | 2025 | 22821.50 |  |  | 22821.50 |
| *Chief Financial Officer* | 2024 | 19428.57 |  |  | 19428.57 |
| *Chenyang Wang<sup>(6)</sup>* | 2025 | 11000 |  | 4800 | 15800 |
| *Director* | 2024 | 8057 |  | 4800 | 12857 |

---

______________

(1) No officer received a bonus in the years ended September 30, 2025 and 2024.

(2) Consists of social security payments required under Chinese law. Although we also reimburse the referenced individuals for reasonable expenses, such reimbursements do not, in the aggregate, exceed $10,000 for any individual in any year presented and are not considered perquisites because they are integrally and directly related to the performance of such recipients' jobs.

(3) Compensation paid included (i) salaries paid of RMB72,946.76 (approximately $10,246.77) as the CEO of the Company and of $84,952 as an officer of U.S. subsidiaries, (ii) social security payment of $5,642.

(4) Dehong Zhang, former Chief Operating Officer of the Company, resigned on December 18, 2024.

(5) Zhimin Lu was appointed as our Chief Financial Officer on February 4, 2024.

(6) Chenyang Wang has served as a director of the Company since January 2025.

**<u>Director Compensation</u>**

The following section presents information regarding the compensation paid during the fiscal years ended September 30, 2025 and 2024 to members of our Board of Directors who are not also our employees (referred to herein as "Non-Employee Directors"). Currently we have the following Non-Employee Directors: Qinyi Fu, Hongdao Qian and Hui Ruan.

---

| |
|:---|
| 104 |
| *[**Table of Contents**](#Toc)* |

---

***Non-Employee Directors***

Historically, we have not paid our directors for acting as such, as they have consisted of our Chief Executive Officer and her spouse. Since the fiscal year ended September 30, 2018, we decided to pay our independent directors an annual cash retainer to be determined from time to time by our Board of Directors. We may also provide stock, option or other equity-based incentives to our directors for their services provided in such capacity. We also reimburse our Non-Employee Directors for any out-of-pocket expenses incurred by them in connection with their services provided in such capacity. Pursuant to our service agreements with our directors, neither we nor our subsidiaries provide benefits to directors upon termination of employment. The compensation for our employee directors is fully reflected in the above Summary Executive Compensation Table.

**Summary Director Compensation Table**

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Name** | **Fiscal**<br>**Year** | **Fees earned**<br>**or paid in**<br>**cash ($)** | **All Other**<br>**Compensation**<br>**($)(1)** | **Total ($)** |
| Hongdao Qian (2) | 2025 | 10000 | – | 10000 |
|  | 2024 | 10000 | – | 10000 |
| Hui Ruan (3) | 2025 | 10000 | – | 10000 |
|  | 2024 | 10000 | – | 10000 |
| Qinyi Fu (4) | 2025 | 10000 | – | 10000 |
|  | 2024 | 10000 | – | 10000 |

---

_____________

(1) No Non-Employee Director received other compensation for the years ended September 30, 2025 and 2024.

(2) Mr. Hongdao Qian's term began on July 7, 2017. He is entitled to a board fee of $10,000 per year beginning from July 7, 2017.

(3) Dr. Hui Ruan's term began on June 19, 2020. He is entitled to a board fee of $10,000 per year beginning from June 19, 2020.

(4) Qinyi Fu's term began on June 3, 2021. He is entitled to a board fee of $10,000 per years beginning from June 3, 2021.

---

| |
|:---|
| 105 |
| *[**Table of Contents**](#Toc)* |

---

**Employment Agreements**

Each employee is required to enter into an employment agreement. Accordingly, all of our employees, including management, have executed their employment agreements. Our employment agreements with our executives provide the amount of each executive officer's salary and establish their eligibility to receive a bonus. Our employment agreements with our executive officers generally provide for a salary to be paid monthly. The agreements also provide that executive officers are to work full time for our company and are entitled to all legal holidays as well as other paid leave in accordance with PRC laws and regulations and our internal work policies. The employment agreements also provide that we will pay for all mandatory social security programs for our executive officers in accordance with PRC regulations. In addition, our employment agreements with our executive officers prevent them from rendering services for our competitors for so long as they are employed.

Other than the salary, bonuses, equity grants and necessary social benefits required by the government, which are defined in the employment agreements, we currently do not provide other benefits to the officers. Our executive officers are not entitled to severance payments upon the termination of their employment agreement or following a change in control.

We have not provided retirement benefits (other than a state pension scheme in which all of our employees in China participate) or severance or change of control benefits to our named executive officers.

Under Chinese law, we may terminate an employment agreement without penalty by providing the employee thirty days' prior written notice or one month's wages in lieu of notice if the employee is incompetent or remains incompetent after training or adjustment of the employee's position in other limited cases. If we wish to terminate an employment agreement in the absence of cause, then we are obligated to pay the employee one month's salary for each year we have employed the employee. We are, however, permitted to terminate an employee for cause without penalty to our company, where the employee has committed a crime or the employee's actions or inactions have resulted in a material adverse effect to us.

We may increase the salary from time to time without entering a new employment agreement.

***Yefang Zhang***

We entered into an employment agreement with our Chief Executive Officer, Ms. Yefang Zhang, effective August 6, 2020. Under the terms of Ms. Zhang's employment, Ms. Zhang is entitled to the following:

· Base compensation of RMB 87,300 per month.

· Reimbursement of reasonable expenses incurred by Ms. Zhang.

Ms. Zhang's employment may be terminated at any time by either party upon presentation of 30 days' prior notice or immediately for cause.

***Zhimin Lu***

We entered into an employment agreement with our chief financial officer, Mr. Zhimin Lu, effective February 4, 2024. Under the terms of Mr. Lu's employment, Mr. Lu is entitled to the following:

· Base compensation of RMB 204,000 per year.

· Reimbursement of reasonable expenses incurred by Mr. Lu.

Mr. Lu's employment may be terminated at any time by either party upon presentation of 30 days' prior notice or immediately for cause.

---

| |
|:---|
| 106 |
| *[**Table of Contents**](#Toc)* |

---

**C. Board Practices**

***Board of Directors and Board Committees***

Our Board of Directors currently consists of five (5) directors. A majority of our Board of Directors (namely, Qinyi Fu, Hongdao Qian and Hui Ruan) are independent, as such term is defined by the Nasdaq Capital Market.

A director may vote in respect of any contract or transaction in which he is interested, provided, however, that the nature of the interest of any director in any such contract or transaction shall be disclosed by him at or prior to its consideration and any vote on that matter. A general notice or disclosure to the directors or otherwise contained in the minutes of a meeting or a written resolution of the directors or any committee thereof of the nature of a director's interest shall be sufficient disclosure and after such general notice it shall not be necessary to give special notice relating to any particular transaction. A director may be counted for a quorum upon a motion in respect of any contract or arrangement which he shall make with our company, or in which he is so interested and may vote on such motion.

We do not have a lead independent director, and we do not anticipate having a lead independent director because we will encourage our independent directors to freely voice their opinions on a relatively small company board. We believe this leadership structure is appropriate because we are a relatively small company in the process of listing on a public exchange. Our Board of Directors plays a key role in our risk oversight. The Board of Directors makes all relevant Company decisions. As a smaller company with a small Board of Directors, we believe it is appropriate to have the involvement and input of all of our directors in risk oversight matters.

***Board Committees***

We have established three standing committees under the board: the audit committee, the compensation committee and the nominating committee. Each committee has three members, and each member is independent, as such term is defined by The Nasdaq Capital Market. The audit committee will be responsible for overseeing the accounting and financial reporting processes of our company and audits of the financial statements of our company, including the appointment, compensation and oversight of the work of our independent auditors. The compensation committee of the Board of Directors will review and make recommendations to the board regarding our compensation policies for our officers and all forms of compensation and will also administer and have authority to make grants under our incentive compensation plans and equity-based plans (but our board retains the authority to interpret those plans). The nominating committee of the Board of Directors will be responsible for the assessment of the performance of the board, considering and making recommendations to the board with respect to the nominations or elections of directors and other governance issues. The nominating committee considers diversity of opinion and experience when nominating directors.

---

| |
|:---|
| 107 |
| *[**Table of Contents**](#Toc)* |

---

The candidates of members of the audit committee, the compensation committee and the nominating committee are set forth below. All such members qualify as independent under the rules of The Nasdaq Capital Market.

---

| | | | |
|:---|:---|:---|:---|
| **Director**<br>| **Audit** <br>**Committee** | **Compensation**<br>**Committee** | **Nominating** <br>**Committee** |
| Qinyi Fu | (1)(2)(3) | (1) | (1) |
| Hongdao Qian | (1) | (1) | (1)(2) |
| Hui Ruan | (1) | (1)(2) | (1) |

---

____________

(1) Committee member

(2) Committee chair

(3) Audit committee financial expert

***Duties of Directors***

As a matter of Cayman Islands law, a director of a Cayman Islands company is considered a fiduciary of the company. Accordingly, directors owe fiduciary duties to their companies to act in accordance with the best interests of the company, to exercise their powers for the purposes for which they are conferred and not to place themselves in a position where there is a conflict between their personal interests and their duty to the company. Accordingly, a director owes a company a duty not to make a profit based on his or her position as director (unless the company permits him or her to do so) and a duty not to put himself or herself in a position where the interests of the company conflict with his or her personal interests or his or her duties to a third party. However, a company's articles of association may permit a director to vote on a matter in which he or she has a personal interest if he or she has disclosed the nature of his or her interest to the board of directors. Our First Amended and Restated Articles of Association provide that a director must disclose the nature and extent of any material interests in any contract or arrangement, and that he or she may not vote at any meeting on any resolution concerning an interested matter.

A director of a Cayman Islands company also owes to the company duties to exercise independent judgment in carrying out his functions and to exercise reasonable skill, care and diligence, which has both objective and subjective elements. Recent Cayman Islands case law confirmed that directors must exercise the care, skill and diligence that would be exercised by a reasonably diligent person having the general knowledge, skill and experience reasonably to be expected of a person acting as a director. Additionally, a director must exercise the knowledge, skill and experience that he or she actually possesses.

***Interested Transactions***

A director may vote, attend a board meeting or, presuming that the director is an officer and that it has been approved, sign a document on our behalf with respect to any contract or transaction in which he or she is interested. We require directors to promptly disclose the interest to all other directors after becoming aware of the fact that he or she is interested in a transaction we have entered into or are to enter into. A general notice or disclosure to the board or otherwise contained in the minutes of a meeting or a written resolution of the board or any committee of the board that a director is a shareholder, director, officer or trustee of any specified firm or company and is to be regarded as interested in any transaction with such firm or company will be sufficient disclosure, and, after such general notice, it will not be necessary to give special notice relating to any particular transaction.

***Remuneration and Borrowing***

The directors may receive such remuneration as our Board of Directors may determine or change from time to time. The compensation committee will assist the directors in reviewing and approving the compensation structure for the directors. Our Board of Directors may exercise all the powers of the company to borrow money and to mortgage or charge our undertakings and property or any part thereof, to issue debentures, debenture stock and other securities whenever money is borrowed or as security for any debt, liability or obligation of the company or of any third party.

---

| |
|:---|
| 108 |
| *[**Table of Contents**](#Toc)* |

---

***Qualification***

A majority of our Board of Directors is required to be independent. There are no membership qualifications for directors. Further, there are no share ownership qualifications for directors unless so fixed by us in a general meeting. There are no other arrangements or understandings pursuant to which our directors are selected or nominated.

***Director Compensation***

All directors hold office until the next annual meeting of shareholders at which they are re-elected and until their successors have been duly elected and qualified. Officers are elected by and serve at the discretion of the Board of Directors. Employee directors do not receive any compensation for their services. Non-employee directors will be entitled to receive such remuneration as our Board of Directors may determine or change from time to time for serving as directors and may receive incentive option grants from our company. In addition, each non-employee director is entitled to be repaid or prepaid all travel, hotel and incidental expenses reasonably incurred or expected to be incurred in attending meetings of our Board of Directors or committees of our Board of Directors or shareholder meetings or otherwise in connection with the discharge of his or her duties as a director.

***Limitation of Director and Officer Liability***

Under Cayman Islands law, each of our directors and officers, in performing his or her functions, is required to act honestly and in good faith with a view to our best interests and exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. Cayman Islands law does not limit the extent to which a company's Memorandum and Articles of Association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against civil fraud or the consequences of committing a crime.

Under our First Amended and Restated Memorandum and Articles of Association, we may indemnify our directors, officers and liquidators against all expenses, including legal fees, and against all judgments, fines and amounts paid in settlement and reasonably incurred in connection with civil, criminal, administrative or investigative proceedings to which they are party or are threatened to be made a party by reason of their acting as our director, officer or liquidator. To be entitled to indemnification, these persons must have acted honestly and in good faith with a view to the best interest of the company and, in the case of criminal proceedings, they must have had no reasonable cause to believe their conduct was unlawful. Such limitation of liability does not affect the availability of equitable remedies such as injunctive relief or rescission. These provisions will not limit the liability of directors under United States federal securities laws.

The decision of our Board of Directors as to whether the director acted honestly and in good faith with a view to our best interests and as to whether the director had no reasonable cause to believe that his or her conduct was unlawful, is in the absence of fraud sufficient for the purposes of indemnification, unless a question of law is involved. The termination of any proceedings by any judgment, order, settlement, conviction or the entry of no plea does not, by itself, create a presumption that a director did not act honestly and in good faith and with a view to our best interests or that the director had reasonable cause to believe that his or her conduct was unlawful. If a director to be indemnified has been successful in defense of any proceedings referred to above, the director is entitled to be indemnified against all expenses, including legal fees, and against all judgments, fines and amounts paid in settlement and reasonably incurred by the director or officer in connection with the proceedings.

We may purchase and maintain insurance in relation to any of our directors or officers against any liability asserted against the directors or officers and incurred by the directors or officers in that capacity, whether or not we have or would have had the power to indemnify the directors or officers against the liability as provided in our First Amended and Restated Memorandum and Articles of Association.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted for our directors, officers or persons controlling our company under the foregoing provisions, we have been informed that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

---

| |
|:---|
| 109 |
| *[**Table of Contents**](#Toc)* |

---

***Involvement in Certain Legal Proceedings***

To the best of our knowledge, none of our directors or officers has been convicted in a criminal proceeding, excluding traffic violations or similar misdemeanors, nor has been a party to any judicial or administrative proceeding during the past five years that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws, except for matters that were dismissed without sanction or settlement. Except as set forth in our discussion below in "Related Party Transactions," our directors and officers have not been involved in any transactions with us or any of our affiliates or associates which are required to be disclosed pursuant to the rules and regulations of the SEC.

***Code of Business Conduct and Ethics***

We have adopted a code of business conduct and ethics applicable to our directors, officers and employees in connection with our application to list on the Nasdaq Capital Market.

**D. Employees**

As of September 30, 2025, we employed a total of 15 full-time and no part time employees in the following functions:

---

| | | | |
|:---|:---|:---|:---|
| | **Number of Employees** | **Number of Employees** | **Number of Employees** |
| <br>**Department** | **September 30,**<br>**2024** | **September 30,**<br>**2023** | **September 30,**<br>**2025** |
| Senior Management | 7 | 7 | 5 |
| Human Resource & Administration | 4 | 4 | 2 |
| Finance | 6 | 7 | 5 |
| Procurement | 2 | 4 | 1 |
| Production | 15 | 36 | 0 |
| Sales & Marketing | 5 | 8 | 1 |
| Quality Control | 2 | 2 | 0 |
| Business Development | 1 | 2 | 1 |
| **Total** | 42 | **70** | **15** |

---

_______

Our employees are not represented by a labor organization or covered by a collective bargaining agreement. We have not experienced any work stoppages.

We are required under PRC law to make contributions to employee benefit plans at specified percentages of our after-tax profit. In addition, we are required by PRC law to cover employees in China with various types of social insurance. For the years ended September 30, 2025, 2024 and 2023, we contributed approximately $32,725, $55,938, and $55,801 to the employee benefit plans and social insurance, respectively. The effect on our liquidity by the payments for these contributions is immaterial. We believe that we are in material compliance with the relevant PRC employment laws.

**E. Share Ownership**

For information regarding the share ownership of our directors and senior management, see "Item 7. Major Shareholders and Related Party Transactions - A. Major Shareholders."

---

| |
|:---|
| 110 |
| *[**Table of Contents**](#Toc)* |

---

***Equity Compensation Program***

We have established a pool for shares and share options for our employees. This pool contains shares and options to purchase our Ordinary Shares, equal to 10% of the number of ordinary shares outstanding at the conclusion of our initial public offering. Subject to approval by the Compensation Committee of our Board of Directors, we may grant shares or options in any percentage determined for a particular grant.

At the annual shareholder meeting held in July 2021, our shareholders approved a 40 million shares incentive plan. In February 2022 we filed a registration statement on Form S-8 for the 2021 Plan, and we subsequently canceled the reserved but unissued 30 million shares in February 2022.

Any options granted will vest at a rate of 20% per year for five years and have a per share exercise price equal to the fair market value of one of our Ordinary Shares on the date of grant. We expect to grant shares and/or options under this pool to certain employees. We have not yet determined the recipients of any such grants. For the year ended September 30, 2022, 10 million ordinary shares were issued to eight employees and $2 million was accounted as share-based compensation expense in general and administration expenses. As of September 30, 2025, the remaining ordinary shares available to be issued under our 2021 plan were 238 shares following the reverse share split completed in February 2025.

***Compensation Recoupment (Clawback) Policy***

We maintain a compensation clawback policy, which we adopted in November 2023 in compliance with Nasdaq listing requirements. In the event that the Company is required to prepare an accounting restatement due to its material noncompliance with any financial reporting requirement under U.S. federal securities law, the policy provides that the Company will recoup compensation from each current or former executive officer who, during the three-year period preceding the date on which an accounting restatement is required, received incentive compensation based on the erroneous financial data that exceeds the amount of incentive-based compensation the executive would have received based on the restatement. The Compensation Committee administers the Company's Clawback Policy and has discretion to determine how to seek recovery under the policy and may forgo recovery if it determines that recovery would be impracticable.

**F. Disclosure of a registrant's action to recover erroneously awarded compensation.**

Not applicable.

**Item 7. Major Shareholders and Related Party Transactions**

**A. Major Shareholders**

The following table sets forth information with respect to beneficial ownership of our ordinary shares as of February 6, 2026 by:

---

| |
|:---|
| Each person who is known by us to beneficially own 5% or more of our outstanding ordinary shares; |
| Each of our directors and named executive officers; and |
| All directors and named executive officers as a group. |

---

---

| |
|:---|
| 111 |
| *[**Table of Contents**](#Toc)* |

---

The number and percentage of ordinary shares beneficially owned are based on 13,811,335 Class A Ordinary Shares and 3,873 Class B Ordinary Shares issued and outstanding. Information with respect to beneficial ownership has been furnished by each director, officer or beneficial owner of 5% or more of our ordinary shares. Beneficial ownership is determined in accordance with the rules of the SEC and generally requires that such person have voting or investment power with respect to securities. In computing the number of ordinary shares beneficially owned by a person listed below and the percentage ownership of such person, ordinary shares underlying options, warrants or convertible securities held by each such person that are exercisable, convertible or repayable within 60 days of February 6, 2026 are deemed outstanding and are deemed outstanding for computing the percentage ownership of any other person. Except as otherwise indicated in the footnotes to this table, or as required by applicable community property laws, all persons listed have sole voting and investment power for all ordinary shares shown as beneficially owned by them. Unless otherwise indicated in the footnotes, the address for each principal shareholder is in the care of our Company at Farmmi, Inc., F3 Building No. 1, 888 Tianning Street, Liandu District, Lishui City, Zhejiang Province, People's Republic of China 323000. The shareholders of record listed in the table are not located in the United States.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Ordinary Shares Beneficially Owned** | **Ordinary Shares Beneficially Owned** | **Ordinary Shares Beneficially Owned** | **Ordinary Shares Beneficially Owned** |
|  | **Class A** <br>**Ordinary**<br>**Shares** | **Class B** <br>**Ordinary**<br>**Shares** | **Percentage of** <br>**Beneficial**<br>**Ownership<sup>(1)</sup>** | **Percentage of** <br>**Aggregate**<br>**Voting**<br>**Power<sup>(2)</sup>** |
|  | **Number** | **Number** | **%** | **%** |
| **Director and Executive Officers:**<sup>(3)</sup> |  |  |  |  |
| Yefang Zhang, CEO and Chairwoman<sup>(4)(5)</sup> | 82 | 3873 | 0.03% | 0.14% |
| Zhimin Lu, CFO |  |  |  |  |
| Chenyang Wang, Director |  |  |  |  |
| Hongdao Qian, Independent Director |  |  |  |  |
| Hui Ruan, Independent Director |  |  |  |  |
| Qinyi Fu, Independent Director |  |  |  |  |
| **All directors and executive officers as a group** | 82 | 3873 | 0.03% | 0.14% |
| **5% or Greater Shareholders:** |  |  |  |  |
| Alera Capital Inc<sup>(6)</sup> | 1000000 |  | 7.24% | 7.23% |
| Bravell Partners Inc<sup>(7)</sup> | 1000000 |  | 7.24% | 7.23% |
| Cavora Holdings Inc<sup>(8)</sup> | 1000000 |  | 7.24% | 7.23% |
| Vanta Capital Inc<sup>(9)</sup> | 980000 |  | 7.09% | 7.09% |
| UFIST Trading LLC<sup>(10)</sup> | 833334 |  | 6.03% | 6.03% |

---

______________

(1) Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the ordinary shares.

(2) Percentage is calculated based on 13,811,335 Class A Ordinary Shares and 3,873 Class B Ordinary Shares issued and outstanding.

(3) Unless otherwise indicated, the address for each director or executive officer is in the care of our Company at Farmmi, Inc., Fl 1, Building No. 1, 888 Tianning Street, Liandu District, Lishui City, Zhejiang Province, People's Republic of China 323000. 

(4) Ms. Yefang Zhang is the Chief Executive Officer, Chairwoman of the Board, and the Founder of the Company. 

(5) Consists of (i) 3,873 Class B Ordinary Shares held by FarmNet Limited, of which Yefang Zhang is the sole shareholder, and (ii) 82 Class A Ordinary Shares owned by Ms. Zhang's children who are members of the household of Ms. Zhang. 

(6) Such Class A Ordinary Shares may be deemed to be beneficially owned by Guangyue Xu, President and Director of Alera Capital Inc. The shareholder granted a voting proxy with respect to such shares to Yefang Zhang, who disclaims beneficial ownership over these shares. The address of Alera Capital Inc is 1410 North Ave, Ste 126, Spearfish, SD 57783. 

(7) Such Class A Ordinary Shares may be deemed to be beneficially owned by Wei Huang, the Chief Executive Officer of Bravell Partners Inc. The shareholder granted a voting proxy with respect to such shares to Yefang Zhang, who disclaims beneficial ownership over these shares. The address of Bravell Partners is 114 S Main Ave Unit 211, Sioux Falls, SD 57104.

(8) Such Class A Ordinary Shares may be deemed to be beneficially owned by Sheng Huang, the President of Cavora Holdings Inc. The shareholder granted a voting proxy with respect to such shares to Yefang Zhang, who disclaims beneficial ownership over these shares. The address Cavora Holdings Inc is: 218 E 7th St Ste 121, Casper, WY 82601.

(9) Such Class A Ordinary Shares may be deemed to be beneficially owned by Jia Liu, who is the President of Vanta Capital Inc. The shareholder granted a voting proxy with respect to such shares to Yefang Zhang, who disclaims beneficial ownership over these shares. The address of Vanta Capital Inc is: 1603 Capitol Ave Ste 1019, Cheyenne, WY 82001.

(10) Such Class A Ordinary Shares may be deemed to be beneficially owned by Ailing Huang, who is the Chief Executive Officer of UFIST Trading LLC, a California limited liability company. The shareholder granted a voting proxy with respect to such shares to Yefang Zhang, who disclaims beneficial ownership over these shares. The address of UFIST Trading LLC is: 5032 Highview St, Chino Hills, CA 91709.

---

| |
|:---|
| 112 |
| *[**Table of Contents**](#Toc)* |

---

**B. Related party transactions**

In addition to the executive officer and director compensation arrangements discussed in "Executive Compensation," below we describe transactions for the years ended September 30, 2025, 2024, and 2023, to which we have been a participant, in which the amount involved in the transactions is material to us or the related party.

The relationship and 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 | Prepayment of electricity and water expenses for office leased to the Company |
| FarmNet Limited | Owns 0.7% equity interest of the Company | Payment of expenses by the Company |
| Epakia Canada Inc | The legal representative of Epakia Canada Inc is a director of the Company. | Payment of expenses by the Company |
| Forasen Group Co., Ltd | Owned by Mr. Zhengyu Wang, the Chairman of the Board of Directors of the Company | Sales from the Company |
| Zhang Bin | Serves as the supervisor of Farmmi Food | Sales from the Company |
| Shanghai Zhongjian Yiting Medical Health Technology Partnership | A partnership jointly set up by the Company with another limited partner ("LP"). | Payment of expenses by the Company |
| Zhang Dehong | The brother of the Company's CEO, Ms. Yefang Zhang | Payment of expenses by the Company and provide guarantees as an additional security for certain loans |
| Yefang Zhang | Chief Executive Officer of the Company | Payment of expenses for the Company |
| Forasen Holdings Group Co., Ltd | Owned by Mr. Zhengyu Wang, the Chairman of the Board of Directors of the Company | Purchases from the Company |
| Zhejiang Tantech Bamboo Technology Co., Ltd | Under common control of Mr. Zhengyu Wang and Ms. Yefang Zhang, CEO of the Company | Lease factory building to the Company and charging water and electricity for offices leased to the Company. |

---

Due from related parties consisted of the following:

---

| | | | |
|:---|:---|:---|:---|
|  |  | **As of** <br>**September 30,** <br>**2025**  | **As of** <br>**September 30,** <br>**2024**  |
| **Due from related parties**  | **Name of related parties**  |  |  |
| Other receivables | Dehong Zhang |  | $202547 |
| Other receivables | Zhejiang Yili Yuncang Holding Group Co., Ltd |  | 99441 |
| Other receivables | FarmNet |  | 4100 |
| Other receivables | Epakia Canada Inc |  | 2996 |
| Trade receivables | Forasen Group Co., Ltd |  | 2094 |
| Trade receivables | Zhang Bin |  | 1184 |
| Total |  |  | $312362 |

---

---

| |
|:---|
| 113 |
| *[**Table of Contents**](#Toc)* |

---

Amount due from Zhejiang Yili Yuncang Holding Group Co., Ltd was mainly related to prepayment of electricity and water expenses for offices leased to the Company.

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 can be recoverable from these related parties.

Due to related parties from the Company consisted of the following:

---

| | | | |
|:---|:---|:---|:---|
|  |  | **As of** <br>**September 30,** <br>**2025**  | **As of** <br>**September 30,** <br>**2024**  |
| **Due to related parties**  | **Name of related parties**  |  |  |
| Other payable | Yefang Zhang | $241773 | $356975 |
| Other payable | Zhejiang Tantech Bamboo Technology Co., Ltd. | 52146 | 144525 |
| Total |  | $293919 | $501500 |

---

Amount due to Zhejiang Tantech Bamboo Technology Co., Ltd was related to water and electricity expenses for offices leased to the Company.

Amounts due to Yefang Zhang were related to payment of expenses by related parties for the Company. Amounts were due on demand and non-interest bearing.

<u>Sales to related parties</u>

The Company periodically sells merchandise to its affiliates during the ordinary course of business. For the years ended September 30, 2025, 2024, and 2023, the Company recorded sales to related parties of $138, $2,785, and nil, respectively.

<u>Operating leases from related parties</u>

The following table summarizes operating leases with related party, Zhejiang Tantech Bamboo Technology Co., Ltd, detailing lease begin date, lease end date, leasing purpose, leasing area in square meters, and annual rent in RMB and its equivalent in USD.

---

| | |
|:---|:---|
| **Zhejiang Tantech Bamboo Technology Co., Ltd.**  | **Lease No 1** |
| Lease begin date | March 1, 2023 |
| Lease end date | February 29, 2028 |
| Leasing purpose | Office  |
| Annual rent in RMB | 131835 |
| Annual rent in USD | $18279 |
| Area (in square meters) | 479 |

---

For the years ended September 30, 2025, 2024, and 2023, the Company incurred lease expense of $18,279, $100,235, and $66,116, respectively.

<u>Non-Competition Agreement</u>

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 the Company. 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.

---

| |
|:---|
| 114 |
| *[**Table of Contents**](#Toc)* |

---

***Future Related Party Transactions***

The Corporate Governance Committee of our Board of Directors must approve all related party transactions. All related party transactions will be made or entered into on terms that are no less favorable to use than can be obtained from unaffiliated third parties. Related party transactions that we have previously entered into were not approved by independent directors, as we had no independent directors at that time.

**C. Interests of experts and counsel**

Not applicable for annual reports on Form 20-F.

**Item 8. Financial Information**

**A. Consolidated Statements and Other Financial Information**

Please refer to Item 18.

**Legal and Administrative Proceedings**

From time to time, we have been involved in litigation relating to contract disputes and other matters in the ordinary course of our business. See "Item 3 - Key Information - Risk Factors - Risks Related to Our Business and Industry - We have guaranteed third parties' debt, and a failure by such parties to repay their debts may be enforced against our company." We are not currently a party to any material legal or administrative proceedings.

**Dividend Policy**

We have never declared or paid any cash dividends on our Ordinary Shares. We anticipate that we will retain any earnings to support operations and to finance the growth and development of our business. Therefore, we do not expect to pay cash dividends in the foreseeable future. Any future determination relating to our dividend policy will be made at the discretion of our Board of Directors and will depend on a number of factors, including future earnings, capital requirements, financial conditions and future prospects and other factors the Board of Directors may deem relevant.

Under Cayman Islands law, a Cayman Islands company may pay a dividend out of either its profit or share premium account, but a dividend may not be paid if this would result in the company being unable to pay its debts as they fall due in the ordinary course of business. According to our First Amended and Restated Articles of Association, dividends can be declared and paid out of funds lawfully available to us, which include the share premium account. Dividends, if any, would be paid in proportion to the number of Ordinary Shares a shareholder holds.

If we determine to pay dividends on any of our Ordinary Shares in the future, as a holding company, we will be dependent on receipt of funds from our foreign-owned Chinese subsidiaries (Farmmi Enterprise, Farmmi Technology, Farmmi Agricultural, FLS Mushroom and Farmmi Food). Current PRC regulations permit our indirect PRC subsidiaries to pay dividends to their shareholders only out of their accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. In addition, each of our subsidiaries in China is required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital. Farmmi Enterprise and Farmmi Technology are also required to further set aside a portion of its after-tax profits to fund the employee welfare fund, although the amount to be set aside, if any, is determined at the discretion of its Board of Directors. Although the statutory reserves can be used, among other ways, to increase the registered capital and eliminate future losses in excess of retained earnings of the respective companies, the reserve funds are not distributable as cash dividends except in the event of liquidation.

In addition, pursuant to the EIT Law and its implementation rules, dividends generated after January 1, 2008 and distributed to Farmmi International by Farmmi Enterprise and Farmmi Technology are subject to withholding tax at a rate of 10% unless otherwise exempted or reduced according to treaties or arrangements between the PRC central government and governments of other countries or regions where the non-PRC-resident enterprises are incorporated.

---

| |
|:---|
| 115 |
| *[**Table of Contents**](#Toc)* |

---

Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval of the State Administration of Foreign Exchange, or SAFE, by complying with certain procedural requirements. Specifically, under the existing exchange restrictions, without prior approval of SAFE, cash generated from operations in China may be used to pay dividends to our company. Farmmi Enterprise and Farmmi Technology may go to a licensed bank to remit its after-tax profits out of China. Nevertheless, the bank will require Farmmi Enterprise and Farmmi Technology to produce the following documents for verification before it may transfer the dividends to Farmmi International's overseas bank account of: (1) tax payment statement and tax return; (2) auditor's report issued by a Chinese certified public accounting firm confirming the availability of profits and dividends for distribution in the current year; (3) the Board minutes authorizing the distribution of dividends to its shareholders; (4) the foreign exchange registration certificate issued by SAFE; (5) the capital verification report issued by a Chinese certified public accounting firm; (6) if the declared dividends will be distributed out of accumulated profits earned in prior years, Farmmi Enterprise and Farmmi Technology must appoint a Chinese certified public accounting firm to issue an auditors' report to the bank to certify Farmmi Enterprise and Farmmi Technology's financial position during the years from which the profits arose; and (7) other information as required by SAFE.

**B. Significant Changes**

We have not experienced any significant changes since the date of our audited consolidated financial statements included in this annual report.

**Item 9. The Offer and Listing**

**A. Offer and listing details**

Our Class A Ordinary Shares have been listed on NASDAQ since February 16, 2018.

As of February 6, 2026, there were approximately 26 holders of record of our ordinary shares.

**B. Plan of distribution**

Not applicable for annual reports on Form 20-F.

**C. Markets**

Our Class A Ordinary Shares are listed on the Nasdaq Capital Market under the symbol "FAMI."

**D. Selling shareholders**

Not applicable for annual reports on Form 20-F.

**E. Dilution**

Not applicable for annual reports on Form 20-F.

**F. Expenses of the issue**

Not applicable for annual reports on Form 20-F.

**Item 10. Additional Information**

**A. Share capital**

Not applicable for annual reports on Form 20-F.

**B. Memorandum and articles of association**

The information required by this item is incorporated by reference to the material headed "Description of Share Capital" in our Registration Statement on Form F-1, File no. 333-221569, filed with the SEC on November 15, 2017, as amended by the Fourth Amended and Restated Memorandum and Articles of Association effective as of January 5, 2026.

---

| |
|:---|
| 116 |
| *[**Table of Contents**](#Toc)* |

---

**C. Material contracts**

On November 13, 2023, Farmmi and Streeterville entered an Amendment to the Convertible Promissory Note to extend the term of the Note from twelve months to twenty four months from the Purchase Price Date, or until September 28, 2024.

On January 12, 2024, Farmmi and Streeterville entered into a Forbearance Agreement, under which Streeterville agreed to withdraw a December Redemption Notice and not to seek to enforce any remedies under the Note with respect to the December Redemption Notice.

On July 30, 2024, Farmmi and Atlas Sciences, LLC, ("Atlas"), entered into a purchase agreement Pursuant to the agreement, the company agreed to issue Atlas an unsecured promissory note in the original principal amount of $5,355,000 for $5,000,000 in gross proceeds (the "July 2024 Note"). The Company used all of the proceeds from the note to repay its indebtedness owed to Streeterville under the convertible promissory note it issued on September 26, 2022.

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 3,433,167 ordinary shares, par value $0.20 per share in a registered direct offering and Series A warrants to purchase up to 3,433,167 Ordinary Shares in a concurrent private placement for gross proceeds of approximately $1.03 million before deducting the placement agent's fees and other estimated offering expenses.

On January 31, 2025, Farmmi and Atlas entered into an exchange agreement, pursuant to which the parties agreed to partition a new promissory note in the original principal amount of $100,000.00, or the partitioned note, from the July 2024 Note, and exchange the partitioned note for 480,769 ordinary shares, par value $0.20, of the Company.

On February 28, 2025, Farmmi International entered into an equity transfer agreement with MALONG LIMITED to acquire 45% of the equity of EWAYFOREST from the seller. EWAYFOREST owns 100% of the equity of Lishui Ganglisen Enterprise Management Co., Ltd, a Chinese company, which in turn owns 100% of the equity of Lishui Senbo Forestry Co., Ltd, a Chinese company. Senbo Forestry is engaged in forestry management, improvement, planting and product sales. The total consideration for the acquisition was RMB723,324,150 ($99,085,500). As of the date of this report, Farmmi International has paid $59.6 million in cash and $35.0 million in accounts receivable.

On April 30, 2025, Farmmi International, MALONG LIMITED and Senbo Forestry entered into a supplemental agreement to the original equity transfer agreement dated February 28, 2025. Pursuant to the supplemental agreement, MALONG and Senbo Forestry agreed to obtain a forest ownership certificate by August 30, 2025 to establish Senbo Forestry's ownership of the forest assets. If Senbo Forestry fails to complete the ownership certification procedure, the parties agree to terminate the original equity transfer agreement and MALONG would refund all consideration paid by Farmmi International under the original agreement.

On August 4, 2025, Farmmi entered into a securities purchase agreement with certain accredited investors, pursuant to which the Company agreed to sell an aggregate of 4,166,667 ordinary shares, par value $2.40 per share, and Series C warrants to purchase up to 8,333,334 ordinary shares in a private placement for gross proceeds of approximately $10 million. The warrants are exercisable upon issuance, have an exercise price of $2.4 per share and have a term of three years from the date of issuance. The exercise price and the number of warrant shares are subject to adjustment upon the occurrence of certain events, such as share splits, business combination or similar recapitalization transactions.

On September 30, 2025, Farmmi International, MALONG, and Senbo Forestry entered into a termination and refund agreement to the original equity transfer agreement dated February 28, 2025 and related supplemental agreement dated April 30, 2025. Pursuant to the agreement, the parties agreed to terminate the original equity acquisition transaction and that all acquisition consideration paid by Farmmi International would be refunded by MALONG, including accounts receivable of $35.0 million and an aggregate cash payment of $59,625,500. The cash refund would be completed as follows: (a) 40% of the cash consideration of $59,625,500, or $23,850,200, be repaid in a lump sum before January 31, 2026, and (b) the remaining 60% of the cash consideration, or $35,775,300, be repaid by MALONG as follows: (i) the repayment period is two (2) years from February 1, 2026 to January 30, 2028, (ii) the interest on the unpaid balance is calculated at an annualized rate of 2%, compounded daily, and is payable quarterly, and (iii) the principal balance is repaid every six months in the following installments: a total of not less than 20% of the principal balance would be refunded during the period from February 1, 2026 to July 30, 2026, not less than 25% of the remaining principal balance would be refunded during each of the six-month periods ending January 30, 2027 and July 30, 2027, respectively, and the final remaining principal balance would be refunded by January 30, 2028.

---

| |
|:---|
| 117 |
| *[**Table of Contents**](#Toc)* |

---

**D. Exchange controls**

**Foreign Currency Exchange**

The principal regulations governing foreign currency exchange in China are the Foreign Exchange Administration Regulations. Under the PRC foreign exchange regulations, payments of current account items, such as profit distributions and trade and service-related foreign exchange transactions, may be made in foreign currencies without prior approval from SAFE by complying with certain procedural requirements. By contrast, approval from or registration with appropriate government authorities is required where RMB is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of foreign currency-denominated loans or foreign currency is to be remitted into China under the capital account, such as a capital increase or foreign currency loans to our PRC subsidiaries.

In August 2008, SAFE issued the Circular on the Relevant Operating Issues Concerning the Improvement of the Administration of the Payment and Settlement of Foreign Currency Capital of Foreign-Invested Enterprises, or SAFE Circular 142, regulating the conversion by a foreign-invested enterprise of foreign currency-registered capital into RMB by restricting how the converted RMB may be used. In addition, SAFE promulgated Circular 45 on November 9, 2011 in order to clarify the application of SAFE Circular 142. Under SAFE Circular 142 and Circular 45, the RMB capital converted from foreign currency registered capital of a foreign-invested enterprise may only be used for purposes within the business scope approved by the applicable government authority and may not be used for equity investments within the PRC. In addition, SAFE strengthened its oversight of the flow and use of the RMB capital converted from foreign currency registered capital of foreign-invested enterprises. The use of such RMB capital may not be changed without SAFE's approval, and such RMB capital may not in any case be used to repay RMB loans if the proceeds of such loans have not been used.

In November 2012, SAFE promulgated the Circular of Further Improving and Adjusting Foreign Exchange Administration Policies on Foreign Direct Investment, which substantially amends and simplifies the current foreign exchange procedure. Pursuant to this circular, the opening of various special purpose foreign exchange accounts, such as pre-establishment expenses accounts, foreign exchange capital accounts and guarantee accounts, the reinvestment of RMB proceeds by foreign investors in the PRC, and remittance of foreign exchange profits and dividends by a foreign-invested enterprise to its foreign shareholders no longer require the approval or verification of SAFE, and multiple capital accounts for the same entity may be opened in different provinces, which was not possible previously. In addition, SAFE promulgated the Circular on Printing and Distributing the Provisions on Foreign Exchange Administration over Domestic Direct Investment by Foreign Investors and the Supporting Documents in May 2013, which specifies that the administration by SAFE or its local branches over direct investment by foreign investors in the PRC shall be conducted by way of registration and banks shall process foreign exchange business relating to the direct investment in the PRC based on the registration information provided by SAFE and its branches.

We typically do not need to use our offshore foreign currency to fund our PRC operations. In the event we need to do so, we will apply to obtain the relevant approvals of SAFE and other PRC government authorities as necessary.

**Regulation of Dividend Distribution**

The principal laws, rules and regulations governing dividend distribution by foreign-invested enterprises in the PRC are the Company Law of the PRC, as amended, the Wholly Foreign-owned Enterprise Law and its implementation regulations and the Equity Joint Venture Law and its implementation regulations. Under these laws, rules and regulations, foreign-invested enterprises may pay dividends only out of their accumulated profit, if any, as determined in accordance with PRC accounting standards and regulations. Both PRC domestic companies and wholly-foreign owned PRC enterprises are required to set aside as general reserves at least 10% of their after-tax profit, until the cumulative amount of such reserves reaches 50% of their registered capital. A PRC company is not permitted to distribute any profits until any losses from prior fiscal years have been offset. Profits retained from prior fiscal years may be distributed together with distributable profits from the current fiscal year.

---

| |
|:---|
| 118 |
| *[**Table of Contents**](#Toc)* |

---

**E. Taxation**

The following sets forth the material Cayman Islands, Chinese and U.S. federal income tax consequences related to an investment in our Ordinary Shares. It is directed to U.S. Holders (as defined below) of our Ordinary Shares and is based upon laws and relevant interpretations thereof in effect as of the date of this report, all of which are subject to change. This description does not deal with all possible tax consequences relating to an investment in our Ordinary Shares, such as the tax consequences under state, local and other tax laws. Unless otherwise noted in the following discussion, this section is the opinion of Kaufman & Canoles, P.C., our U.S. counsel, insofar as it relates to legal conclusions with respect to matters of U.S. federal income tax law, and of Zhejiang Zhiheng Law Firm, our PRC counsel, insofar as it relates to legal conclusions with respect to matters of Chinese tax law.

The following brief description applies only to U.S. Holders (defined below) that hold Ordinary Shares as capital assets and that have the U.S. dollar as their functional currency. This brief description is based on the tax laws of the United States in effect as of the date of this report and on U.S. Treasury regulations in effect or, in some cases, proposed, as of the date of this report, as well as judicial and administrative interpretations thereof available on or before such date. All of the foregoing authorities are subject to change, which change could apply retroactively and could affect the tax consequences described below.

The brief description below of the U.S. federal income tax consequences to "U.S. Holders" will apply to you if you are a beneficial owner of shares and you are, for U.S. federal income tax purposes,

---

| |
|:---|
| an individual who is a citizen or resident of the United States; |
| a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) organized under the laws of the United States, any state thereof or the District of Columbia; |
| an estate whose income is subject to U.S. federal income taxation regardless of its source; or |
| a trust that (1) is subject to the primary supervision of a court within the United States and the control of one or more U.S. persons for all substantial decisions or (2) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person. |

---

**<u>WE URGE POTENTIAL PURCHASERS OF OUR SHARES TO CONSULT THEIR OWN TAX ADVISORS CONCERNING</u>**

**<u>THE U.S. FEDERAL, STATE, LOCAL AND NON-U.S. TAX CONSEQUENCES OF PURCHASING, OWNING AND DISPOSING OF OUR SHARES.</u>**

**<u>People's Republic of China Enterprise Taxation</u>**

Under the PRC Enterprise Income Tax Law, an enterprise established outside the PRC with "de facto management bodies" within the PRC is considered a "resident enterprise" for PRC enterprise income tax purposes and is generally subject to a uniform 25% enterprise income tax rate on its worldwide income. Under the implementation rules to the EIT Law, a "de facto management body" is defined as a body that has material and overall management and control over the manufacturing and business operations, personnel and human resources, finances and properties of an enterprise.

Our PRC subsidiaries and PRC consolidated VIE are companies incorporated under PRC law and, as such, are subject to PRC enterprise income tax on their taxable income in accordance with the relevant PRC income tax laws. Pursuant to the EIT Law, which became effective on January 1, 2008, a uniform 25% enterprise income tax rate is generally applicable to both foreign-invested enterprises and domestic enterprises, except where a special preferential rate applies. The enterprise income tax is calculated based on the entity's global income as determined under PRC tax laws and accounting standards.

---

| |
|:---|
| 119 |
| *[**Table of Contents**](#Toc)* |

---

In addition, the SAT Circular 82 issued by the SAT in April 2009 specifies that certain offshore incorporated enterprises controlled by PRC enterprises or PRC enterprise groups will be classified as PRC resident enterprises if the following are located or resident in the PRC: senior management personnel and departments that are responsible for daily production, operation and management; financial and personnel decision making bodies; key properties, accounting books, company seal, minutes of board meetings and shareholders' meetings; and half or more of the senior management or directors having voting rights. Further to SAT Circular 82, the SAT issued the SAT Bulletin 45, which took effect in September 2011, to provide more guidance on the implementation of SAT Circular 82. SAT Bulletin 45 provides for procedures and administration details of determination on resident status and administration on post-determination matters. Farmmi, Inc. is a company incorporated outside the PRC. As a holding company, its key assets are its ownership interests in its subsidiaries, and its key assets are located, and its records (including the resolutions of its Board of Directors and the resolutions of its shareholders) are maintained, outside the PRC. As such, we do not believe that Farmmi, Inc. meet all of the conditions above or are PRC resident enterprises for PRC tax purposes. For the same reasons, we believe our other entities outside of China are not PRC resident enterprises either. However, the tax resident status of an enterprise is subject to determination by the PRC tax authorities and uncertainties remain with respect to the interpretation of the term "de facto management body." There can be no assurance that the PRC government will ultimately take a view that is consistent with us. If the PRC tax authorities determine that our Cayman Islands holding company is a PRC resident enterprise for PRC enterprise income tax purposes, a number of unfavorable PRC tax consequences could follow. One example is that a 10% withholding tax would be imposed on dividends we pay to our non-PRC enterprise shareholders and with respect to gains derived by our non-PRC enterprise shareholders from transferring our shares and potentially a 20% of withholding tax would be imposed on dividends we pay to our non-PRC individual shareholders and with respect to gains derived by our non-PRC individual shareholders from transferring our shares. See "Item 3 - Key Information - Risk Factors - Risk Related to Doing Business in China - Under the PRC Enterprise Income Tax Law, we may be classified as a PRC "resident enterprise" for PRC enterprise income tax purposes. Such classification would likely result in unfavorable tax consequences to us and our non-PRC shareholders and has a material adverse effect on our results of operations and the value of your investment."

As a Cayman Islands holding company, we may receive dividends from our PRC subsidiaries through Farmmi International. The EIT Law and its implementing rules provide those dividends paid by a PRC entity to a non-resident enterprise for income tax purposes is subject to PRC withholding tax at a rate of 10%, subject to reduction by an applicable tax treaty with China. Pursuant to the Arrangement between Mainland China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and Tax Evasion on Income, the withholding tax rate in respect to the payment of dividends by a PRC enterprise to a Hong Kong enterprise may be reduced to 5% from a standard rate of 10% if the Hong Kong enterprise directly holds at least 25% of the PRC enterprise. Pursuant to the Notice of the State Administration of Taxation on the Issues concerning the Application of the Dividend Clauses of Tax Agreements, or SAT Circular 81, a Hong Kong resident enterprise must meet the following conditions, among others, in order to apply the reduced withholding tax rate: (i) it must be a company; (ii) it must directly own the required percentage of equity interests and voting rights in the PRC resident enterprise; and (iii) it must have directly owned such required percentage in the PRC resident enterprise throughout the 12 months prior to receiving the dividends. In August 2015, the State Administration of Taxation promulgated the Administrative Measures for Non-Resident Taxpayers to Enjoy Treatment under Tax Treaties, or SAT Circular 60, which became effective on November 1, 2015. SAT Circular 60 provides that non-resident enterprises are not required to obtain pre-approval from the relevant tax authority in order to enjoy the reduced withholding tax. Instead, non-resident enterprises and their withholding agents may, by self-assessment and on confirmation that the prescribed criteria to enjoy the tax treaty benefits are met, directly apply the reduced withholding tax rate, and file necessary forms and supporting documents when performing tax filings, which will be subject to post-tax filing examinations by the relevant tax authorities. Accordingly, Farmmi International may be able to benefit from the 5% withholding tax rate for the dividends it receives from Farmmi Enterprise and Farmmi Technology, if it satisfies the conditions prescribed under SAT Circular 81 and other relevant tax rules and regulations. However, according to SAT Circular 81 and SAT Circular 60, if the relevant tax authorities consider the transactions or arrangements we have are for the primary purpose of enjoying a favorable tax treatment, the relevant tax authorities may adjust the favorable withholding tax in the future.

---

| |
|:---|
| 120 |
| *[**Table of Contents**](#Toc)* |

---

In January 2009, the SAT promulgated the Provisional Measures for the Administration of Withholding of Enterprise Income Tax for Non-resident Enterprises, pursuant to which the entities that have the direct obligation to make certain payments to a non-resident enterprise should be the relevant tax withholders for the non-resident enterprise, and such payments include: income from equity investments (including dividends and other return on investment), interest, rents, royalties and income from assignment of property as well as other incomes subject to enterprise income tax received by non-resident enterprises in China. Further, the measures provide that in case of an equity transfer between two non-resident enterprises which occurs outside China, the non-resident enterprise which receives the equity transfer payment must, by itself or engage an agent to, file tax declaration with the PRC tax authority located at place of the PRC company whose equity has been transferred, and the PRC company whose equity has been transferred should assist the tax authorities to collect taxes from the relevant non-resident enterprise. The SAT issued a SAT Circular 59 together with the MOF in April 2009 and a SAT Circular 698 in December 2009. Both Circular 59 and Circular 698 became effective retroactively as of January 1, 2008. By promulgating and implementing these two circulars, the PRC tax authorities have enhanced their scrutiny over the direct or indirect transfer of equity interests in a PRC resident enterprise by a non-resident enterprise. Under SAT Circular 698, where a non-resident enterprise transfers the equity interests of a PRC "resident enterprise" indirectly by disposition of the equity interests of an overseas holding company, and such overseas holding company is located in certain low tax jurisdictions, the non-resident enterprise, being the transferor, must report to the relevant tax authority of the PRC "resident enterprise" this Indirect Transfer. The PRC tax authority may disregard the existence of the overseas holding company if it lacks a reasonable commercial purpose and was established for the purpose of reducing, avoiding or deferring PRC tax. As a result, gains derived from such Indirect Transfer may be subject to PRC tax at a rate of up to 10%. On February 3, 2015, the SAT issued the Announcement of the State Administration of Taxation on Several Issues Concerning the Enterprise Income Tax on Indirect Property Transfer by Non-Resident Enterprises, or SAT Bulletin 7, to supersede existing provisions in relation to the Indirect Transfer as set forth in Circular 698, while the other provisions of Circular 698 remain in force. SAT Bulletin 7 introduces a new tax regime that is significantly different from that under Circular 698. Public Notice extends its tax jurisdiction to capture not only Indirect Transfer as set forth under Circular 698 but also transactions involving transfer of immovable property in China and assets held under the establishment and place, in China of a foreign company through the offshore transfer of a foreign intermediate holding company. SAT Bulletin 7 also addresses transfer of the equity interest in a foreign intermediate holding company widely. In addition, SAT Bulletin 7 provides clearer criteria than Circular 698 on how to assess reasonable commercial purposes and introduces safe harbor scenarios applicable to internal group restructurings. However, it also brings challenges to both the foreign transferor and transferee of the Indirect Transfer as they have to make self-assessment on whether the transaction should be subject to PRC tax and to file or withhold the PRC tax accordingly. Although it appears that SAT Circular 698 and/or SAT Bulletin 7 was not intended to apply to share transfers of publicly traded companies, there is uncertainty as to the application of SAT Circular 698 and/or SAT Bulletin 7 and we and our non-resident investors may be at risk of being required to file a return and being taxed under SAT Circular 698 and/or SAT Bulletin 7 and we may be required to expend valuable resources to comply with SAT Circular 698 or to establish that we should not be taxed under SAT Circular 698 and/or SAT Bulletin 7.

**<u>Cayman Islands Taxation</u>**

The Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation and there is no taxation in the nature of inheritance tax or estate duty or withholding tax applicable to us or to any holder of Ordinary Shares. There are no other taxes likely to be material to us levied by the government of the Cayman Islands except for stamp duties which may be applicable on instruments executed in, or after execution brought within the jurisdiction of the Cayman Islands. No stamp duty is payable in the Cayman Islands on transfers of shares of Cayman Islands companies except those which hold interests in land in the Cayman Islands. The Cayman Islands is not party to any double tax treaties which are applicable to any payments made by or to our company. There are no exchange control regulations or currency restrictions in the Cayman Islands.

Payments of dividends and capital in respect of our Ordinary Shares will not be subject to taxation in the Cayman Islands and no withholding will be required on the payment of a dividend or capital to any holder of our Ordinary Shares, nor will gains derived from the disposal of our Ordinary Shares be subject to Cayman Islands income or corporation tax.

There is no income tax treaty or convention currently in effect between the United States and the Cayman Islands.

---

| |
|:---|
| 121 |
| *[**Table of Contents**](#Toc)* |

---

**<u>United States Federal Income Taxation</u>**

The following does not address the tax consequences to any particular investor or to persons in special tax situations such as:

---

| |
|:---|
| banks; |
| financial institutions; |
| insurance companies; |
| regulated investment companies; |
| real estate investment trusts; |
| broker-dealers; |
| traders that elect to mark-to-market; |
| U.S. expatriates; |
| tax-exempt entities; |
| persons liable for alternative minimum tax; |
| persons holding our Ordinary Shares as part of a straddle, hedging, conversion or integrated transaction; |
| persons that actually or constructively own 10% or more of our voting shares; |
| persons who acquired our Ordinary Shares pursuant to the exercise of any employee share option or otherwise as consideration; or |
| persons holding our Ordinary Shares through partnerships or other pass-through entities. |

---

Prospective purchasers are urged to consult their own tax advisors about the application of the U.S. Federal tax rules to their particular circumstances as well as the state, local, foreign and other tax consequences to them of the purchase, ownership and disposition of our Ordinary Shares.

***Taxation of Dividends and Other Distributions on our Ordinary Shares***

Subject to the passive foreign investment company rules discussed below, the gross amount of distributions made by us to you with respect to the Ordinary Shares (including the amount of any taxes withheld therefrom) will generally be includable in your gross income as dividend income on the date of receipt by you, but only to the extent that the distribution is paid out of our current or accumulated earnings and profits (as determined under U.S. federal income tax principles). With respect to corporate U.S. Holders, the dividends will not be eligible for the dividends-received deduction allowed to corporations in respect of dividends received from other U.S. corporations.

With respect to non-corporate U.S. Holders, including individual U.S. Holders, dividends will be taxed at the lower capital gains rate applicable to qualified dividend income, provided that (1) the Ordinary Shares are readily tradable on an established securities market in the United States, or we are eligible for the benefits of an approved qualifying income tax treaty with the United States that includes an exchange of information program, (2) we are not a passive foreign investment company (as discussed below) for either our taxable year in which the dividend is paid or the preceding taxable year, and (3) certain holding period requirements are met. Under U.S. Internal Revenue Service authority, Ordinary Shares are considered for purpose of clause (1) above to be readily tradable on an established securities market in the United States if they are listed on the Nasdaq Capital Market. You are urged to consult your tax advisors regarding the availability of the lower rate for dividends paid with respect to our Ordinary Shares, including the effects of any change in law after the date of this report.

---

| |
|:---|
| 122 |
| *[**Table of Contents**](#Toc)* |

---

Dividends will constitute foreign source income for foreign tax credit limitation purposes. If the dividends are taxed as qualified dividend income (as discussed above), the amount of the dividend taken into account for purposes of calculating the foreign tax credit limitation will be limited to the gross amount of the dividend, multiplied by the reduced rate divided by the highest rate of tax normally applicable to dividends.

The limitation on foreign taxes eligible for credit is calculated separately with respect to specific classes of income. For this purpose, dividends distributed by us with respect to our Ordinary Shares will constitute "passive category income" but could, in the case of certain U.S. Holders, constitute "general category income."

To the extent that the amount of the distribution exceeds our current and accumulated earnings and profits (as determined under U.S. federal income tax principles), it will be treated first as a tax-free return of your tax basis in your Ordinary Shares, and to the extent the amount of the distribution exceeds your tax basis, the excess will be taxed as capital gain. We do not intend to calculate our earnings and profits under U.S. federal income tax principles.

Therefore, a U.S. Holder should expect that a distribution will be treated as a dividend even if that distribution would otherwise be treated as a non-taxable return of capital or as capital gain under the rules described above.

***Taxation of Dispositions of Ordinary Shares***

Subject to the passive foreign investment company rules discussed below, you will recognize taxable gain or loss on any sale, exchange or other taxable disposition of a share equal to the difference between the amount realized (in U.S. dollars) for the share and your tax basis (in U.S. dollars) in the Ordinary Shares. The gain or loss will be capital gain or loss. If you are a non-corporate U.S. Holder, including an individual U.S. Holder, who has held the Ordinary Shares for more than one year, you will be eligible for (a) reduced tax rates of 0% (for individuals in the 10% or 15% tax brackets), (b) higher tax rates of 20% (for individuals in the 39.6% tax bracket) or (c) 15% for all other individuals. The deductibility of capital losses is subject to limitations. Any such gain or loss that you recognize will generally be treated as United States source income or loss for foreign tax credit limitation purposes.

***Passive Foreign Investment Company***

Based on our current and anticipated operations and the composition of our assets, we do not expect to be a passive foreign investment company, or PFIC, for U.S. federal income tax purposes for our current taxable year. Our actual PFIC status for the current taxable year ending will not be determinable until the close of such taxable year and, accordingly, there is no guarantee that we will not be a PFIC for the current taxable year. Because PFIC status is a factual determination for each taxable year which cannot be made until the close of the taxable year. A non-U.S. corporation is considered a PFIC for any taxable year if either:

· at least 75% of its gross income is passive income; or

· at least 50% of the value of its assets (based on an average of the quarterly values of the assets during a taxable year) is attributable to assets that produce or are held for the production of passive income (the "asset test").

We will be treated as owning our proportionate share of the assets and earning our proportionate share of the income of any other corporation in which we own, directly or indirectly, at least 25% (by value) of the stock.

We must make a separate determination each year as to whether we are a PFIC. As a result, our PFIC status may change from no to yes. In particular, because the value of our assets for purposes of the asset test will generally be determined based on the market price of our Ordinary Shares, our PFIC status will depend in large part on the market price of our Ordinary Shares. Accordingly, fluctuations in the market price of the Ordinary Shares may cause us to become a PFIC. In addition, the application of the PFIC rules is subject to uncertainty in several respects and the composition of our income and assets will be affected by how, and how quickly, we spend the cash we receive upon cash exercises, if any, of the Warrants to purchase the Ordinary Shares offered hereby. If we are a PFIC for any year during which you hold Ordinary Shares, we will continue to be treated as a PFIC for all succeeding years during which you hold Ordinary Shares. However, if we cease to be a PFIC, you may avoid some of the adverse effects of the PFIC regime by making a "deemed sale" election with respect to the Ordinary Shares.

---

| |
|:---|
| 123 |
| *[**Table of Contents**](#Toc)* |

---

If we are a PFIC for any taxable year during which you hold Ordinary Shares, you will be subject to special tax rules with respect to any "excess distribution" that you receive and any gain you realize from a sale or other disposition (including a pledge) of the Ordinary Shares, unless you make a "mark-to-market" election as discussed below. Distributions you receive in a taxable year that are greater than 125% of the average annual distributions you received during the shorter of the three preceding taxable years or your holding period for the Ordinary Shares will be treated as an excess distribution. Under these special tax rules:

· the excess distribution or gain will be allocated ratably over your holding period for the Ordinary Shares;

· the amount allocated to the current taxable year, and any taxable year prior to the first taxable year in which we were a PFIC, will be treated as ordinary income, and

· the amount allocated to each other year will be subject to the highest tax rate in effect for that year and the interest charge generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year.

The tax liability for amounts allocated to years prior to the year of disposition or "excess distribution" cannot be offset by any net operating losses for such years, and gains (but not losses) realized on the sale of the Ordinary Shares cannot be treated as capital, even if you hold the Ordinary Shares as capital assets.

A U.S. Holder of "marketable stock" (as defined below) in a PFIC may make a mark-to-market election for such stock to elect out of the tax treatment discussed above. If you make a mark-to-market election for the Ordinary Shares, you will include in income each year an amount equal to the excess, if any, of the fair market value of the Ordinary Shares as of the close of your taxable year over your adjusted basis in such Ordinary Shares. You are allowed a deduction for the excess, if any, of the adjusted basis of the Ordinary Shares over their fair market value as of the close of the taxable year. However, deductions are allowable only to the extent of any net mark-to-market gains on the Ordinary Shares included in your income for prior taxable years. Amounts included in your income under a mark-to-market election, as well as gain on the actual sale or other disposition of the Ordinary Shares, are treated as ordinary income. Ordinary loss treatment also applies to the deductible portion of any mark-to-market loss on the Ordinary Shares, as well as to any loss realized on the actual sale or disposition of the Ordinary Shares, to the extent that the amount of such loss does not exceed the net mark-to-market gains previously included for such Ordinary Shares. Your basis in the Ordinary Shares will be adjusted to reflect any such income or loss amounts. If you make a valid mark-to-market election, the tax rules that apply to distributions by corporations which are not PFICs would apply to distributions by us, except that the lower applicable capital gains rate for qualified dividend income discussed above under "- Taxation of Dividends and Other Distributions on our Ordinary Shares" generally would not apply.

The mark-to-market election is available only for "marketable stock", which is stock that is traded in other than de minimis quantities on at least 15 days during each calendar quarter ("regularly traded") on a qualified exchange or other market (as defined in applicable U.S. Treasury regulations), including the Nasdaq Capital Market. If the Ordinary Shares are regularly traded on the Nasdaq Capital Market and if you are a holder of Ordinary Shares, the mark-to-market election would be available to you were we to be or become a PFIC.

Alternatively, a U.S. Holder of stock in a PFIC may make a "qualified electing fund" election with respect to such PFIC to elect out of the tax treatment discussed above. A U.S. Holder who makes a valid qualified electing fund election with respect to a PFIC will generally include in gross income for a taxable year such holder's pro rata share of the corporation's earnings and profits for the taxable year. However, the qualified electing fund election is available only if such PFIC provides such U.S. Holder with certain information regarding its earnings and profits as required under applicable U.S. Treasury regulations. We do not currently intend to prepare or provide the information that would enable you to make a qualified electing fund election. If you hold Ordinary Shares in any year in which we are a PFIC, you will be required to file U.S. Internal Revenue Service Form 8621 regarding distributions received on the Ordinary Shares and any gain realized on the disposition of the Ordinary Shares.

You are urged to consult your tax advisors regarding the application of the PFIC rules to your investment in our Ordinary Shares and the elections discussed above.

---

| |
|:---|
| 124 |
| *[**Table of Contents**](#Toc)* |

---

***Information Reporting and Backup Withholding***

Dividend payments with respect to our Ordinary Shares and proceeds from the sale, exchange or redemption of our Ordinary Shares may be subject to information reporting to the U.S. Internal Revenue Service and possible U.S. backup withholding at a current rate of 28%. Backup withholding will not apply, however, to a U.S. Holder who furnishes a correct taxpayer identification number and makes any other required certification on U.S. Internal Revenue Service Form W-9 or who is otherwise exempt from backup withholding. U.S. Holders who are required to establish their exempt status generally must provide such certification on U.S. Internal Revenue Service Form W-9. U.S. Holders are urged to consult their tax advisors regarding the application of the U.S. information reporting and backup withholding rules.

Backup withholding is not an additional tax. Amounts withheld as backup withholding may be credited against your U.S. federal income tax liability, and you may obtain a refund of any excess amounts withheld under the backup withholding rules by filing the appropriate claim for refund with the U.S. Internal Revenue Service and furnishing any required information. We do not intend to withhold taxes for individual shareholders.

Under the Hiring Incentives to Restore Employment Act of 2010, certain United States Holders are required to report information relating to Ordinary Shares, subject to certain exceptions (including an exception for Ordinary Shares held in accounts maintained by certain financial institutions), by attaching a complete Internal Revenue Service Form 8938, Statement of Specified Foreign Financial Assets, with their tax return for each year in which they hold Ordinary Shares. U.S. Holders are urged to consult their tax advisors regarding the application of the U.S. information reporting and backup withholding rules.

**F. Dividends and paying agents**

Not applicable for annual reports on Form 20-F.

**G. Statement by experts**

Not applicable for annual reports on Form 20-F.

**H. Documents on display**

We are subject to the information requirements of the Exchange Act. In accordance with these requirements, the Company files reports and other information with the SEC. You may read and copy any materials filed with the SEC at the Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains a web site at http://www.sec.gov that contains reports and other information regarding registrants that file electronically with the SEC.

**I. Subsidiary Information**

Not applicable.

**Item 11. Quantitative and Qualitative Disclosures About Market Risk**

Our exposure to interest rate risk primarily relates to excess cash invested in short-term instruments with original maturities of less than a year and long-term held-to-maturity securities with maturities of greater than a year. Investments in both fixed rate and floating rate interest earning instruments carry a degree of interest rate risk. Fixed rate securities may have their fair market value adversely impacted due to a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall. Due in part to these factors, our future investment income may fall short of expectations due to changes in interest rates, or we may suffer losses in principal if we have to sell securities that have declined in market value due to changes in interest rates. We have not been, and do not expect to be, exposed to material interest rate risks, and therefore have not used any derivative financial instruments to manage our interest risk exposure.

---

| |
|:---|
| 125 |
| *[**Table of Contents**](#Toc)* |

---

As of September 30, 2025, we had approximately $1.81 million in outstanding long-term loans with interest rate of 4.5% per annum and $2.52 million in promissory notes with interest rate of 7% per annum, if interest rates increased/decreased by 1 percentage point, with all other variables having remained constant, and assuming the amount of borrowings outstanding at the end of the year was outstanding for the entire year, profit attributable to equity owners of our company would have been approximately $21,775 and $25,191 lower/higher, respectively, mainly as a result of interest expense on loans and promissory notes.

We had cash of $0.8 million as of September 30, 2025, and no other short-term investments and long-term held-to-maturity investments as of September 30, 2025.

***Foreign Exchange Risk***

Our functional currency is the RMB, and our financial statements are presented in U.S. dollar. The RMB appreciated by 1.2% in 2022, depreciated by 2.5% in 2023, and depreciated by 1.4% in 2024. The change in the value of the RMB relative to the U.S. dollar may affect our financial results reported in the U.S. dollar terms without giving effect to any underlying change in our business or results of operation. The negative impact attributable to changes in revenue and expenses due to 1% change in foreign currency translation are summarized as follows.

---

| | | | |
|:---|:---|:---|:---|
|  | **Year Ended September 30,**  | **Year Ended September 30,**  | **Year Ended September 30,**  |
|  | **2025**  | **2024**  | **2023**  |
| Impact on revenue | $279574 | $636500 | $1103649 |
| Impact on operating expenses | $24465 | $30780 | $22454 |
| Impact on net income | $4583 | $46278 | $25438 |

---

Currently, majority of our assets, liabilities, revenues and costs are denominated in RMB. However, we may generate revenues denominated in U.S. dollar, and our offering will be in U.S. dollar. Therefore, a portion of our cash and cash equivalents and short-term financial assets may be denominated in U.S. dollar in the future. Our exposure to foreign exchange risk will primarily relate to those financial assets denominated in U.S. dollars. Any significant revaluation of RMB against U.S. dollar may materially affect our earnings and financial position, and the value of, and any dividends payable on, our ordinary shares in U.S. dollars in the future. See "Item 3 - Key Information - Risk Factors - Risks Related to Doing Business in China - Fluctuations in exchange rates could adversely affect our business and the value of our securities."

***Commodity Risk***

As a manufacturer of dried edible fungi products, our Company is exposed to the risk of an increase in the price of raw edible fungi and, as a result, dried edible fungi. We have not entered into any contract to hedge any specific commodity risk. Moreover, our Company does not purchase or trade on commodity instruments or positions; instead, it purchases commodities for use.

**Item 12. Description of Securities Other than Equity Securities**

With the exception of Items 12.D.3 and 12.D.4, this Item 12 is not applicable for annual reports on Form 20-F. As to Items 12.D.3 and 12.D.4, this Item 12 is not applicable, as the Company does not have any American Depositary Shares.

---

| |
|:---|
| 126 |
| *[**Table of Contents**](#Toc)* |

---

**Part II**

**Item 13. Defaults, Dividend Arrearages and Delinquencies**

We do not have any material defaults in the payment of principal, interest, or any installments under a sinking or purchase fund as described in Item 13.

**Item 14. Material Modifications to the Rights of Securities Holders and Use of Proceeds**

**A. Not applicable.**

**B. Not applicable.**

**C. Not applicable.**

**D. Not applicable.**

**E. Not applicable.**

**Item 15. Controls and Procedures**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Disclosure Controls and Procedures.

The Company's management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that is designed to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

As of September 30, 2025, our company carried out an evaluation, under the supervision of and with the participation of management, including our Company's chief executive officer and chief financial officer, of the effectiveness of the design and operation of our Company's disclosure controls and procedures. Included in this Annual Report on Form 20-F, the chief executive officer and chief financial officer concluded that our Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) were ineffective in timely alerting them to information required to be included in the Company's SEC filings.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Management's annual report on internal control over financial reporting.

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. We used the 2013 Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the "2013 COSO Framework") in performing the assessment of the effectiveness of the Company's internal control over financial reporting as of September 30, 2025. Based on the assessment, management determined that, as of September 30, 2025, we did not maintain effective internal control over financial reporting, because:

---

| |
|:---|
| We did not have sufficient personnel with appropriate levels of accounting knowledge and experience to address complex U.S. GAAP accounting issues and to prepare and review financial statements and related disclosures under U.S. GAAP. Specifically, our control did not operate effectively to ensure the appropriate and timely analysis of and accounting for unusual and non-routine transactions and certain financial statement accounts; |
| We have not established an internal control department and had a lack of adequate policies and procedures in internal audit function to ensure that our policies and procedures have been carried out as planned; and |
| We have not established sufficient risk assessment in accordance with the requirement of COSO 2013 Framework. |

---

---

| |
|:---|
| 127 |
| *[**Table of Contents**](#Toc)* |

---

A material weakness is a deficiency, or a combination of deficiencies, within the meaning of PCAOB Auditing Standard AS 2201, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. We have hired additional accounting staffs and are in the process of improving our system security environment and conducting regular backup plan and penetration testing to ensure the network and information security. In addition, we plan to address the weaknesses identified above by implementing the following measures:

· Improve the design and documentation related to multiple levels of review over financial statements included in our SEC filings;

· Expand the design and assessment test work over the monitoring function of entity level controls;

· Enhance documentation retention policies over test work related to our continuous management assessments of internal control effectiveness; and

· Expand documentation practices and policies related to various key controls to provide support and audit trails for both internal management assessment as well as external auditor testing.

Especially for the identified material weakness related to internal control, we plan to hire experts to improve and test our internal control and the set up a series of standard and recurring internal audit work procedures before September 2025. We schedule to perform self-assessment of internal control effectiveness on a continuous basis, which will be led by our accounting and risk management department within fiscal year 2025. We also plan to hire more competent personnel and involve professional service companies to help us implement SOX 404 compliance together with the establishment of our internal audit function.

However, we cannot assure you that we will remediate our material weaknesses in a timely manner. See "Risk Factors-Risks Relating to Our Business and Industry-If we fail to implement and maintain an effective internal controls over financing reporting, we may be unable to accurately report our results of operations, meet our reporting obligations or prevent fraud." in the annual report for the year ended September 30, 2025.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Attestation report of the registered public accounting firm.

Not applicable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Changes in internal control over financial reporting.

There were no changes in our internal controls over financial reporting that occurred during the period covered by this annual report on Form 20-F that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

**Item 16. [Reserved]**

**Item 16A. Audit Committee Financial Expert**

The Company's board of directors has determined that Qinyi Fu qualifies as an "audit committee financial expert" in accordance with applicable Nasdaq Capital Market standards. The Company's board of directors has also determined that Qinyi Fu and the other members of the Audit Committee are all "independent" in accordance with the applicable Nasdaq Capital Market standards.

---

| |
|:---|
| 128 |
| *[**Table of Contents**](#Toc)* |

---

**Item 16B. Code of Ethics**

The Company has adopted a Code of Business Conduct and Ethics that applies to the Company's directors, officers, employees and advisors. The Code of Ethics is attached as an exhibit to this annual report. We have also posted a copy of our code of business conduct and ethics on our website at http://farmmi.com/.

**Item 16C. Principal Accountant Fees and Services**

YCM CPA INC. was appointed by the Company to serve as its independent registered public accounting firm for fiscal years 2025 and 2024.

***Fees Paid to Independent Registered Public Accounting Firm***

**Audit Fees**

During fiscal years 2025 and 2024, YCM CPA INC.'s audit fees were $250,000 and $235,000, respectively.

**Audit-Related Fees**

During fiscal years 2025 and 2024, YCM CPA INC.'s audit-related fees were $0.

**Tax Fees**

During fiscal years 2025 and 2024, YCM CPA INC.'s tax fees were $0.

**All Other Fees**

During fiscal years 2025 and 2024, YCM CPA INC.'s other fees were $0.

**Audit Committee Pre-Approval Policies**

Before YCM CPA INC. was engaged by the Company to render audit or non-audit services, the engagement was pre-approved by the Company's audit committee. All services rendered by YCM CPA INC. have been so pre-approved.

***Percentage of Hours***

The percentage of hours expended on the principal accountants' engagement to audit our consolidated financial statements for fiscal year 2025 that were attributed to work performed by persons other than YCM CPA INC.'s full-time permanent employees was less than 50%.

**Item 16D. Exemptions from the Listing Standards for Audit Committees**

Not applicable.

**Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers**

Neither the Company nor any affiliated purchaser has purchased any shares or other units of any class of the Company's equity securities registered by the Company pursuant to Section 12 of the Securities Exchange Act during the fiscal year ended September 30, 2025.

**Item 16F. Change in Registrant's Certifying Accountant**

Not applicable.

---

| |
|:---|
| 129 |
| *[**Table of Contents**](#Toc)* |

---

**Item 16G. Corporate Governance**

We are incorporated in the Cayman Islands and our corporate governance practices are governed by applicable Cayman Islands law. In addition, because our Ordinary Shares are listed on The Nasdaq Capital Market, we are subject to Nasdaq's corporate governance requirements.

Other than as described in this section, our corporate governance practices do not differ from those followed by domestic companies listed on the Nasdaq Capital Market. Nasdaq Listing Rule 5635 ("NASDAQ Rule 5635") generally provides that shareholder approval is required of U.S. domestic companies listed on the NASDAQ Capital Market prior to an issuance (or potential issuance) of securities in connection with: (i) the acquisition of the stock or assets of another company; (ii) equity-based compensation of officers, directors, employees or consultants; (iii) a change of control; and (iv) certain transactions other than a public offering involving issuances equaling 20% or more of the Company's ordinary shares or voting power for less than the greater of market or book value. Notwithstanding this general requirement, NASDAQ Listing Rule 5615(a)(3)(A) permits foreign private issuers like the Company to follow their home country practice rather than this shareholder approval requirement. The corporate governance practice in our home country, the Cayman Islands, does not require to obtain such shareholder approval prior to entering into a transaction with the potential to issue securities as described in Nasdaq Rule 5635 above. The Company has elected to follow Cayman Islands practices in lieu of the requirements of Nasdaq Rule 5635 in connection with an issuance of securities.

Nasdaq Rule 5620(a) generally requires each Nasdaq listed company to hold an annual meeting of shareholders no later than one year after the end of a company's fiscal year-end. Nasdaq Rule 5250(c)(3) generally requires each company to disclose the material terms of all agreements and arrangements between any director or nominee for director, and any person or entity other than the Company, relating to compensation or other payment in connection with such person's candidacy or service as a director of the Company. Nasdaq Rule 5250(d) sets forth requirements regarding distributions of annual and interim reports to shareholders. The corporate governance practice in the Cayman Islands does not have the foregoing requirements. The Company has elected to follow Cayman Islands practice in lieu of the requirements of Nasdaq Rules 5620(a), 5250(c)(3) and 5250(d).

**Item 16H. Mine Safety Disclosure**

Not applicable.

**Item 16I. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections**

Not applicable.

**Item 16J. Insider Trading Policy**

We have adopted an insider trading policy to provide guidance on the purchases, sales and other dispositions of our securities by our directors, officers, employees and other relevant persons, with the goal of promoting compliance with applicable insider trading laws, rules and regulations, and the listing standards of Nasdaq. The insider trading policy is filed as Exhibit 11.2 to this annual report on Form 20-F.

**Item 16K. Cybersecurity**

***Risk Management and Strategy***

We have implemented processes for assessing, identifying and managing material risks from cybersecurity threats and monitoring the prevention, detection, mitigation and remediation of material cybersecurity incident. We assess risks arising from cybersecurity threats against our information systems that may result in adverse effects on our information systems or any information residing therein. We conduct periodic assessments to identify such cybersecurity threats.

Following these risk assessments, we re-design, implement, and maintain reasonable safeguards to mitigate identified risks and reasonably address any identified gaps in existing safeguards. We regularly monitor and test our safeguards and regularly conduct training for our employees on these safeguards in collaboration with the administrative department and management. Primary responsibility for assessing, monitoring and managing our cybersecurity risks rests with our IT department, to manage the risk assessment and mitigation process.

As of the date of this annual report, we have not experienced any material cybersecurity incidents or identified any material cybersecurity threats that have affected or are reasonably likely to materially affect us, our business strategy, results of operations or financial condition.

***Governance***

Our Company's Board of Directors has oversight responsibility for the Company's overall risk management, including cybersecurity risks, and has not delegated oversight authority for cybersecurity risks to any committee. Our management, led by our Chief Executive Officer and Chief Financial Officer, is responsible for assessing, identifying and managing material cybersecurity risks and threats to our Company and the prevention, mitigation and remediation of material cybersecurity incidents and risks. Our Chief Executive Officer, as the management representative, reports to the Board of Directors on an annual basis with respect to the status and updates of any material cybersecurity risks our Company may face and on disclosure concerning cybersecurity matters in our annual report on Form 20-F.

In the 2025 fiscal year, we did not experience any cybersecurity threats that have materially affected or are reasonably likely to materially affect our business strategy, results of operations, or financial condition. However, we face potential cybersecurity threats that, if realized, would materially affect us. These threats include but are not limited to ransomware and malware attacks, and compromised business email and other social engineering threats. Our service providers, suppliers, customers and business partners also face similar cybersecurity risks, which could have an adverse impact on our business. Additional information on cybersecurity risks we face is discussed in Part I, Item 1A, "Risk Factors - While we are not aware of any data breach in the past, future cyberattacks, computer viruses or any failure to adequately maintain security and prevent unauthorized access to our information technology system or data could result in a disruption of our business operations and materially adversely affect our reputation, financial condition and operating results."

---

| |
|:---|
| 130 |
| *[**Table of Contents**](#Toc)* |

---

**Part III**

**Item 17. Financial Statements**

See Item 18.

**Item 18. Financial Statements**

Our consolidated financial statements are included at the end of this annual report, beginning with page F-1.

---

| |
|:---|
| 131 |
| *[**Table of Contents**](#Toc)* |

---

**Item 19. Exhibits**

The following documents are filed as part of this annual report:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Exhibit No.** | **Description of Exhibit** | **Included** | **Form** | **Filing Date** |
| [1.1](http://www.sec.gov/Archives/edgar/data/1701261/000114420417059192/tv478808_ex3-1.htm) | [Memorandum and Articles of Association of Farmmi, Inc.](http://www.sec.gov/Archives/edgar/data/1701261/000114420417059192/tv478808_ex3-1.htm) | By Reference | F-1 | 2017-11-15 |
| [1.2](http://www.sec.gov/Archives/edgar/data/1701261/000147793226000608/fami_ex31.htm) | [Fourth Amended and Restated Memorandum and Articles of Association of Farmmi, Inc.](http://www.sec.gov/Archives/edgar/data/1701261/000147793226000608/fami_ex31.htm) | By Reference | 6-K | 2026-02-03 |
| [2.1](http://www.sec.gov/Archives/edgar/data/1701261/000114420417059192/tv478808_ex4-1.htm) | [Specimen Ordinary Share Certificate](http://www.sec.gov/Archives/edgar/data/1701261/000114420417059192/tv478808_ex4-1.htm) | By Reference | F-1 | 2017-11-15 |
| [2.2](fami_ex22.htm) | [Description of Securities Registered under Section 12 of the Securities Exchange Act of 1934](fami_ex22.htm) | Herewith |  |  |
| [4.1](http://www.sec.gov/Archives/edgar/data/1701261/000110465921009423/tm213389d1_ex4-1.htm) | [Employment Agreement with Yefang Zhang](http://www.sec.gov/Archives/edgar/data/1701261/000110465921009423/tm213389d1_ex4-1.htm) | By Reference | 20-F | 2021-01-29 |
| [4.2](http://www.sec.gov/Archives/edgar/data/1701261/000147793224000432/fami_ex43.htm) | [Employment Agreement with Zhimin Lu](http://www.sec.gov/Archives/edgar/data/1701261/000147793224000432/fami_ex43.htm) | By Reference | 20-F | 2024-01-29 |
| [4.3](http://www.sec.gov/Archives/edgar/data/1701261/000114420417059192/tv478808_ex10-13.htm) | [Translation of Non-competition Agreement by and between Farmmi, Inc. and Forasen Group, dated December 16, 2016](http://www.sec.gov/Archives/edgar/data/1701261/000114420417059192/tv478808_ex10-13.htm) | By Reference | F-1 | 2017-11-15 |
| [4.4](http://www.sec.gov/Archives/edgar/data/1701261/000114420417059192/tv478808_ex10-14.htm) | [Non-competition Agreement by and among Zhengyu Wang, Yefang Zhang, Farmmi, Inc. and Tantech Holdings Ltd, dated June 30, 2017](http://www.sec.gov/Archives/edgar/data/1701261/000114420417059192/tv478808_ex10-14.htm) | By Reference | 20-F | 2021-01-29 |
| [4.5](http://www.sec.gov/Archives/edgar/data/1701261/000110465921009423/tm213389d1_ex4-23.htm) | [Summary Translation of Lease Agreement with Zhejiang Tantech Bamboo Technology Co., Ltd, dated July 6, 2020](http://www.sec.gov/Archives/edgar/data/1701261/000110465921009423/tm213389d1_ex4-23.htm) | By Reference | 20-F | 2021-01-29 |
| [4.6](http://www.sec.gov/Archives/edgar/data/1701261/000147793224004503/fami_ex101.htm) | [Securities Purchase Agreement with Atlas Sciences, , LLC dated July 30, 2024](http://www.sec.gov/Archives/edgar/data/1701261/000147793224004503/fami_ex101.htm) | By Reference | 6-K | 2024-08-01 |
| [4.7](http://www.sec.gov/Archives/edgar/data/1701261/000147793224005322/fami_ex101.htm) | [Securities Purchase Agreement with Investors dated August 22, 2024](http://www.sec.gov/Archives/edgar/data/1701261/000147793224005322/fami_ex101.htm) | By Reference  | 6-K | 2024-08-27 |
| [4.8](http://www.sec.gov/Archives/edgar/data/1701261/000147793224005322/fami_ex103.htm) | [Placement Agent Agreement, dated August 22, 2024, between the Company and Maxim Group LLC](http://www.sec.gov/Archives/edgar/data/1701261/000147793224005322/fami_ex103.htm) | By Reference | 6-K | 2024-08-27 |
| [4.9](fami_ex49.htm) | [Indemnification Agreement dated January 19, 2025 by and between Farmmi, Inc. and Chenyang Wang](fami_ex49.htm) | Herewith |  |  |
| [4.10](http://www.sec.gov/Archives/edgar/data/1701261/000147793225001517/fami_ex102.htm) | [Exchange Agreement dated January 31, 2025, by and between Atlas Sciences, LLC and Farmmi, Inc.](http://www.sec.gov/Archives/edgar/data/1701261/000147793225001517/fami_ex102.htm) | By Reference | 6-K | 2025-03-06 |
| [4.11](http://www.sec.gov/Archives/edgar/data/1701261/000147793225001517/fami_ex101.htm) | [Equity Transfer Agreement dated February 28, 2025, by and between Farmmi International Limited and Malong Limited](http://www.sec.gov/Archives/edgar/data/1701261/000147793225001517/fami_ex101.htm) | By Reference | 6-K | 2025-03-06 |
| [4.12](http://www.sec.gov/Archives/edgar/data/1701261/000147793225002472/fami_ex101.htm) | [Share Transfer Agreement dated March 31, 2025, by and between Zhejiang Farmmi Ecological Agricultural Technology Co., Ltd. and Lishui Chida Logistics Co., Ltd.](http://www.sec.gov/Archives/edgar/data/1701261/000147793225002472/fami_ex101.htm) | By Reference | 6-K | 2025-04-04 |
| [4.13](http://www.sec.gov/Archives/edgar/data/1701261/000147793225004872/fami_ex101.htm) | [Share Transfer Agreement dated June 11, 2025, by and between Zhejiang Yitang Medical Services Co., Ltd. and Lishui Chida Logistics Co., Ltd. (English translation)](http://www.sec.gov/Archives/edgar/data/1701261/000147793225004872/fami_ex101.htm) | By Reference | 6-K | 2025-07-01 |
| [4.14](http://www.sec.gov/Archives/edgar/data/1701261/000147793225004872/fami_ex102.htm) | [Share Transfer Agreement dated June 13, 2025, by and between Zhejiang Farmmi Ecological Agricultural Technology Co., Ltd. and Lishui Damushan Tea Co., Ltd. (English translation)](http://www.sec.gov/Archives/edgar/data/1701261/000147793225004872/fami_ex102.htm) | By Reference | 6-K | 2025-07-01 |
| [4.15](fami_ex415.htm) | [Supplemental Agreement to Equity Transfer Agreement dated April 30, 2025, by and among Farmmi International Limited, Malong Limited and](fami_ex415.htm) | Herewith |  |  |
| [4.16](http://www.sec.gov/Archives/edgar/data/1701261/000147793225005429/fami_ex101.htm) | [Securities Purchase Agreement, dated August 4, 2025, by and among Farmmi, Inc. and the Purchasers](http://www.sec.gov/Archives/edgar/data/1701261/000147793225005429/fami_ex101.htm) |  | 6-K | 2025-08-04 |
| [4.17](fami_ex417.htm) | [Asset Purchase Termination and Refund Agreement dated September 30, 2025, by and among Farmmi International Limited, MALONG LIMITED, and Lishui Senbo Forestry Co., Ltd.](fami_ex417.htm)  | Herewith |  |  |
| [4.18](fami_ex418.htm) | [Sublease Agreement dated July 10, 2024, by and between Port Logistics Group, LLC. And Farmmi USA Inc.](fami_ex418.htm) | Herewith |  |  |
| [4.19](fami_ex419.htm) | [Multi-Tenant Industrial Triple Net Lease dated March 20, 2025, by and between JWH Real Estate Holding Corp. and Farmmi USA Inc.](fami_ex419.htm) | Herewith |  |  |
| [4.20](fami_ex420.htm) | [Industrial Lease Agreement dated August 1, 2025, by and between PPF Industrial Three Montgomery Way, LLC and Farmmi USA Inc.](fami_ex420.htm) | Herewith |  |  |
| [8.1](fami_ex81.htm) | [List of subsidiaries](fami_ex81.htm) | Herewith |  |  |
| [11.1](http://www.sec.gov/Archives/edgar/data/1701261/000114420417059192/tv478808_ex99-2.htm) | [Code of Business Conduct and Ethics of Farmmi, Inc.](http://www.sec.gov/Archives/edgar/data/1701261/000114420417059192/tv478808_ex99-2.htm) | By Reference | F-1 | 2017-11-15 |
| [11.2](http://www.sec.gov/Archives/edgar/data/1701261/000147793225000434/fami_ex112.htm) | [Insider Trading Policy](http://www.sec.gov/Archives/edgar/data/1701261/000147793225000434/fami_ex112.htm) | By Reference | 20-F | 2025-01-24 |
| [12.1](fami_ex121.htm) | [Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes- Oxley Act of 2002 and Securities and Exchange Commission Release 34-46427](fami_ex121.htm) | Herewith |  |  |
| [12.2](fami_ex122.htm) | [Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes- Oxley Act of 2002 and Securities and Exchange Commission Release 34-46427](fami_ex122.htm) | Herewith |  |  |
| [13.1](fami_ex131.htm) | [Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002](fami_ex131.htm) | Herewith |  |  |
| [13.2](fami_ex132.htm) | [Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002](fami_ex132.htm) | Herewith |  |  |
| [15.1](fami_ex151.htm) | [Consent of YCM CPA INC.](fami_ex151.htm) | Herewith |  |  |
| [97.1](http://www.sec.gov/Archives/edgar/data/1701261/000147793224000432/fami_ex971.htm) | [Clawback Policy](http://www.sec.gov/Archives/edgar/data/1701261/000147793224000432/fami_ex971.htm) | By Reference | 20-F | 2024-01-29 |
| 101.INS | XBRL Instance Document. |  |  |  |
| 101.SCH | XBRL Taxonomy Extension Schema Document. |  |  |  |
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. |  |  |  |
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. |  |  |  |
| 101.LAB | XBRL Taxonomy Extension Labels Linkbase Document. |  |  |  |
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. |  |  |  |

---

---

| |
|:---|
| 132 |
| *[**Table of Contents**](#Toc)* |

---

**SIGNATURES**

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

---

| | | |
|:---|:---|:---|
|  | Farmmi, Inc. | Farmmi, Inc. |
| Date: February 10, 2026 | By: | */s/ Yefang Zhang* |
|  | Name: | Yefang Zhang |
|  | Title: | Chief Executive Officer |

---

---

| |
|:---|
| 133 |
| *[**Table of Contents**](#Toc)* |

---

**FARMMI, INC.**

**CONSOLIDATED FINANCIAL STATEMENTS**

**AS OF AND FOR THE YEARS ENDED SEPTEMBER 30, 2025, 2024, AND 2023**

---

| |
|:---|
| 134 |
| *[**Table of Contents**](#Toc)* |

---

**FARMMI, INC.**

**INDEX TO CONSOLIDATED FINANCIAL STATEMENTS**

---

| | |
|:---|:---|
|  | **Page** |
| [Report of Independent Registered Public Accounting Firm (PCAOB ID: 6781)](#REPORTOFINDEPENDENT) | F-2 |
| [Consolidated Balance Sheets as of September 30, 2025 and 2024](#bs) | F-3 |
| [Consolidated Statements of Operations and Comprehensive Income (Loss) for the years ended September 30, 2025, 2024, and 2023](#so) | F-4 |
| [Consolidated Statements of Changes in Stockholders' Equity for the years ended September 30, 2025, 2024, and 2023](#sse) | F-5 |
| [Consolidated Statements of Cash Flows for the years ended September 30, 2025, 2024, and 2023](#cs) | F-6 |
| [Notes to Consolidated Financial Statements](#note) | F-7 |

---

---

| |
|:---|
| F-1 |
| *[**Table of Contents**](#Tocfs)* |

---

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

![fami_20fimg34.jpg](fami_20fimg34.jpg)

To the Board of Directors and Shareholders of Farmmi, Inc.

**Opinion on the Financial Statements**

We have audited the accompanying consolidated balance sheets of Farmmi, Inc. and its subsidiaries (collectively, the "Company") as of September 30, 2025 and 2024, the related consolidated statements of operations and comprehensive income (loss), changes in shareholders' equity, and cash flows for each of the three years in the period ended September 30, 2025, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of September 30, 2025 and 2024 and the results of its operations and its cash flows for each of the three years in the period ended September 30, 2025, in conformity with accounting principles generally accepted in the United States of America.

**Basis for Opinion**

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statement. We believe that our audits provide a reasonable basis for our opinion.

**Critical Audit Matter**

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

***Note receivable***

*Description of the Matter*

As described in Note 5 to the financial statements, the Company has a note receivable totaling approximately $59.6 million as of September 30, 2025, of which approximately $31 million is current and approximately $28.6 million is non-current. We identified valuation (recoverability) of the note receivable as a critical audit matter due to its non-routine transaction background (serving as a refund of cash paid in connection with a cancelled investment), significant amount, and the involvement of significant management judgment regarding its recoverability, altogether requiring extensive audit efforts and significant audit judgment.

*How the Critical Audit Matter Was Addressed in the Audit*

In order to address the above matter, we performed the following audit procedures, among others:

· We reviewed the relevant legal documents regarding the investment cancellation and establishment of the note receivable and verified the sufficiency of the relevant financial statement disclosures.

· We obtained and evaluated a third-party background check on the counterparty indicating ability to pay.

· We requested and received a confirmation letter from a knowledgeable external source (the counterparty) to obtain relevant and reliable audit evidence about outstanding balance and repayment schedule indicating willingness to pay.

· We tested subsequent cash collection from the counterparty indicating ability to pay.

· We evaluated the reasonableness of management's assessment of the note's recoverability.

/s/ *YCM CPA INC.*

We have served as the Company's auditor since 2021.

PCAOB ID 6781

Irvine, California

February 10, 2026

---

| |
|:---|
| F-2 |
| *[**Table of Contents**](#Tocfs)* |

---

**FARMMI, INC.**

**CONSOLIDATED BALANCE SHEETS**

---

| | | |
|:---|:---|:---|
|  | **As of** <br>**September 30,** <br>**2025**  | **As of** <br>**September 30,** <br>**2024**  |
| **Assets**  |  |  |
| **Current assets**  |  |  |
| Cash and restricted cash | $804098 | $486522 |
| Accounts receivable, net | 13095167 | 32460438 |
| Advances to suppliers, net | 46304704 | 122127761 |
| Note receivable, current portion | 31005260 |  |
| Inventories, net | 1544462 | 5490877 |
| Other current assets, net | 372264 | 1047836 |
| Due from a related party | - | 312362 |
| **Total current assets**  | 93125955 | 161925796 |
| **Non-current assets**  |  |  |
| Note receivable | 28620240 |  |
| Long-term investments, net | 6932404 | 7032573 |
| Biological assets, net |  | 9333216 |
| Right-of-use assets, net | 16440531 | 7399841 |
| Security deposits | 1877272 |  |
| Property and equipment, net | 36780 | 42293 |
| Other non-current assets  | - | 1000000 |
| **Total non-current assets**  | 53907227 | 24807923 |
| **Total assets**  | $147033182 | $186733719 |
| **Liabilities and shareholders' equity**  |  |  |
| **Current liabilities**  |  |  |
| Long-term loans - current |  | 202405 |
| Promissory notes | 2519134 | 5256238 |
| Accounts payable | 15695 | 69999 |
| Due to related parties | 293919 | 501500 |
| Operating lease liabilities - current | 5030911 | 3391141 |
| Other current liabilities | 2096671 | 638957 |
| **Total current liabilities**  | 9956330 | 10060240 |
| **Non-current liabilities**  |  |  |
| Long-term loans - non-current | 1809780 | 2177592 |
| Operating lease liabilities - non-current | 11409620 | 4025625 |
| Other non-current liabilities | - | 454025 |
| **Total non-current liabilities**  | 13219400 | 6657242 |
| **Total liabilities**  | 23175730 | 16717482 |
| **Commitment and contingencies**  |  |  |
| **Shareholders' equity**  |  |  |
| Ordinary shares, $2.40 par value, 5 billion shares authorized, 5,481,874 and 889,906 shares issued and outstanding as of September 30, 2025 and 2024, respectively | 13156498 | 2135774 |
| Additional paid-in capital | 161426802 | 161571262 |
| Statutory reserve | 687173 | 697443 |
| (Accumulated deficit) Retained earnings | (39839384) | 13248995 |
| Accumulated other comprehensive loss | (11313205) | (7664144) |
| **Total Farmmi, Inc.'s shareholders' equity**  | 124117884 | 169989330 |
| **Noncontrolling interest**  | (260432) | 26907 |
| **Total shareholders' equity**  | 123857452 | 170016237 |
| **Total liabilities and shareholders' equity**  | $147033182 | $186733719 |

---

The accompanying notes are an integral part of these consolidated financial statements.

---

| |
|:---|
| F-3 |
| *[**Table of Contents**](#Tocfs)* |

---

**FARMMI, INC.**

**CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)**

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Years Ended September 30,**  | **For the Years Ended September 30,**  | **For the Years Ended September 30,**  |
|  | **2025**  | **2024**  | **2023**  |
| Sales to third parties | $27971222 | $64128547 | $110364887 |
| Sales to related parties | 138 | 2785 | - |
| **Revenues**  | $27971360 | $64131332 | $110364887 |
| **Cost of revenues**  | (27169837) | (60257618) | (106078132) |
| **Gross profit**  | 801523 | 3873714 | 4286755 |
| **Operating expenses**  |  |  |  |
| Impairment loss for biological assets  | (8868597) | - | - |
| (Allowance) reversal of allowance for credit losses | (45112391) | (418661) | 32007 |
| Selling and distribution expenses | (309085) | (135848) | (145292) |
| General and administrative expenses | (2627826) | (2523520) | (2132095) |
| Total operating expenses | (56917899) | (3078029) | (2245380) |
| **(Loss) income from operations**  | (56116376) | 795685 | 2041375 |
| **Other income (expenses)**  |  |  |  |
| Change in fair value of derivative liability |  |  | 873767 |
| Interest income | 10517 | 3887 | 743858 |
| Interest expense | (418313) | (1690551) | (650813) |
| Amortization of debt issuance costs | (294699) | (60301) | (1691609) |
| Government grant | 9345 |  | 1439208 |
| Other income, net | 1521887 | 265429 | 101520 |
| Gain (loss) on disposal of subsidiaries | 1901693 | (3941657) | - |
| **Total other income (expenses), net**  | 2730430 | (5423193) | 815931 |
| **(Loss) income before income taxes**  | (53385946) | (4627508) | 2857306 |
| **Income tax expense** | (42) | (264) | (313493) |
| **Net (loss) income** | (53385988) | (4627772) | 2543813 |
| Less: Net (loss) income attributable to non-controlling interest | (287339) | 26907 | - |
| **Net (loss) income attributable to Farmmi, Inc.** | $(53098649) | $(4654679) | $2543813 |
| **Comprehensive (loss) income**  |  |  |  |
| Net (loss) income | $(53098649) | $(4654679) | $2543813 |
| Foreign currency translation | (3649061) | 10751380 | (4281978) |
| **Comprehensive (loss) income attributable to Farmmi, Inc.**  | $(56747710) | $6096701 | $(1738165) |
| **Weighted average number of ordinary shares**  |  |  |  |
| Basic | 1836043 | 590694 | 302410 |
| Diluted | 1836043 | 590694 | 704406 |
| **(Loss) earnings per ordinary share**  |  |  |  |
| Basic | $(28.92) | $(7.88) | $8.41 |
| Diluted | $(28.92) | $(7.88) | $3.61 |

---

The accompanying notes are an integral part of these consolidated financial statements.

---

| |
|:---|
| F-4 |
| *[**Table of Contents**](#Tocfs)* |

---

**FARMMI, INC.**

**CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY**

**For the years ended September 30, 2025, 2024, and 2023**

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Ordinary shares**  | **Ordinary shares**  | | | | | | | |
|  | **Shares**  | **Amount**  | **Additional** <br>**Paid in** <br>**Capital**  | **Statutory** <br>**Reserve**  | **Retained** <br>**Earnings** <br>**(Accumulated** <br>**Deficits)** | **Accumulated** <br>**Other** <br>**Comprehensive** <br>**Income (loss)**  | **Total** <br> **Farmmi Inc,'s**<br>**Shareholders'** <br>**Equity**  | **Noncontrolling** <br>**Interest**  | **Total** <br>**Equity**  |
| **Balance as of September 30, 2022** | 249063 | $597751 | $152162582 | $1153813 | $14903491 | $(14133546) | $154684091 |  | $154684091 |
| Issuance of ordinary shares, net | 219298 | 526315 | 7403685 |  |  |  | 7930000 |  | 7930000 |
| Issuance of ordinary shares for promissory notes redemption | 39511 | 94826 | 1005174 |  |  |  | 1100000 |  | 1100000 |
| Reverse share-split adjustment | (39) | (94) | 94 |  |  |  |  |  |  |
| Foreign currency translation loss |  |  |  |  |  | (4281978) | (4281978) |  | (4281978) |
| Net income for the year |  |  |  |  | 2543813 |  | 2543813 |  | 2543813 |
| Statutory reserve | - | - | - | 541816 | (541816) | - | - | - | - |
| **Balance as of September 30, 2023**  | 507833 | $1218798 | $160571535 | $1695629 | $16905488 | $(18415524) | $161975926 | - | $161975926 |
| Issuance of ordinary shares for promissory notes redemption | 96167 | 230801 | 923199 |  |  |  | 1154000 |  | 1154000 |
| Reverse share-split adjustment | (191) | (458) | 458 |  |  |  |  |  |  |
| Issuance of ordinary shares, net | 286097 | 686633 | 76070 |  |  |  | 762703 |  | 762703 |
| Foreign currency translation gain |  |  |  |  |  | 10751380 | 10751380 |  | 10751380 |
| Disposal of subsidiaries |  |  |  | (998186) | 998186 |  |  |  |  |
| Net (loss) income for the year | - | - | - | - | (4654679) | - | (4654679) | 26907 | (4627772) |
| **Balance as of September 30, 2024**  | 889906 | $2135774 | $161571262 | $697443 | $13248995 | $(7664144) | $169989330 | $26907 | $170016237 |
| Issuance of ordinary shares for promissory notes redemption | 100182 | 240437 | 3847 |  |  |  | 244284 |  | 244284 |
| Issuance of ordinary shares for warrants exercised | 325825 | 781980 |  |  |  |  | 781980 |  | 781980 |
| Issuance of ordinary shares, net | 4166667 | 10000001 | (150001) |  |  |  | 9850000 |  | 9850000 |
| Reverse share-split adjustment | (706) | (1694) | 1694 |  |  |  |  |  |  |
| Foreign currency translation loss |  |  |  |  |  | (3649061) | (3649061) |  | (3649061) |
| Disposal of subsidiaries |  |  |  | (10270) | 10270 |  |  |  |  |
| Net loss for the year | - | - | - | - | (53098649) | - | (53098649) | (287339) | (53385988) |
| **Balance as of September 30, 2025**  | 5481874 | $13156498 | $161426802 | $687173 | $(39839384) | $(11313205) | $124117884 | $(260432) | $123857452 |

---

The accompanying notes are an integral part of these consolidated financial statements.

---

| |
|:---|
| F-5 |
| *[**Table of Contents**](#Tocfs)* |

---

**FARMMI, INC.**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Years Ended September 30,**  | **For the Years Ended September 30,**  | **For the Years Ended September 30,**  |
|  | **2025**  | **2024**  | **2023**  |
| **Cash flows from operating activities**  |  |  |  |
| Net (loss) income | $(53385988) | $(4627772) | 2543813 |
| Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: |  |  |  |
| Changes in allowances - accounts receivable | 34352880 | 280158 | 7915 |
| Changes in allowances - advances to suppliers | 9994385 | (3217) |  |
| Changes in allowances - inventories | (8088) | 3933 | (40963) |
| Changes in allowances - other current assets | 676460 |  |  |
| Changes in allowances - due from related parties | 96754 |  |  |
| Changes in allowances - long-term investment |  | 137786 | 92944 |
| Changes in impairment- biological assets | 8868597 | - | - |
| Depreciation | 14382 | 11121 | 26870 |
| Amortization of operating lease right-of-use assets | 3062366 | 364301 | 45473 |
| Loss on short-term investment |  |  | 5870 |
| Loss on disposal of property and equipment |  |  | 124 |
| (Gain) loss from disposal of subsidiaries | (1901693) | 3941657 | (5592) |
| Amortization of debt issuance costs | 294699 | 60301 | 1691609 |
| Interest expenses for promissory note redemption  | 94166 | 1404229 |  |
| Amortization of biological assets | 212412 | 213240 | 217207 |
| Deferred income tax provision |  |  | 164600 |
| Change in fair value of derivative liability |  |  | (873767) |
| Changes in operating assets and liabilities: |  |  |  |
| Accounts receivable, net | (15950605) | (10553909) | (9045179) |
| Advances to suppliers, net | 62838313 | (9327123) | (71298597) |
| Note receivable |  |  | 3558349 |
| Inventories, net | 3714122 | (1401002) | (3272753) |
| Other current assets | 1181680 | (318052) | (222440) |
| Other non-current assets - security deposits | (877272) | (1000000) |  |
| Accounts payable | 841728 | 3006640 | 946285 |
| Operating lease liabilities | (3066268) | (359177) | (63467) |
| Other current liabilities | 1408795 | 937330 | (232463) |
| Other non-current liabilities | - | 454025 | - |
| **Net cash provided by (used in) operating activities**  | 52461825 | (16775531) | (75754162) |
| **Cash flows from investing activities**  |  |  |  |
| Purchase of property, plant and equipment | (16667) | (29450) | (314) |
| Short-term deposits |  |  | 35444402 |
| Proceeds from disposal of subsidiaries, net of cash | (60538) | 2097809 | 12998 |
| Cash paid for investment | (59625500) |  | (7088880) |
| Other receivables |  |  | 7504211 |
| Advances to related parties |  |  | (7096) |
| Repayment of advances to related party | - | - | 30872 |
| **Net cash (used in) provided by investing activities**  | (59702705) | 2068359 | 35896193 |
| **Cash flows from financing activities**  |  |  |  |
| Proceeds from promissory notes |  | 5000000 |  |
| Repayment of promissory notes | (2586986) | (130000) |  |
| Repayment of convertible promissory notes |  | (6050625) |  |
| Borrowings from a third party loan | 4439900 | 2184592 |  |
| Repayment of a third party loan | (4807712) | (7000) |  |
| Repayment of bank acceptance notes payable |  |  | (12491) |
| Proceed from issuance of ordinary shares for warrants exercised | 781980 |  |  |
| Proceed from issuance of ordinary shares, net | 9850000 | 762703 | 7930000 |
| Borrowing from bank loans |  |  | 4779323 |
| Repayments of bank loans |  | (164719) | (1688040) |
| Repayment of advances from related parties | (115200) | (482807) |  |
| Proceeds from advances from related parties | - | 715226 | 9150 |
| **Net cash provided by (used in) financing activities**  | 7561982 | 1827370 | 11017942 |
| Effect of exchange rate changes on cash | (3526) | 576589 | 462261 |
| **Net increase (decrease) in cash**  | 317576 | (12303213) | (28377766) |
| Cash and restricted cash, beginning of year | 486522 | 12789735 | 41167501 |
| Cash and restricted cash, end of year | $804098 | $486522 | $12789735 |
| **Representing:**  |  |  |  |
| Cash, end of year | $803477 | $486522 | $12789735 |
| Restricted cash, end of year | 621 | - | - |
| Total cash and restricted cash, end of year | $804098 | $486522 | $12789735 |
| **Supplemental disclosure information:** |  |  |  |
| Income taxes paid | - | $1213 | $67572 |
| Interest paid | $288402 | $65556 | $165179 |
| **Non-cash investing activities** |  |  |  |
| Note receivable for refund due from cancelled investment | $59625500 | - | - |
| **Non-cash financing activities** |  |  |  |
| Right-of-use assets obtained in exchange for operating lease obligations | $13221424 | $7268186 | $2888 |
| Issuance of ordinary shares for promissory notes redemption | $244284 | $1154000 | $1100000 |
| Interest expenses for promissory note redemption | $94166 | $1328630 | $1691609 |

---

The accompanying notes are an integral part of these consolidated financial statements.

---

| |
|:---|
| F-6 |
| *[**Table of Contents**](#Tocfs)* |

---

**FARMMI, INC.**

**NOTES TO 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 100% equity interest of Farmmi International Limited ("Farmmi International"), a Hong Kong company, which in turn owns 100% equity interest in Zhejiang Suyuan Agricultural Technology Co., Ltd ("Zhejiang Suyuan Agricultural"), Farmmi (Hangzhou) Enterprise Management Co., Ltd. ("Farmmi Enterprise") and Farmmi (Hangzhou) Health Development Co., Ltd ("Farmmi Heath Development"), and these subsidiaries were established under the laws of the People's Republic of China ("PRC" or "China"). Also, FAMI owns 100% equity interest in Farmmi USA Inc ("Farmmi USA"), which was established under the laws of the State of California.

Farmmi Enterprise owns 100% equity interest in Zhejiang Farmmi Ecological Agriculture Technology Co., Ltd ("Farmmi Eco Agri"). Farmmi Eco Agri owns 100% equity interests in Lishui Farmmi E-Commerce Co., Ltd. ("Farmmi E-Commerce"), Zhejiang Farmmi Food Co., Ltd. ("Farmmi Food"), Zhejiang Farmmi Agricultural Supply Chain Co., Ltd. ("Farmmi Supply Chain"), Ningbo Farmmi Baitong Trade Co., Ltd ("Ningbo Farmmi Trade") and Zhejiang Farmmi Biotechnology Co., Ltd. ("Farmmi Biotech").

Farmmi Supply Chain owns 100% equity interest in Jiangxi Xiangbo Agriculture and Forestry Development Co. Ltd ("Jiangxi Xiangbo") and Guoning Zhonghao (Ningbo) Trading Co., Ltd. ("Guoning Zhonghao"). Jiangxi Xiangbo owns 100% equity interest in Yudu County Yada Forestry Co., Ltd. ("Yudu Yada").

Farmmi Health Development owns 100% equity interest in Zhejiang Farmmi Healthcare Technology Co., Ltd ("Farmmi Healthcare"). Farmmi Healthcare and Farmmi Health Development own 95% and 5% of the equity interests in Zhejiang Yitang Medical Service Co., Ltd. ("Yitang Mediservice"), respectively. Yitang Mediservice owns 100% interest in Zhejiang Yiting Medical Technology Co., Ltd. ("Yiting Meditech").

On July 13, 2022, Farmmi Canada Inc. (Farmmi Canada) was established under the laws of Canada. Farmmi Inc. owns 100% of the equity interest in Farmmi Canada. Farmmi Canada was dissolved on December 31, 2024.

On July 23, 2024, SuppChains Group Inc ("SuppChains") was established under the laws of the State of California. Farmmi USA owns 75% equity of SuppChains.

On October 31, 2024, Suppchains Transport Inc ("Suppchains Transport") was established under the laws of the State of California. SuppChains owns 100% equity of SuppChains Transport.

On November 4, 2024, Zhejiang Famimi Biotechnology Co., Ltd ("Famimi Biotech") was established under the laws of PRC, where Zhejiang Suyuan Agricultural owns 95% and Farmmi E-Commerce owns 5% of Famimi Biotech, respectively.

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 100% interest in Farmmi Food and Farmmi Supply Chain to a third party for a total cash consideration of RMB20,000 ($2,754).

In June 2025, agreements were signed to divest 100% interest in Farmmi Biotech, Guoning Zhonghao and Ningbo Farmmi Trade to third parties for a total cash consideration of RMB10,000 ($1,405), RMB10,000 ($1,405), and RMB5,000 ($702), respectively.

On August 6, 2025, Suppchains Oak Inc ("Suppchains Oak") was established under the laws of the State of New Jersey, the United States of America. Suppchains Transport owns 100% equity of Suppchains Oak.

---

| |
|:---|
| F-7 |
| *[**Table of Contents**](#Tocfs)* |

---

**FARMMI, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**Note 1 - Organization and nature of business (Continued)**

As of September 30, 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 | July 28, 2015 | Cayman | Parent | Holding company |
| Farmmi International | August 20, 2015 | Hong Kong | 100% | Holding company |
| Farmmi Enterprise | May 23, 2016 | Zhejiang, China | 100% | Holding company |
| Farmmi Health Development | September 17, 2021 | Zhejiang, China | 100% | Holding company |
| Zhejiang Suyuan Agricultural | July 25, 2022 | Zhejiang, China | 100% | Holding company |
| Farmmi Eco Agri | May 27, 2022 | Zhejiang, China | 100% | Agriculture products |
| Farmmi E-Commerce | March 22, 2019 | Zhejiang, China | 100% | Agriculture products |
| Farmmi Healthcare | September 18, 2021 | Zhejiang, China | 100% | Medical health |
| Yitang Mediservice | September 7, 2021 | Zhejiang, China | 100% | Medical services |
| Yiting Meditech | September 17, 2021 | Zhejiang, China | 100% | Medical technology |
| Jiangxi Xiangbo | June 18, 2021 | Jiangxi, China | 100% | Holding company |
| Yudu Yada | November 10, 2010 | Jiangxi, China | 100% | Forestry development |
| Farmmi USA | April 20, 2023 | California, USA | 100% | Agriculture products |
| SuppChains | July 23, 2024 | California, USA | 75% | Trading |
| Suppchains Transport | October 31, 2024 | California, USA | 100% | Trading |
| Suppchains Oak | August 6, 2025 | New Jersey, USA | 100% | Trading |

---

FAMI through its subsidiaries (herein collectively referred to as the "Company") are principally engaged in processing, distributing, and trading dried Shiitake mushrooms, Mu Er (also known as Auricularia heimuer or black ear fungus), other edible fungi, other agricultural products trading business (e.g., tapioca, corn, cotton, and cornstarch), and logistic services.

**Note 2 - Summary of significant accounting policies**

<u>Basis of presentation and principles of consolidation</u>

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP") 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.

The consolidated financial statements of the Company include the financial statements of the Company and its subsidiaries. All inter-company transactions and balances between the Company and its subsidiaries have been eliminated upon consolidation. Results of subsidiaries and businesses acquired from third parties are consolidated from the date on which control is transferred to the Company.

---

| |
|:---|
| F-8 |
| *[**Table of Contents**](#Tocfs)* |

---

**FARMMI, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**Note 2 - Summary of significant accounting policies (Continued)**

<u>Use of estimates</u>

In preparing the consolidated financial statements in conformity with US 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 consolidated financial statements, as well as the reported amounts of revenues and expenses during the reporting year. Significant items subject to such estimates and assumptions include allowance for doubtful accounts and advances to suppliers, the valuation of inventories, the impairment of long-term investments and right-of-use assets, the useful lives of biological assets and property and equipment, and the valuation of deferred tax assets. Actual results could differ from those estimates.

<u>Cash</u>

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 People's Republic of China and the United States of America. Cash maintained in banks within the PRC of less than RMB 0.5 million (equivalent to $70,235) per bank are covered by "deposit insurance regulation" promulgated by the State Council of the People's Republic of China. Cash maintained with U.S. financial institutions of less than $250,000 are covered by the Federal Deposit Insurance Corporation or other programs.

<u>Accounts receivable, net</u>

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, the customer's payment history and current credit-worthiness, and current economic trends. Accounts are written off after efforts at collection prove unsuccessful.

---

| |
|:---|
| F-9 |
| *[**Table of Contents**](#Tocfs)* |

---

**FARMMI, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**Note 2 - Summary of significant accounting policies (Continued)**

<u>Advances to suppliers, net</u>

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.

<u>Inventory, net</u>

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.

<u>Long-term investments</u>

The Company's long-term investments consist of equity securities without readily determinable 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 September 30, 2025, and 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.

**FARMMI, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**Note 2 - Summary of significant accounting policies (Continued)**

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 ordinary shares or in-substance ordinary 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 September 30, 2025, and 2024, impairment for long-term investments was approximately $0.2 million and $0.2 million, respectively.

<u>Biological assets</u>

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 km<sup>2</sup>. 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. Biological assets are initially measured at cost and subsequently amortized on a straight-line basis over the terms of the forest right certificates.

<u>Property and equipment, net</u>

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 | 5 - 10 years |
| Transportation equipment | 4 years |
| Office equipment | 3 - 5 years |

---

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-11 |
| *[**Table of Contents**](#Tocfs)* |

---

**FARMMI, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**Note 2 - Summary of significant accounting policies (Continued)**

<u>Impairment of long-lived assets</u>

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.

<u>Revenue recognition</u>

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 obligation(s) 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 obligation(s) in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation.

The Company's principal businesses are (i) processing, distributing, and trading dried Shiitake mushrooms, Mu Er (also known as Auricularia heimuer or black ear fungus), other edible fungi, and other agricultural products (e.g., tapioca, corn, cotton, and cornstarch), and (ii) providing warehousing and logistics services (including operation services, outbound delivery services, storage services, and special work order services).

*<u>Revenue from trading and sales of agricultural products (including dried Shiitake mushrooms, Mu Er, and other edible fungi), operation services, and special work order services</u>*

The Company enters into contracts with customers as a principal and primary obligator and has the discretion to determine prices and vendors. Each contract contains one performance obligation, which is transferring the product(s) or service(s) to the Company's customer in exchange for consideration. The terms of pricing and payment stipulated in the contract are fixed. Usually, the Company requires certain customers to pay in advance or offers a credit term within six months for business customers with good credit worthiness. The Company recognizes revenue at the point in time when the control of the product(s) or service(s) has been transferred to the customer. The transfer of control is considered complete when the product(s) or service(s) have been accepted and received by the customer.

*<u>Revenue from outbound delivery and storage services</u>*

The Company enters into contracts with customers as a principal and primary obligator and has the discretion to determine prices and vendors. Outbound delivery and storage services are considered distinct services that are recognized over time when the performance obligations have been provided. Outbound delivery services are performed by the Company for the customers generally from shipment pickup to delivery. Storage services are recognized over the duration of the storage contractual period.

*<u>Contract balances and remaining performance obligations</u>*

The Company's contract liabilities primarily include advances from customers. As of September 30, 2025 and 2024, contract liabilities were approximately $0.6 million and $22,607, respectively, and are included in other current liabilities on the consolidated balance sheets. For the fiscal years ended September 30, 2025, 2024, and 2023, there were no revenues recognized from performance obligations related to prior periods.

Refer to **Note 17** - **Segment reporting** for details of revenue segregation.

<u>Cost of revenues</u>

Cost of revenues includes cost of raw materials purchased, inbound freight cost, cost of direct labor, depreciation expense, and other overhead. Write-down of inventory for lower of cost or net realizable value adjustments is also recorded in cost of revenues.

---

| |
|:---|
| F-12 |
| *[**Table of Contents**](#Tocfs)* |

---

**FARMMI, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**Note 2 - Summary of significant accounting policies (Continued)**

<u>Earnings (loss) per share</u>

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 following table sets forth the computation of basic and diluted earnings per share for the years ended September 30, 2025, 2024, and 2023:

---

| | | | |
|:---|:---|:---|:---|
| **Years Ended September 30,**  | **2025** | **2024** | **2023** |
| Net (loss) income available for ordinary shareholders (A) | $(53098649) | $(4654679) | $2543813 |
| Weighted average outstanding ordinary shares (B) |  |  |  |
| - basic | 1836043 | 590694 | 302410 |
| - potentially dilutive shares from convertible promissory notes | - | - | 401996 |
| - diluted | 1836043 | 590694 | 704406 |
| (Loss) earnings per ordinary share - basic (A/B) | $(28.92) | $(2.54) | $0.70 |
| (Loss) earnings per ordinary share - diluted (A/B) | $(28.92) | $(2.54) | $0.30 |

---

Securities that could potentially dilute loss per share in the future that were not included in the computation of diluted loss per share for the years ended September 30, 2025, 2024, and 2023 are as follows:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Years Ended September 30,**  | **2025** | **2025** | **2024** | **2024** | **2023** | **2023** |
| Warrants to purchase ordinary shares |  | 9,080,374 |  | 1,072,865 |  | - |
| Potentially dilutive shares from promissory notes |  | 41,718 |  | - |  | - |

---

<u>Fair value of financial instruments</u>

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, other current assets, due from a related party, remaining acquisition consideration 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 maturities. The fair value of longer term long-term loans and operating lease liabilities approximate their recorded values as their stated interest rates approximate the rates currently available.

---

| |
|:---|
| F-13 |
| *[**Table of Contents**](#Tocfs)* |

---

**FARMMI, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**Note 2 - Summary of significant accounting policies (Continued)**

<u>Debt issuance costs and debt discounts</u>

The Company may record debt issuance costs and/or debt discounts in connection with raising funds through the issuance of debt. These costs may be paid in the form of cash or equity (such as issuance of ordinary shares). These costs are amortized to interest expense through the maturity of the debt. If a conversion of the underlying debt occurs prior to maturity, a proportionate share of the unamortized amounts is immediately expensed.

<u>Concentrations of credit risk</u>

Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash, accounts receivable, and advances to suppliers. As of September 30, 2025 and 2024, $30,502 and $0.07 million, respectively, of the Company's cash is maintained in banks within the People's Republic of China, of which deposits of RMB0.5 million (equivalent to $70,235) per bank are covered by "deposit insurance regulation" promulgated by the State Council of the People's Republic of China. As of September 30, 2025 and 2024, cash balances of $772,975 and $414,737, respectively, were maintained at U.S. financial institutions and each U.S. account was insured by the Federal Deposit Insurance Corporation or other programs subject to $250,000 limitations. The Company has not experienced any losses in such accounts. A significant portion of the Company's sales are credit sales primarily to customers whose ability to pay is dependent upon the industry economics prevailing in these areas. The Company also makes cash advances to certain suppliers to ensure the stable supply of key raw materials. The Company performs ongoing credit evaluations of its customers and key suppliers to help further reduce credit risk.

<u>Comprehensive income (loss)</u>

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 shareholders' 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.

---

| |
|:---|
| F-14 |
| *[**Table of Contents**](#Tocfs)* |

---

**FARMMI, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**Note 2 - Summary of significant accounting policies (Continued)**

<u>Leases</u>

The Company accounts for leases following ASC 842, *Leases* ("Topic 842").

The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use ("ROU") assets, current portion of obligations under operating leases, and obligations under operating leases, non-current on the Company's consolidated balance sheets.

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and includes initial direct costs incurred. The Company's lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expenses for minimum lease payments are recognized on a straight-line basis over the lease term.

The Company adopted the practical expedient that allows lessees to treat the lease and non-lease components of a lease as a single lease component. Non-lease components include payments for building management services, utilities and property taxes. It separates the non-lease components from the lease components to which they relate.

The Company evaluates the impairment of its right-of-use assets consistent with the approach applied for its other long-lived assets. The Company reviews the recoverability of its long-lived assets when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment of possible impairment is based on its ability to recover the carrying value of the asset from the expected undiscounted future pre-tax cash flows of the related operations. The Company has elected to include the carrying amount of finance and operating lease liabilities in any tested asset group and include the associated lease payments in the undiscounted future pre-tax cash flows. As of September 30, 2025 and 2024, the Company did not have any impairment loss for its operating lease right-of-use assets.

---

| |
|:---|
| F-15 |
| *[**Table of Contents**](#Tocfs)* |

---

**FARMMI, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**Note 2 - Summary of significant accounting policies (Continued)**

<u>Foreign currency translation</u>

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 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 September 30, 2025 and 2024 for US$1 were RMB 7.1190 and RMB 7.0176, respectively. The average exchange rates for the years ended September 30, 2025, 2024, and 2023, for US$1 were RMB 7.2125, RMB 7.2043, and RMB 7.0533, respectively.

<u>Shipping and handling expenses</u>

All shipping and handling costs are expensed as incurred and included in selling expenses. Total shipping and handling expenses were $81,704, $88,649, and $60,204 for the years ended September 30, 2025, 2024, and 2023, respectively.

<u>Value added tax</u>

The Company is generally subject to the value added tax ("VAT") for selling merchandise. Before May 1, 2018, the applicable VAT rate was 13% or 17% (depending on the type of goods involved) for products sold in the PRC. After May 1, 2018, the Company is subject to a tax rate of 12% or 16%, and after April 1, 2019, the tax rate was further reduced to 9% or 13% based on the new Chinese tax law. Pursuant to approval issued by the State Administration of Taxation, Farmmi Eco Agri's major operation can be classified as agriculture products and its revenue is exempt from VAT. The amount of VAT liability is determined by applying the applicable tax rate to the invoiced amount of goods sold (output VAT) less VAT paid on purchases made with the relevant supporting invoices (input VAT). Under the commercial practice of the PRC, the Company pays VAT based on tax invoices issued. The tax invoices may be issued subsequent to the date on which revenue is recognized, and there may be a considerable delay between the date on which the revenue is recognized and the date on which the tax invoice is issued. In the event the PRC tax authorities dispute the date on which revenue is recognized for tax purposes, the PRC tax authorities have the right to assess a penalty based on the amount of taxes which is determined to be late or deficient, with any penalty being expensed in the period when a determination is made by the tax authorities that a penalty is due. During the reporting periods, the Company had no dispute with PRC tax authorities and there was no tax penalty incurred.

---

| |
|:---|
| F-16 |
| *[**Table of Contents**](#Tocfs)* |

---

**FARMMI, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**Note 2 - Summary of significant accounting policies (Continued)**

<u>Income taxes</u>

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 subsidiaries in the United States of America are 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 September 30, 2025, and 2024. As of September 30, 2025, the tax years ended December 31, 2015 through December 31, 2023 for the Company's subsidiaries remain open for statutory examination by PRC, and USA tax authorities.

<u>Statement of cash flows</u>

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.

<u>Risks and uncertainties</u>

The operations of the Company are located in the PRC. 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 economy. The Company's results may be adversely affected by changes in the political and social conditions in the PRC 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 in the PRC 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-17 |
| *[**Table of Contents**](#Tocfs)* |

---

**FARMMI, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**Note 2 - Summary of significant accounting policies (Continued)**

<u>Recent accounting pronouncements</u>

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.

---

| |
|:---|
| F-18 |
| *[**Table of Contents**](#Tocfs)* |

---

**FARMMI, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**Note 2 - Summary of significant accounting policies (Continued)**

In July 2025, the FASB issued ASU 2025-05, "Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets (ASU 2025-05)", simplifies credit loss calculations by introducing a practical expedient (available to all entities) that allows entities to assume current conditions won't change over an asset's life, removing the need for complex macroeconomic forecasts. Additionally, a new accounting policy election (for non-public business entities) allows these entities to consider post-balance sheet collection activity to estimate expected credit losses. ASU 2025-05 is effective for fiscal years beginning after December 15, 2025. Early adoptions is permitted. The Company's management does not believe the adoption of ASU 2025-05 will have a material impact on its financial statements and disclosures.

In September 2025, the FASB issued ASU 2025-06, "Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40) - Targeted Improvements to the Accounting for Internal-Use Software", the amendments in this Update remove all references to prescriptive and sequential software development stages (referred to as "project stages") throughout Subtopic 350-40. Therefore, an entity is required to start capitalizing software costs when both of the following occur: 1. Management has authorized and committed to funding the software project. 2. It is probable that the project will be completed and the software will be used to perform the function intended (referred to as the "probable-to-complete recognition threshold"). In evaluating the probable-to-complete recognition threshold, an entity is required to consider whether there is significant uncertainty associated with the development activities of the software (referred to as "significant development uncertainty"). The two factors to consider in determining whether there is significant development uncertainty are whether: 1. The software being developed has technological innovations or novel, unique, or unproven functions or features, and the uncertainty related to those technological innovations, functions, or features, if identified, has not been resolved through coding and testing. 2. The entity has determined what it needs the software to do (for example, functions or features), including whether the entity has identified or continues to substantially revise the software's significant performance requirements. The amendments in this Update specify that the disclosures in Subtopic 360- 10, Property, Plant, and Equipment—Overall, are required for all capitalized internal-use software costs, regardless of how those costs are presented in the financial statements. Additionally, the amendments clarify that the intangibles disclosures in paragraphs 350-30-50-1 through 50-3 are not required for capitalized internal-use software costs. Furthermore, the amendments in this Update supersede the website development costs guidance and incorporate the recognition requirements for website-specific development costs from Subtopic 350-50 into Subtopic 350-40. 4 within those annual reporting periods. Early adoption is permitted as of the beginning of an annual reporting period. The amendments in this Update permit an entity to apply the new guidance using any of the following transition approaches: 1. A prospective transition approach 2. A modified transition approach that is based on the status of the project and whether software costs were capitalized before the date of adoption 3. A retrospective transition approach. Under a prospective transition approach, an entity should apply the amendments in this Update to new software costs incurred as of the beginning of the period of adoption for all projects, including in-process projects. Under a modified transition approach, an entity should apply the amendments in this Update on a prospective basis to new software costs incurred (for all projects, including costs incurred for in-process projects), except for in-process projects that, as of the date of adoption, the entity determines do not meet the capitalization requirements under the amendments but meet the capitalization requirements under current guidance. For those in-process projects, an entity should derecognize any capitalized costs through 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 date of adoption. Under a retrospective transition approach, an entity 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 first period presented.

In September 2025, the FASB issued ASU 2025-07, "Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606) - Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract", the amendments in this Update exclude from derivative accounting nonexchange-traded contracts with underlyings that are based on operations or activities specific to one of the parties to the contract. However, this scope exception does not apply to (1) variables based on a market rate, market price, or market index, (2) variables based on the price or performance of a financial asset or financial liability of one of the parties to the contract, (3) contracts (or features) involving the issuer's own equity that are evaluated under the guidance in Subtopic 815-40, Derivatives and Hedging—Contracts in Entity's Own Equity, and (4) call options and put options on debt instruments. 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. Early adoption is permitted. An entity is permitted to apply the amendments in this Update either (1) prospectively to new contracts entered into on or after the date of adoption or (2) on a modified retrospective basis through a cumulative-effect adjustment to the opening balance of retained earnings as of the beginning of the annual reporting period of adoption for contracts existing as of the beginning of the annual reporting period of adoption. If an entity applies the modified retrospective transition method described in the preceding paragraph, upon adoption the entity may elect on an instrument by-instrument basis to (1) measure contracts previously accounted for as derivatives that are no longer accounted for as derivatives in their entirety under the amendments in this Update at fair value with changes in fair value recognized in earnings and (2) stop applying the fair value option for contracts that contained embedded features that otherwise would have been bifurcated but are no longer accounted for as derivatives under the amendments in this Update.

The amendments in this Update clarify that an entity should apply the guidance in Topic 606, including the guidance on noncash consideration in paragraphs 606-10-32-21 through 32-24, to a contract with share-based noncash consideration (for example, shares, share options, or other equity instruments) from a customer for the transfer of goods or services. The guidance in other Topics (including Topic 815 on derivatives and hedging and Topic 321 on equity securities) does not apply to share-based noncash consideration from a customer for the transfer of goods or services unless and until the entity's right to receive or retain the share-based noncash consideration is unconditional under Topic 606. 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. Early adoption is permitted. An entity is permitted to apply the amendments in this Update either (1) prospectively to new contracts entered into on or after the date of adoption, including modified contracts accounted for as separate contracts in accordance with paragraph 606-10-25-12, or (2) on a modified retrospective basis through a cumulative-effect adjustment to the opening balance of retained earnings as of the beginning of the annual reporting period of adoption for contracts existing as of the beginning of the annual reporting period of adoption.

In November 2025, the FASB issued ASU 2025-08, "Financial Instruments—Credit Losses (Topic 326) Purchased Loans", the amendments in this update expand the population of acquired financial assets subject to the gross-up approach in Topic 326. In accordance with the amendments in this Update, loans (excluding credit cards) acquired without credit deterioration and deemed "seasoned" (defined below) are purchased seasoned loans and accounted for using the gross-up approach at acquisition. Specifically, after an entity determines that a loan is a non-PCD asset based on its assessment of credit deterioration experienced since origination, the entity should apply the guidance described in the amendments to determine whether the loan is seasoned and, therefore, should be accounted for using the gross-up approach. All non-PCD loans (excluding credit cards) that are acquired in a business combination are deemed seasoned. Other non-PCD loans (excluding credit cards) are seasoned if they were purchased at least 90 days after origination and the acquirer was not involved in the origination of the loans. 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 should be applied prospectively to loans that are acquired on or after the initial application date. Early adoption is permitted in an interim or annual reporting period in which financial statements have not yet been issued or made available for issuance. If an entity adopts the amendments in an interim reporting period, it should apply the amendments as of the beginning of that interim reporting period or the beginning of the annual reporting period that includes that interim reporting period.

In November 2025, the FASB issued ASU 2025-09, "Derivatives and Hedging (Topic 815) Hedge Accounting Improvements", Issue 1: Similar Risk Assessment for Cash Flow Hedges - the amendments in this Update expand the hedged risks permitted to be aggregated in a group of individual forecasted transactions in a cash flow hedge by changing the requirement to designate a group of individual forecasted transactions from having a shared risk exposure to having a similar risk exposure. Entities are required to assess risk similarity both at hedge inception and on an ongoing basis. The amendments also clarify that a group of individual forecasted transactions can be considered to have a similar risk exposure if the derivative used as the hedging instrument is highly effective against each hedged risk in the group. In addition, in some cases, entities are permitted to perform an ongoing qualitative assessment of whether a group of individual forecasted transactions has a similar risk exposure. The amendments in this Update improve GAAP by expanding the hedged risks permitted to be aggregated in a group of individual forecasted transactions, thereby enabling entities to apply hedge accounting to potentially broader portfolios of forecasted transactions. Entities that aggregate larger groups of individual forecasted transactions in accordance with the amendments can achieve hedge accounting in a more efficient, cost-effective manner while reducing the risk of missed forecasts for highly effective economic hedges. Furthermore, the amendments improve operability and foster consistent application of the similar risk assessment. Therefore, an entity's financial statements can provide more relevant information to investors about the entity's risk management activities related to cash flow hedges of groups of forecasted transactions. 4 The amendments in this Update improve GAAP because the application of hedge accounting will not be limited by whether the execution of the nonfinancial purchase or sale transaction is in the spot or forward market. Relative to current GAAP, which limits designation of nonfinancial components to those that are contractually specified, a model based on the clearly-and-closely-related criteria permits hedge accounting for eligible components of forecasted spot-market transactions, forward-market transactions, and subcomponents of explicitly referenced components in an agreement's pricing formula. Furthermore, the amendments also may enable entities to reduce missed forecasts for highly effective economic hedges, more closely aligning hedge accounting with the economics of entities' risk management activities. The amendments in this Update also clarify that entities may designate a variable price component in a contract that is accounted for as a derivative as the hedged risk if all other hedge criteria are satisfied. That clarification improves GAAP because it resolves diversity in practice about whether hedge accounting may be applied in those situations and allows hedge accounting to be applied to highly effective economic hedges. Issue 4: Net Written Options as Hedging Instruments The amendments in this Update on the use of net written options as hedging instruments improve GAAP by updating the hedge accounting guidance to accommodate differences in the loan and swap markets that developed after the cessation of the London Interbank Offered Rate. Specifically, the amendments in this Update eliminate the requirement to apply the net written option test to a compound derivative comprising a swap and a written option designated as the hedging instrument in a cash flow hedge or a fair value hedge of interest rate risk. Issue 5: Foreign-Currency-Denominated Debt Instrument as Hedging Instrument and Hedged Item (Dual Hedge) The amendments in this Update eliminate the recognition and presentation mismatch related to a dual hedge strategy (that is, a hedge for which a foreign currency-denominated debt instrument is both designated as the hedging instrument in a net investment hedge and designated as the hedged item in a fair value hedge of interest rate risk). The amendments require that an entity exclude the debt instrument's fair value hedge basis adjustment from the net 5 investment hedge effectiveness assessment. As a result, an entity immediately recognizes in earnings the gains and losses from the remeasurement of the debt instrument's fair value hedge basis adjustment at the spot exchange rate. Entities are prohibited from applying this guidance by analogy to other circumstances. The amendments in this Update improve GAAP by enabling entities that utilize dual hedging strategies to reflect the economic offset of changes attributable to both interest rate risk and foreign exchange risk. For public business entities, the amendments in this Update are effective for annual reporting periods beginning after December 15, 2026, and interim periods within those annual reporting periods. For entities other than public business entities, the amendments are effective for annual reporting periods beginning after December 15, 2027, and interim periods within those annual reporting periods. Early adoption is permitted on any date on or after the issuance of this Update. Entities should apply the amendments in this Update on a prospective basis for all hedging relationships. An entity may elect to adopt the amendments in this Update for hedging relationships that exist as of the date of adoption. Upon adoption of the amendments in this Update, entities are permitted to modify certain critical terms of certain existing hedging relationships without dedesignating the hedge.

In December 2025, the FASB issued ASU 2025-10, "Government Grants (Topic 832) Accounting for Government Grants Received by Business Entities", The amendments in this Update establish the accounting for a government grant received by a business entity, including guidance for (1) a grant related to an asset and (2) a grant related to income. A grant related to an asset is a government grant, or part of a government grant, that is conditioned on the purchase, construction, or acquisition of an asset (for example, a long-lived asset or inventory). A grant related to income is a government grant, or part of a government grant, other than a grant related to an asset (for example, a grant that reimburses a business entity for operating expenses). The amendments in this Update require that a government grant received by a business entity should not be recognized until: 1. It is probable that (a) a business entity will comply with the conditions attached to the grant and (b) the grant will be received. 2. A business entity meets the recognition guidance for a grant related to an asset or a grant related to income. 3 The amendments in this Update require that a grant related to an asset be recognized on the balance sheet as a business entity incurs the related costs for which the grant is intended to compensate, either as: 1. Deferred income (the deferred income approach) 2. An adjustment to the cost basis in determining the carrying amount of the asset (the cost accumulation approach). A grant related to income and a grant related to an asset for which the deferred income approach is elected should be recognized in earnings on a systematic and rational basis over the periods in which a business entity recognizes as expenses the costs for which the grant is intended to compensate. When a business entity elects the cost accumulation approach for a grant related to an asset, there is no separate subsequent recognition of the government grant proceeds in earnings. The carrying amount of the asset that reflects the government grant proceeds would be used to determine depreciation or other subsequent accounting for that asset. The amendments in this Update require that a business entity present a grant related to income and a grant related to an asset for which the deferred income approach is elected as part of earnings either (1) separately under a general heading such as other income or (2) deducted from the related expense. In addition, the amendments in this Update require, consistent with current disclosure requirements, that a business entity provide disclosures, including the nature of the government grant received, the accounting policies used to account for the grant, and significant terms and conditions of the grant. Under a modified prospective approach, prior-period results should not be restated and there is no cumulative-effect adjustment. 2. A modified retrospective approach to both: a. Government grants that are entered into on or after the beginning of the earliest period presented b. Government grants that are not complete as of the beginning of the earliest period presented. A government grant is complete when substantially all of the government grant proceeds have been recognized before the beginning of the earliest period presented. Under a modified retrospective approach, all prior period results should be restated for government grants that are not complete as of the beginning of the earliest period presented through a cumulative-effect adjustment to the opening balance of retained earnings as of the beginning of the earliest period presented. 3. A retrospective approach to all government grants through a cumulative effect adjustment to the opening balance of retained earnings as of the beginning of the earliest period presented.

In December 2025, the FASB issued ASU 2025-11, "Interim Reporting (Topic 270) Narrow-Scope Improvements", the amendments in this Update clarify interim disclosure requirements and the applicability of Topic 270. The amendments in this Update result in a comprehensive list of interim disclosures that are required by GAAP. In developing the list of disclosures required by other Topics, the Board focused on identifying the interim disclosures that are currently required under GAAP. The objective of the amendments is to provide clarity about the current requirements, rather than evaluate whether to expand or reduce interim disclosure requirements. The amendments in this Update also include a disclosure principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. The intent of the disclosure principle, which is modeled after a previous SEC disclosure requirement, is to help entities determine whether disclosures not specified in Topic 270 should be provided in interim reporting periods. The amendments in this Update also clarify the applicability of Topic 270, the types of interim reporting, and the form and content of interim financial statements in accordance with GAAP. The Board expects that these clarifications will enhance consistency in interim reporting for all entities. The Board considers the amendments in this Update to be necessary to reflect the development of interim reporting over time. The amendments in this Update are effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, for public business entities and for interim reporting periods within annual reporting periods beginning after December 15, 2028, for entities other than public business entities. Early adoption is permitted for all entities. The amendments in this Update can be applied either (1) prospectively or (2) retrospectively to any or all prior periods presented in the financial statements.

In December 2025, the FASB issued ASU 2025-12, "Codification Improvements", thirty-three issues are addressed in this Update. Generally, the amendments in this Update are not intended to result in significant changes for most entities. However, the Board recognizes that changes to guidance may result in accounting changes for some entities. Therefore, the Board is providing transition guidance for the amendments. 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. Early adoption is permitted in both interim and annual reporting periods in which financial statements have not yet been issued or made available for issuance. If an entity adopts the amendments in this Update in an interim period, it must adopt them as of the beginning of the annual reporting period that includes that interim reporting period. An entity may elect to early adopt the amendments on an issue-by-issue basis. For example, an entity may decide to early adopt certain amendments and adopt the remaining amendments at the effective date. An entity should apply the amendments in this Update (except for the amendments to Topic 260, Earnings Per Share, related to Issue 4) using one of the following transition methods: 1. Prospectively to all transactions recognized on or after the date that the entity first applies the amendments 2. Retrospectively to the beginning of the earliest comparative period presented. An entity should adjust 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 comparative period presented. An entity may elect the transition method on an issue-by-issue basis. For example, it may apply certain amendments prospectively while applying others retrospectively. For the amendments in this Update to Topic 260 (that is, Issue 4), an entity should apply the amendments retrospectively to each prior reporting period presented in the period of adoption.

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 consolidated financial position, statements of operations, cash flows, and disclosures.

**Note 3 - Accounts receivable, net**

Accounts receivable from the Company consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **As of** <br>**September 30,** <br>**2025**  | **As of** <br>**September 30,** <br>**2024**  |
| Accounts receivable | $47284561 | $32763352 |
| Less: Allowance for credit losses | (34189394) | (302914) |
| Accounts receivable, net | $13095167 | $32460438 |

---

Allowance for credit losses of $34,189,394 and $302,914 was made for certain accounts receivable as of September 30, 2025 and 2024, respectively. The Company's accounts receivable primarily include balances due from customers when the Company's products are sold and delivered to customers.

The movement of allowance for credit losses was as follows:

---

| | | |
|:---|:---|:---|
|  | **For the** <br> **Year Ended** <br> **September 30,** <br> **2025**  | **For the** <br> **Year Ended** <br> **September 30,** <br> **2024**  |
| Balance as of beginning of year  | $302914 | $7249 |
| Additions  |  | 280158 |
| Reversal  | 33451447 |  |
| Translation adjustments  | 435033 | 15507 |
| Balance as of end of year  | $34189394 | $302914 |

---

**Note 4 - Advances to suppliers, net**

Advances to suppliers consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **As of** <br>**September 30,** <br>**2025**  | **As of** <br>**September 30,** <br>**2024**  |
| **Advances to suppliers:**  |  |  |
| Lishui Zhelin Trading Co., Ltd | $23470221 | $33994029 |
| Qingyuan Nongbang Mushroom Industry Co., Ltd | 16848007 | 18579142 |
| Jingning Liannong Trading Co., Ltd | 16092973 | 24023751 |
| Zhongjin Boda (Hangzhou) Industrial Co., Ltd |  | 24224806 |
| Ningbo Runcai Supply Chain Management Co., Ltd |  | 21214781 |
| Others | 19153 | 91252 |
| Total | $56430354 | $122127761 |
| Less: Allowance for credit losses | (10125650) | - |
| Advances to suppliers, net | $46304704 | $122127761 |

---

The movement of allowance for credit losses was as follows:

---

| | | |
|:---|:---|:---|
|  | **For the** <br> **Year Ended** <br> **September 30,** <br> **2025**  | **For the** <br> **Year Ended** <br> **September 30,** <br> **2024**  |
| Balance as of beginning of year  |  | $3176 |
| Additions  | 9994385 |  |
| Reversal  |  | (3217) |
| Translation adjustments  | 131265 | 41 |
| Balance as of end of year  | $10125650 | - |

---

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, soybeans, etc. The agreement was signed for a period of 2 years. Zhongjin Boda used to be a large supplier of the Company and had sufficient capacity to supply goods. In April 2025, the advance to Zhongjin Boda was fully refunded to the Company and was used as part of the cash consideration to acquire 45% equity of Ewayforest Group Limited.

---

| |
|:---|
| F-19 |
| *[**Table of Contents**](#Tocfs)* |

---

**FARMMI, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**Note 4 - Advances to suppliers, net (Continued)**

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. In May 2025, the advance to Ningbo Runcai was fully refunded to the Company and was used as part of the cash consideration to acquire 45% equity of Ewayforest Group Limited.

The Company has signed agreements with these two suppliers mainly as a reserve supplier of bulk agricultural products.

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 and 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 for no other reason than 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 any 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. These advances to suppliers are refundable to the Company upon negotiation. 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 have been gradually recovered before May 31, 2025. As of September 30, 2025 and 2024, advances to Ningbo Runcai was nil and $21.2 million, and advances to Zhongjin Boda was nil and $24.2 million, respectively.

**FARMMI, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**Note 5 - Note receivable**

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 45% equity of Ewayforest Group Limited (the "Target"), a Hong Kong company and a wholly owned subsidiary of the Seller. The Target owns 100% of the equity of Lishui Ganglisen Enterprise Management Co., Ltd, a Chinese company, which in turn owns 100% of the equity of Lishui Senbo Forestry Co., Ltd, a Chinese company ("Senbo Forestry"). Senbo Forestry is engaged in forestry management, improvement, planting and product sales. The Target had an appraised value of approximately RMB1.6 billion (approximately $220.2 million) as of December 31, 2024 based on an asset appraisal report issued by an independent third party appraisal firm.

Pursuant to the agreement, Farmmi International would pay a total purchase price of RMB723,324,150 ($99,676,733) for 45% of the Target's equity (the "Equity"). The parties had agreed that the Buyer would pay $35 million in cash and $35 million in the form of accounts receivable by March 31, 2025, with the remaining purchase price of $29,085,500 to be settled by September 2025. The parties had further agreed the date on which the Seller received the first installment of the purchase price should be deemed the closing date of the transaction. Within one month after receiving the first installment of the purchase price, the Seller should complete the procedures for amending the Target's articles of association and transferring the Equity. The Target was also required to have a two-member board of directors with one director appointed by each of the Buyer and the Seller. The agreement contains customary representations, warranties and covenants of the Buyer and the Seller, and is subject to certain customary closing conditions. However, due to the inability to obtain the Forest Ownership Certificate, the ownership of the relevant assets could not be confirmed. On September 30, 2025, both parties agreed to terminate the original asset/equity acquisition transaction and reached an agreement regarding the refund of the already paid consideration. The acquisition consideration to be refunded to the Company includes accounts receivable amounting to $35 million, and the cash portion of the consideration amounting to $59,625,500. As of September 30, 2025, accounts receivable of $35 million was reverted to the Company.

Both parties agree that 40% of the cash consideration of $59,625,500, amounting to $23,850,200, shall be refunded by the Seller to the Buyer in a lump sum before January 31, 2026. The Company received $23,850,200 on January 27, 2026.

Both parties agree that 60% of the cash consideration of $59,625,500, totaling $35,775,300, shall be repaid by the Seller in installments to the Buyer. The specific arrangement is as follows:

(1) The repayment period is two (2) years, from February 1, 2026 to January 30, 2028.

(2) Interest is calculated at an annualized rate of 2%, with interest to be paid once per quarter. Interest is calculated on a daily basis based on the specific outstanding balance.

(3) The principal is to be repaid every six months, with the specific time and amount as follows:

From February 1, 2026 to July 30, 2026, a total of no less than 20% shall be returned during this period:

From August 1, 2026 to January 30, 2027, a total of no less than 25% shall be returned;

From February 1, 2027 to July 30, 2027, a total of no less than 25% shall be returned;

From August 1, 2027 to January 30, 2028, the balance to be settled during this period.

**Note 6 - Inventories, net**

Inventories, net, consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **As of** <br>**September 30,** <br>**2025**  | **As of** <br>**September 30,** <br>**2024**  |
| Raw materials |  | $331311 |
| Packaging materials |  | 70052 |
| Finished goods | 1544462 | 5102711 |
| Inventory | 1544462 | 5504074 |
| Less: Allowance for inventory reserve | - | (13197) |
| Inventory, net | $1544462 | $5490877 |

---

The allowance for inventory reserve was nil and $13,197 as of September 30, 2025 and 2024, respectively.

---

| |
|:---|
| F-21 |
| *[**Table of Contents**](#Tocfs)* |

---

**FARMMI, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**Note 7 - Long-term investments, net**

Long-term investments of the Company relate to investment of RMB50 million (approximately $7.1 million) in Shanghai Zhong Jian Yiting Medical Health Technology Partnership ("Partnership") as a Limited Partner ("LP") with a third party, Zhong Jian (Lishui) Business Management Co., Ltd., who is a General Partner ("GP") or the executive partner in the Partnership and GP has decision-making authority in significant financial and operating decisions of the Partnership, and investment of RMB1 million (approximately $0.1 million) in 10% equity of Zhejiang Yili Yuncang Technology Group Co., Ltd

Long-term investments, net of allowance, are as follows:

---

| | | |
|:---|:---|:---|
|  | **As of** <br>**September 30,** <br>**2025**  | **As of** <br>**September 30,** <br>**2024**  |
| Long-term investments | $7163928 | $7267442 |
| Less: Impairment | (231524) | (234869) |
| Total | $6932404 | $7032573 |

---

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 September 30, 2025 and 2024, impairment for long-term investments was $231,524 and $234,869, respectively.

**Note 8 - 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, are as follows:

---

| | | |
|:---|:---|:---|
|  | **As of** <br>**September 30,** <br>**2025**  | **As of** <br>**September 30,** <br>**2024**  |
| Biological assets | $9832842 | $9974920 |
| Accumulated amortization | (847766) | (641704) |
| Sub-total  | 8985076 | 9333216 |
| Less: impairment loss | &nbsp;&nbsp;&nbsp;&nbsp;(8985076) | - |
| Total  | - | $9333216 |

---

Amortization expense was $0.2 million, $0.2 million, and $0.2 million for the years ended September 30, 2025, 2024, and 2023, respectively.

---

| |
|:---|
| F-22 |
| *[**Table of Contents**](#Tocfs)* |

---

**FARMMI, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**Note 9 - Security deposits**

Security deposits relate to rental deposits paid to three third-party landlords for leasing warehouse spaces. These leases have expiry dates ranging from September 2026 to January 2031.

**Note 10 - Property and equipment, net**

Property and equipment, stated at cost less accumulated depreciation, consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **As of** <br>**September 30,** <br>**2025**  | **As of** <br>**September 30,** <br>**2024**  |
| Machinery and equipment |  | $64938 |
| Transportation equipment | $29450 | 29489 |
| Office equipment | 16672 | 3064 |
| Subtotal | 46122 | 97491 |
| Accumulated depreciation | (9342) | (55198) |
| Total | $36780 | $42293 |

---

Depreciation expense was $14,382, $11,122, and $26,870 for the years ended September 30, 2025, 2024, and 2023, respectively.

---

| |
|:---|
| F-23 |
| *[**Table of Contents**](#Tocfs)* |

---

**FARMMI, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**Note 11 - Promissory notes**

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 Company issued to the Investor an unsecured promissory note (the "Note") dated July 30, 2024 in the original principal amount of $5,355,000 (the "Note") for $5,000,000 in gross proceeds. The Company used all of the proceeds from the Note to repay its indebtedness owed to Streeterville Capital, LLC under the Convertible Promissory Note it issued on September 26, 2022.

The Note bears interest at a rate of 7.0% per year and has a term of twelve (12) months after the purchase price of the Note is delivered by the Investor (the "Purchase Price Date"). The Note carries an original issue discount of $350,000 and includes $5,000 for investor fees, costs, and other transaction expenses incurred in connection with the purchase and sale of the Note. The Company may prepay all or a portion of the Note at any time by paying 105% of the outstanding balance elected for pre-payment. The Investor has the right to redeem the Note at any time six (6) months after the Purchase Price Date, subject to a maximum monthly redemption amount of $1,000,000. Following receipt of a redemption notice, if the Company has not repaid by a minimum monthly redemption amount of $250,000, the Company is required to pay by the fifth day of the following month the difference between the minimum monthly redemption amount and the amount actually repaid in such month, or the outstanding balance will be automatically increased by 0.5% as of such fifth day. Under the Purchase Agreement, while the Note is outstanding until 5 days after the Note is satisfied in full, the Company agreed to keep adequate current public information available, maintain its Nasdaq listing and not make certain Restricted Issuance (as defined therein), among other things. Upon the occurrence of a Trigger Event (as defined in the Note), the Investor shall have the right to increase the balance of the Note by 10% for a Major Trigger Event (as defined in the Note) and 5% for a Minor Trigger Event (as defined in the Note), with an aggregate of 25% as the maximum increase in the outstanding balance. In addition, the Note provides that upon occurrence of an Event of Default, the interest rate shall accrue on the outstanding balance at the rate equal to the lesser of 15% per annum or the maximum rate permitted under applicable law.

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 years ended September 30, 2025, 2024, and 2023, 100,182, 96,167, and 39,511 ordinary shares were issued for the redemption $244,284, $1,154,000, and $1,100,000 of the promissory notes and $2.6 million, $130,000, and nil in cash were paid for the repayment of the promissory notes, respectively. As of September 30, 2025 and 2024, the balance of the promissory notes amounted to approximately $2.5 million and $5.3 million, respectively.

For the years ended September 30, 2025, 2024, and 2023, the interest expense of the promissory notes was $269,091, $493,469 and $445,766, respectively, and the amortization of debt issuance costs was $294,699, $60,301, and $1,691,609, respectively.

---

| |
|:---|
| F-24 |
| *[**Table of Contents**](#Tocfs)* |

---

**FARMMI, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**Note 12 - Long-term loans**

Long-term loans consist of the following:

---

| | | |
|:---|:---|:---|
|  | **As of** <br>**September 30,** <br>**2025**  | **As of** <br>**September 30,** <br>**2024**  |
| **Long-term loans - current portion**  |  |  |
| Huaneng Guicheng Trust Co., Ltd. |  | $146296 |
| Zhejiang Mintai Commercial Bank |  | 39276 |
| WeBank Co., Ltd | - | 16833 |
| **Total long-term loans - current portion**  | - | 202405 |
| **Long-term loan, non-current portion**  |  |  |
| Xinmao Group Co., Ltd. | $1809780 | $2177592 |
| **Total long-term loan, non-current portion**  | $1809780 | $2177592 |

---

The following table summarizes the loan commencement date, loan maturity date, and the effective annual interest rate of the unsecured long-term loan:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **As of September 30, 2025**  | | | | | |
| **Long-term loans, non-current portion**  | **Loan** <br>**commencement** <br>**date**  | **Loan** <br>**maturity** <br>**date**  | **Effective** <br>**interest** <br>**rate**  | **Loan** <br>**amount** <br>**in USD**  |<br>**Note** |
| Xinmao Group Co., Ltd. | May 1, 2024 | April 30, 2027 | 4.50% | 1809780 | 4 |
| **Total long-term loans, non-current portion**  |  |  |  | $1809780 |  |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Loan**<br>**commencement**<br>**date**  | **Loan**<br>**maturity**<br>**date**  | **Loan**<br>**amount**<br>**in RMB**  | **Loan**<br>**amount**<br>**in USD**  | **Effective**<br>**interest**<br>**rate**  |<br>**Note**  |
| <br>**As of September 30, 2024** <br>**Secured long-term loans**  |  |  |  |  |  |  |
| **Long-term loans, current portion**  |  |  |  |  |  |  |
| Huaneng Guicheng Trust Co., Ltd. | August 1, 2023 | August 1, 2025 | 525000 | $74812 | 16.2% | 1 |
| Huaneng Guicheng Trust Co., Ltd. | December 30, 2022 | December 28, 2024 | 501667 | 71484 | 16.56% | 1 |
| Zhejiang Mintai Commercial Bank | August 1, 2023 | July 28, 2025 | 275625 | 39276 | 14.11% | 2 |
| WeBank Co., Ltd | August 1, 2023 | July 28, 2025 | 118125 | 16833 | 14.11% | 3 |
| **Total long-term loans, current portion**  |  |  | 1420417 | $202405 |  |  |
| **Long-term loans, non-current portion**  |  |  |  |  |  |  |
| Xinmao Group Co., Ltd. | May 1, 2024 | April 30, 2027 |  | 2177592 | 4.50% | 4 |
| **Total long-term loans, non-current portion**  |  |  |  | $2177592 |  |  |

---

1. These loans are guaranteed by a related party, Mr. Dehong Zhang, a legal representative of Farmmi Agricultural, for up to RMB 3 million ($0.4 million) of the outstanding principal and interest. These loans are in default. Farmmi Supply Chain was divested on March 31, 2025.

2. The loan is guaranteed by Mr. Dehong Zhang, a legal representative of Farmmi Food, for up to RMB 5 million ($0.7 million). These loans are in default. Farmmi Food was divested on March 31, 2025.

3. The loan is guaranteed by Mr. Dehong Zhang, a legal representative of Farmmi Food, for up to RMB 5 million ($0.7 million). These loans are in default. Farmmi Food was divested on March 31, 2025.

4. On January 1, 2024, the Company entered into a revolving loan of $5.0 million with a third party, with a flexible drawdown and repayment terms from May 1, 2024 to April 30, 2027, and with an annual interest of 4.5% per annum.

For the years ended September 30, 2025, 2024, and 2023, the interest expense was $149,222, $215,120, and $205,047 respectively.

---

| |
|:---|
| F-25 |
| *[**Table of Contents**](#Tocfs)* |

---

**FARMMI, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**Note 13 - Shareholders' equity** 

<u>Ordinary shares and warrants</u>

FAMI is a holding company which was incorporated under the laws of the Cayman Islands on July 28, 2015. On May 31, 2022, the Company consolidated its ordinary shares at a ratio of one-for-twenty-five. On September 25, 2023, the Company consolidated its ordinary shares at a ratio of one-for-eight, and, immediately following the share consolidation, the authorized share capital of the Company was increased from $2.5 million divided into 12.5 million ordinary shares of $0.20 par value each to $100 million divided into 500 million ordinary shares of $0.20 par value each by creation of an additional 487.5 million ordinary shares of $0.20 par value each. On March 17, 2025, the Company consolidated its ordinary shares at a ratio of one-for-twelve from $100,000,000 divided into 500,000,000 ordinary shares of a par value of $0.20 each to $100,000,000 divided into 41,666,667 ordinary shares of a par value of $2.40 each, and, immediately following the share consolidation, the authorized share capital of the Company was increased from $100,000,000 to$12,000,000,000, divided into 5,000,000,000 ordinary shares of $2.40 par value each. As a result of the reverse share split, 706, 191, and 39 ordinary shares were cancelled for the years ended September 30, 2025, 2024, and 2023, respectively.

For the year ended September 30, 2023, the Company issued 21,052,632 ordinary shares at $0.38 per ordinary share for a net proceed of $7.9 million in July 2023. After share consolidation in September 2023, and March 2025, the issuance of 21,052,632 ordinary shares was retrospectively adjusted to 2,631,579, and to 219,298 ordinary shares, respectively.

For the year ended September 30, 2024, the Company issued 3,433,167 (or 286,097 after reverse share split) ordinary shares at $0.30 per ordinary share for a net proceed of $0.8 million in August 2024.

For the year ended September 30, 2025, the Company issued 4,166,667 ordinary shares at $2.40 per share for a net proceed of $9.85 million.

<u>Warrants</u>

2024 warrants - Series A

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 3,433,167 ordinary shares, par value $0.20 per share, in a registered direct offering and Series A warrants to purchase up to 3,433,167 Ordinary Shares in a concurrent private placement for gross proceeds of approximately $1.03 million before deducting the placement agent's fees and other estimated offering expenses. In connection with this offering, on August 26, 2024, 3,433,167 warrants were issued with an exercise price of $0.75, exercisable immediately, which expire five years after their issuance date on August 26, 2024 (i.e., August 25, 2029). On December 6, 2024, the warrant was adjusted to an exercise price of $0.20 (or $2.40 after adjusted for the effect of the reverse share split) and, correspondingly, the number of warrants adjusted to 12,874,377 (or 1,072,865 after adjusted for the effect of the reverse share split). As of September 30, 2025, 325,825 warrants were exercised for proceeds of $781,980. As of September 30, 2024, no warrant was exercised. As of September 30, 2025 and 2024, 747,040 and 1,072,865 warrants, respectively, were outstanding, out-of-money and antidilutive.

2025 warrants - Series C

On August 4, 2025, the Company entered into a definitive securities purchase agreement, (the "Purchase Agreement") with certain accredited investors ("Selling Shareholders"), pursuant to which the Company offered to sell to the Selling Shareholders an aggregate of 4,166,667 Ordinary Shares, par value $2.4 per share, of the Company and Series C warrants to purchase up to 8,333,334 Ordinary Shares in a private placement for gross proceeds of $10.0 million (the "August 2025 PIPE"). The Offering closed on August 6, 2025. The Warrants are exercisable immediately following issuance at an initial exercise price of $2.40 per ordinary share and expire 3 years from the date of issuance. The exercise price and the number of ordinary shares issuable upon the exercise of the Warrants, or the Warrant Shares, are subject to adjustment upon the occurrence of certain events, including stock dividends or share splits, business combination, other recapitalization transactions or similar transactions. Upon such reset of the exercise price, the number of Warrant Shares will be proportionately increased such that the aggregate exercise price payable for the adjusted number of Warrant Shares will be the same as the aggregate exercise price on the date of issuance for the Warrant Shares then outstanding. In addition, subject to the rules and regulations of the Principal Market, the Company may at any time during the term of this Warrant, subject to the prior written consent of the Holder, reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the board of directors of the Company. As of September 30, 2025, no warrant was exercised. As of September 30, 2025, 8,333,334 warrants were outstanding, out-of-money and antidilutive.

---

| |
|:---|
| F-26 |
| *[**Table of Contents**](#Tocfs)* |

---

**FARMMI, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

The following tables summarize the warrants issued, outstanding, and expired as of and for the years ended, September 30, 2025 and 2024.

---

| | | |
|:---|:---|:---|
|  |<br>**Warrants**  | **Exercised** <br>**price**  |
| Warrants outstanding, as of September 30, 2023 |  |  |
| Issued | 1072865 | $2.40 |
| Exercised |  |  |
| Expired | - |  |
| Warrants outstanding, as of September 30, 2024 | 1072865 | $2.40 |
| Issued | 8333334 | $2.40 |
| Exercised | (325825) | $2.40 |
| Expired | - |  |
| Warrants outstanding, as of September 30, 2025 | 9080374 | $2.40 |
| Warrants exercisable, as of September 30, 2025 | 9080374 | $2.40 |

---

---

| | | | |
|:---|:---|:---|:---|
| <br>**Warrants Outstanding as of September 30, 2025** |<br>**Warrant** <br>**exercisable**  |<br>**Exercise** <br>**price**  | **Remaining** <br>**contractual** <br>**life**  |
| 2024 warrants - Series A | 747040 | $2.40 | 3.9 years |
| 2025 warrants - Series C | 8333334 | $2.40 | 2.8 years |

---

<u>Issuance of ordinary shares for promissory notes redemption</u>

For the years ended September 30, 2025, 2024, and 2023, 100,182, 96,167, and 39,511 ordinary shares, respectively, were issued for the redemption of $244,284, $1.2 million, and $1.1 million promissory notes, respectively.

<u>Share incentive plan</u>

The Company established a pool for shares and share options for employees. This pool contains shares and options to purchase 1,168,000 (or 5,840 after reverse share split) ordinary shares, equal to 10% of the number of ordinary shares outstanding at the conclusion of the initial public offering. Subject to approval by the Compensation Committee of our Board of Directors, the Company may grant shares or options in any percentage determined for a particular grant. Any options granted will vest at a rate of 20% per year for five years and have a per share exercise price equal to the fair market value of one of ordinary shares on the date of grant. 596,600 (or 2,983 after reverse share split) ordinary shares were granted in March 2011. As of September 30, 2025 and 2024, after share consolidation on March 17, 2025, the remaining ordinary shares available to be issued are 238 and 238, respectively.

<u>Statutory reserve</u>

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 10% of the after-tax net income determined in accordance with PRC GAAP until the reserve is equal to 50% of the entities' registered capital. Appropriations to the discretionary surplus reserve are made at the discretion of the Board of Directors. As of September 30, 2025 and 2024, the balance of the required statutory reserves was $0.7 million and $0.7 million, respectively.

---

| |
|:---|
| F-27 |
| *[**Table of Contents**](#Tocfs)* |

---

**FARMMI, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**Note 14 - Taxes**

<u>Corporation income tax ("CIT")</u>

The Company is subject to income taxes on an entity basis on income derived from the location in which each entity is domiciled.

FAMI is incorporated in the Cayman Islands as an offshore holding company and is not subject to tax on income or capital gains under the laws of the Cayman Islands.

Under the United States of America tax laws, an entity is subject to a 21% corporate tax rate.

Under the Hong Kong tax laws, an entity, that incorporated under the laws of Hong Kong China, is not subject to income tax if no revenue is generated in Hong Kong.

In China the Corporate Income Tax Law generally applies an income tax rate of 25% to all enterprises. Most of the China subsidiaries are subject to corporate income tax at a statutory rate of 25% on net income reported after certain tax adjustments. Certain subsidiaries were identified as small-scaled minimal profit enterprises. Once an enterprise meets certain requirements and is identified as a small-scale minimal profit enterprise, the part of its taxable income not more than RMB 1 million is subject to a reduced rate of 5% and the part between RMB 1 million and 3 million is subject to a reduced rate of 10%.

Under the Enterprise Income Tax ("EIT") Law of the PRC, domestic enterprises and foreign investment enterprises are usually subject to a unified 25% enterprise income tax rate while preferential tax rates, tax holidays and even tax exemption may be granted on a case-by-case basis. EIT is typically governed by the local tax authority in China. Each local tax authority at times may grant special tax treatment to local enterprises as a way to encourage specific agricultural industry and stimulate local economy. Farmmi Eco Agri is engaged in agricultural industry and their income are tax exempted. Net income of $1.9 million, $3.4 million, and $3.9 million was exempt from income tax for the years ended September 30, 2025, 2024, and 2023, respectively. The estimated tax savings as the result of the tax break for the years ended September 30, 2025, 2024, and 2023 amounted to $0.5 million, $0.8 million, and $1.0 million, respectively. After adjusted for share consolidation, per share effect of the tax exemption were $0.26, $1.43, and $3.19 for the years ended September 30, 2025, 2024, and 2023, respectively.

The following table reconciles PRC statutory rates to the Company's effective tax rates for the years ended September 30, 2025, 2024, and 2023:

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Years Ended September 30,**  | **For the Years Ended September 30,**  | **For the Years Ended September 30,**  |
|  | **2025**  | **2024**  | **2023**  |
| Statutory PRC income tax rate | 25.0% | 25.0% | 25.0% |
| Effect of income tax exemption (a) | 0.8% | (18.2)% | (40.9)% |
| Favorable tax rate impact (a) |  |  | 13.3% |
| Permanent difference | 0.9% | 32.3% | 0.0% |
| Effect of disposal of subsidiaries | (0.5)% | - | - |
| Changes of deferred tax assets valuation allowances | (25.0)% | (9.3)% | (5.8)% |
| Non-PRC entities not subject PRC income tax | (1.2)% | (29.8)% | 19.4% |
| Total | 0.0% | 0.01% | 11.0% |

---

(a) Income tax exemption refers to entity engaged in agricultural industry and its income is tax exempted. Favorable tax rate impact refers to entities that are identified as a small-scale minimal profit enterprise, for the portion of taxable income not more than RMB 1 million is subject to a reduced tax rate of 5% and for the portion of taxable income between RMB 1 million and RMB 3 million is subject to a reduced tax rate of 10%.

---

| |
|:---|
| F-28 |
| *[**Table of Contents**](#Tocfs)* |

---

**FARMMI, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**Note 14 - Taxes (Continued)**

<u>Corporation income tax ("CIT") (Continued)</u>

The income tax expenses of the Company consist of the following:

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Years Ended September 30,**  | **For the Years Ended September 30,**  | **For the Years Ended September 30,**  |
|  | **2025**  | **2024**  | **2023**  |
| Current income tax expenses | $42 | $264 | $148893 |
| Deferred income tax expenses | - | - | 164600 |
| Total | $42 | $264 | $313493 |

---

Deferred tax liabilities and assets attributable to different tax jurisdictions are not offset. Components of deferred tax assets and liabilities were as follows:

---

| | | |
|:---|:---|:---|
|  | **As of** <br>**September 30,** <br>**2025**  | **As of** <br>**September 30,** <br>**2024**  |
| Net operating loss ("NOL") carry forward | $347923 | $504051 |
| Allowance for inventory |  | 3299 |
| Allowance for credit losses | 11250097 | 75729 |
| Allowance for long-term investments | 57881 | 58717 |
| Valuation allowance | (11655901) | (641796) |
| Total | - | - |

---

The deferred tax expense (benefit) is the change of deferred tax assets and deferred tax liabilities resulting from the temporary difference between tax basis and U.S. GAAP. Certain subsidiaries had a cumulative net operating loss of approximately $1.4 million as of September 30, 2025, which may be available to reduce future taxable income. Deferred tax assets were primarily the result of these net operating losses.

As of each reporting date, management considers evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets. On the basis of this evaluation, a valuation allowance of $11.7 million was recorded against the gross deferred tax asset balance at September 30, 2025. The amount of the deferred tax asset is considered unrealizable because it is more likely than not that certain subsidiaries will not generate sufficient future taxable income to utilize the net operating loss.

**Note 15 - Concentration of major customers and suppliers**

For the year ended September 30, 2025, two major customers accounted for approximately 68% and 22% of the Company's total sales. For the year ended September 30, 2024, one major customer accounted for approximately 55% of the Company's total sales. For the year ended September 30, 2023, two major customers accounted for approximately 41% and 12% of the Company's total sales. Any decrease in sales to this major customer may negatively impact the Company's operations and cash flows if the Company fails to increase its sales to other customers.

As of September 30, 2025, one major customer accounted for approximately 99.7% of the Company's accounts receivable balance. As of September 30, 2024, one major customer accounted for approximately 98% of the Company's accounts receivable balance.

For the year ended September 30, 2025, three major suppliers accounted for approximately 36%, 35% and 20% of the total purchases. For the year ended September 30, 2024, three major suppliers accounted for approximately 24%, 22%, and 16% of the total purchases. For the year ended September 30, 2023, one major supplier accounted for approximately 14% of the total purchases.

As of September 30, 2025, three major suppliers accounted for approximately 42%, 30%, and 29% of the Company's advances to suppliers balance. As of September 30, 2024, five major suppliers accounted for approximately 28%, 20%, 20%, 17%, and 15% of the Company's advances to suppliers balance.

---

| |
|:---|
| F-29 |
| *[**Table of Contents**](#Tocfs)* |

---

**FARMMI, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**Note 16 - Leases**

The Company rents (i) its factories in Lishui City, Zhejiang Province from a related party, Zhejiang Tantech Bamboo Technology Co., Ltd, for processing dried edible fungi; (ii) a floor in an office building in Hangzhou from a third party; and (iii) three warehouses in the USA.

As of September 30, 2025 and 2024, the remaining average lease term was 4.3 years and 2.3 years, respectively. The Company's lease agreements do not provide a readily determinable implicit rate, nor is it available to the Company from its lessors. Instead, the Company estimates its incremental borrowing rate based on actual incremental borrowing interest rates from financial institutions in order to discount lease payments to present value. The weighted average discount rate of the Company's operating leases was 14.6% per annum and 4.7% per annum as of September 30, 2025, and 2024, respectively.

Supplemental balance sheet information related to operating leases is as follows:

---

| | | |
|:---|:---|:---|
|  | **As of** <br>**September 30,** <br>**2025**  | **As of** <br>**September 30,** <br>**2024**  |
| Right-of-use assets under operating leases | $16440531 | $7399841 |
| Operating lease liabilities, current | 5030911 | 3391141 |
| Operating lease liabilities, non-current | 11409620 | 4025625 |
| Total operating lease liabilities | $16440531 | $7416766 |

---

---

| | |
|:---|:---|
|  | **As of**  |
|  | **September 30,**  |
| **For the years ending September 30,**  | **2025** |
| 2026 | $7025712 |
| 2027 | 3456560 |
| 2028 | 3559453 |
| 2029 | 3669199 |
| 2030 | 3569388 |
| Thereafter | 1002553 |
| Total future minimum lease payments | 22282865 |
| Less: Imputed interest | (5842334) |
| Total | $16440531 |

---

---

| |
|:---|
| F-30 |
| *[**Table of Contents**](#Tocfs)* |

---

**FARMMI, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**Note 17 - 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 mushrooms, mu er fungus, 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 two operating segments and therefore two reportable segments as defined by ASC 280. Since June 2021, the Company's operations have expanded into bulk agricultural commodity trading, such as cotton and corn bulk trading. The Company obtains control over these commodities as a principal from its suppliers before selling these commodities to its customers. To implement global expansion strategy and meet the growing customer demand, the Company launched its warehouse and logistics services business in the U.S. in the summer of 2024, with the aim to develop a food and agricultural product supply chain system. In July 2024, Farmmi USA opened its first warehouse and logistics services base in Chino, California, through the lease of warehouse spaces of 315,000 square feet from a large facility managed by established logistics companies. The facility provides special railway lines that offer sea-railway cargo transportation services. The logistics services provided to customers include cargo transfers and bonded warehouses. In March 2025, the Company further expanded its logistics service operations to the U.S. East Coast by opening a new warehouse located within an industrial park in Somerset, New Jersey. In August 2025, the Company leased additional warehouse spaces of approximately 183,000 square feet located in Robbinsville, New Jersey, bringing its total warehouse footprint in the U.S. to 640,000 square feet. In January 2026, the U.S. subsidiary completes a Food Facility Registration with the U.S. Food and Drug Administration and has the capacity to support the storage and distribution of a wide range of foods and agricultural commodities.

*<u>Revenue disaggregation</u>*

Management has concluded that the disaggregation level is the same under both the revenue standard and the segment reporting standard. Revenue under the segment reporting standard is measured on the same basis as under the revenue standard. The Company's disaggregation of revenue for the years ended September 30, 2025, 2024 and 2023 are as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Years Ended September 30,**  | **For the Years Ended September 30,**  | **For the Years Ended September 30,**  |
|  | **2025**  | **2024**  | **2023**  |
| **Revenue recognition at a point in time** |  |  |  |
| **Sales of agricultural products**  |  |  |  |
| Shiitake | $10667870 | $17791882 | $19655465 |
| Mu Er | 9162453 | 14820286 | 16301157 |
| Other products | 29183 | 31493 | 112853 |
| **Agricultural products trading business**  |  |  |  |
| Tapioca |  |  | 39977734 |
| Corn | 784933 | 30971188 | 27430969 |
| Cotton |  |  | 5547927 |
| Red dates |  | 507083 |  |
| Cornstarch |  |  | 1338782 |
| **Logistic services** |  |  |  |
| Operation services | 1471700 | 9400 |  |
| Special work order services | 442025 | - | - |
| **Sub-total** | 22558164 | 64131332 | 110364887 |
| **Revenue recognition over time**  |  |  |  |
| **Logistic services** |  |  |  |
| Outbound delivery services  | 5175610 |  |  |
| Storage services  | 237586 | - | - |
| **Total**  | $27971360 | $64131332 | $110364887 |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Years Ended September 30,**  | **For the Years Ended September 30,**  | **For the Years Ended September 30,**  |
|  | **2025**  | **2024**  | **2023**  |
| Products revenue  | $20644439 | $64121932 | $110364887 |
| Services revenue  | 7326921 | 9400 | - |
| **Total**  | $27971360 | $64131332 | $110364887 |

---

Revenue by geographical segment for the years ended September 30, 2025, 2024 and 2023:

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Years Ended September 30,**  | **For the Years Ended September 30,**  | **For the Years Ended September 30,**  |
|  | **2025**  | **2024**  | **2023**  |
| PRC | $20644439 | $64121932 | $110364887 |
| United States of America | 7326921 | 9400 | **-** |
| Total | $27971360 | $64131332 | $110364887 |

---

---

| | | | |
|:---|:---|:---|:---|
|  | &nbsp;&nbsp;&nbsp;&nbsp;**For the Year Ended September 30, 2025**  | &nbsp;&nbsp;&nbsp;&nbsp;**For the Year Ended September 30, 2025**  | &nbsp;&nbsp;&nbsp;&nbsp;**For the Year Ended September 30, 2025**  |
|  | **USA**  | **PRC**  | **Total**  |
| Revenues  | $7326921 | $20644439 | $27971360 |
| Cost of revenues  | (8805651) | (18364186) | (27169837) |
| Gross (loss) profit  | (1478730) | 2280253 | 801523 |
| Operating expenses  | (821384) | (56096515) | (56917899) |
| Loss from operations  | (2300114) | (53816262) | (56116376) |
| Other income (expenses)  | 1338800 | 1391630 | 2730430 |
| Loss before income taxes  | (961314) | (52424632) | (53385946) |
| Income tax expenses  | - | (42) | (42) |
| Net loss  | $(961314) | $(52424674) | $(53385988) |

---

---

| | | | |
|:---|:---|:---|:---|
|  | &nbsp;&nbsp;&nbsp;&nbsp;**For the Year Ended September 30, 2024**  | &nbsp;&nbsp;&nbsp;&nbsp;**For the Year Ended September 30, 2024**  | &nbsp;&nbsp;&nbsp;&nbsp;**For the Year Ended September 30, 2024**  |
|  | **USA**  | **PRC**  | **Total**  |
| Revenues  | $9400 | $64121932 | $64131332 |
| Cost of revenues  | (4480) | (60253138) | (60257618) |
| Gross profit  | 4920 | 3868794 | 3873714 |
| Operating expenses  | (338119) | (2739910) | (3078029) |
| (Loss) income from operations  | (333199) | 1128884 | 795685 |
| Other income (expenses)  | 34888 | (5458081) | (5423193) |
| Loss before income taxes  | (298311) | (4329197) | (4627508) |
| Income tax benefits (expenses)  | 949 | (1213) | (264) |
| Net loss  | $(297362) | $(4330410) | $(4627772) |

---

---

| | | | |
|:---|:---|:---|:---|
|  | &nbsp;&nbsp;&nbsp;&nbsp;**For the Year Ended September 30, 2023**  | &nbsp;&nbsp;&nbsp;&nbsp;**For the Year Ended September 30, 2023**  | &nbsp;&nbsp;&nbsp;&nbsp;**For the Year Ended September 30, 2023**  |
|  | **USA**  | **PRC**  | **Total**  |
| Revenues  |  | $110364887 | $110364887 |
| Cost of revenues  |  | (106078132) | (106078132) |
| Gross profit  |  | 4286755 | 4286755 |
| Operating expenses  |  | (2245380) | (2245380) |
| Income from operations  |  | 2041375 | 2041375 |
| Other income  |  | 815931 | 815931 |
| Income before income tax  |  | 2857306 | 2857306 |
| Income tax expenses  |  | (313493) | (313493) |
| Net income  |  | $2543813 | $2543813 |

---

As of September 30, 2025 and 2024, the Company's long-lived assets are located in PRC and the United States of America:

---

| | | |
|:---|:---|:---|
|  | **As of** <br> **September 30,** <br> **2025**  | **As of** <br> **September 30,** <br> **2024**  |
| United States of America | $46933699 | $7969062 |
| PRC | 6973528 | 16838861 |
| Total long-lived assets  | $53907227 | $24807923 |

---

---

| |
|:---|
| F-31 |
| *[**Table of Contents**](#Tocfs)* |

---

**FARMMI, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**Note 18 - Related party transactions**

The relationship and 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 | Prepayment of electricity and water expenses for office leased to the Company |
| FarmNet Limited | Owns 0.7% equity interest of the Company | Payment of expenses by the Company |
| Epakia Canada Inc | The legal representative of Epakia Canada Inc is a director of the Company. | Payment of expenses by the Company |
| Forasen Group Co., Ltd | Owned by Mr. Zhengyu Wang, the Chairman of the Board of Directors of the Company | Sales from the Company |
| Zhang Bin | Serves as the supervisor of Farmmi Food | Sales from the Company |
| Shanghai Zhongjian Yiting Medical Health Technology Partnership | A partnership jointly set up by the Company with another limited partner ("LP"). | Payment of expenses by the Company |
| Zhang Dehong | The brother of the Company's CEO, Ms. Yefang Zhang | Payment of expenses by the Company and provide guarantees as an additional security for certain loans |
| Yefang Zhang | Chief Executive Officer of the Company | Payment of expenses for the Company |
| Forasen Holdings Group Co., Ltd | Owned by Mr. Zhengyu Wang, the Chairman of the Board of Directors of the Company | Purchases from the Company |
| Zhejiang Tantech Bamboo Technology Co., Ltd | Under common control of Mr. Zhengyu Wang and Ms. Yefang Zhang, CEO of the Company | Lease factory building to the Company and charging water and electricity for offices leased to the Company. |

---

---

| |
|:---|
| F-32 |
| *[**Table of Contents**](#Tocfs)* |

---

**FARMMI, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**Note 18 - Related party transactions (Continued)**

Due from related parties consisted of the following:

---

| | | | |
|:---|:---|:---|:---|
|  |  | **As of** <br>**September 30,** <br>**2025**  | **As of** <br>**September 30,** <br>**2024**  |
| **Due from related parties**  | **Name of related parties**  |  |  |
| Other receivables | Dehong Zhang |  | $202547 |
| Other receivables | Zhejiang Yili Yuncang Holding Group Co., Ltd |  | 99441 |
| Other receivables | FarmNet |  | 4100 |
| Other receivables | Epakia Canada Inc |  | 2996 |
| Trade receivables | Forasen Group Co., Ltd |  | 2094 |
| Trade receivables | Zhang Bin |  | 1184 |
| Total |  |  | $312362 |

---

Amount due from Zhejiang Yili Yuncang Holding Group Co., Ltd was mainly related to prepayment of electricity and water expenses for offices leased to the Company.

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 can be recoverable from these related parties.

Due to related parties from the Company consisted of the following:

---

| | | | |
|:---|:---|:---|:---|
|  |  | **As of** <br>**September 30,** <br>**2025**  | **As of** <br>**September 30,** <br>**2024**  |
| **Due to related parties**  | **Name of related parties**  |  |  |
| Other payable | Yefang Zhang | $241773 | $356975 |
| Other payable | Zhejiang Tantech Bamboo Technology Co., Ltd. | 52146 | 144525 |
| Total |  | $293919 | $501500 |

---

The amount due to Zhejiang Tantech Bamboo Technology Co., Ltd was related to water and electricity expenses for offices leased to the Company.

Amounts due to Yefang Zhang were related to payment of expenses by related parties for the Company. Amounts were due on demand and non-interest bearing.

<u>Sales to related parties</u>

The Company periodically sells merchandise to its affiliates during the ordinary course of business. For the years ended September 30, 2025, 2024, and 2023, the Company recorded sales to related parties of $138, $2,785, and nil, respectively.

<u>Operating leases from related parties</u>

The following table summarizes operating leases with related party, Zhejiang Tantech Bamboo Technology Co., Ltd, detailing lease begin date, lease end date, leasing purpose, leasing area in square meters, and annual rent in RMB and its equivalent in USD.

---

| | |
|:---|:---|
| **Zhejiang Tantech Bamboo Technology Co., Ltd.**  | **Lease No 1**  |
| Lease begin date | March 1, 2023 |
| Lease end date | February 29, 2028 |
| Leasing purpose | Office  |
| Annual rent in RMB | 131835 |
| Annual rent in USD | $18279 |
| Area (in square meters) | 479 |

---

For the years ended September 30, 2025, 2024, and 2023, the Company incurred lease expense of $18,279, $100,235, and $66,116, respectively.

<u>Non-Competition Agreement</u>

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 the Company. 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-33 |
| *[**Table of Contents**](#Tocfs)* |

---

**FARMMI, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**Note 19 - Dispositions of subsidiaries**

On March 31, 2025, an agreement was signed to divest 100% interest in Farmmi Food and Farmmi Supply Chain to a third party for a total cash consideration of RMB20,000 ($2,754).

In June 2025, agreements were signed to divest 100% interest in Farmmi Biotech, Guoning Zhonghao, and Ningbo Farmmi Trade to third parties for a total cash consideration of RMB10,000 ($1,405), RMB10,000 ($1,405), and RMB5,000 ($702), respectively.

Prior to the entry into the above-mentioned agreements, all of the business operations, customers, and suppliers of Farmmi Food, Farmmi Supply Chain, Farmmi Biotech, Guoning Zhonghao and Ningbo Farmmi Trade had been transferred to other operating subsidiaries of the Company. The purchase price to be paid by the buyers to the Company reflected the aggregate value of all the net assets of the disposed entities.

The Company disposed of these subsidiaries but maintained their operations with the remaining subsidiaries; therefore, these disposals did not constitute discontinued operations.

The following is a reconciliation of the carrying amounts of major classes of assets and liabilities in the consolidated balance sheets as of the date of disposition and September 30, 2024.

**FARMMI, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**Note 19 - Dispositions of subsidiaries (Continued)**

---

| | | |
|:---|:---|:---|
|  | **As of date** <br>**of disposal** <br>**2025**  | **As of** <br>**September 30,** <br>**2024**  |
| **Carrying amounts of major classes of assets**  |  |  |
| Cash | $67654 | $55211 |
| Accounts receivable, net | 257092 | 215071 |
| Advances to suppliers | 294248 | 71822 |
| Inventories, net | 113498 | 388166 |
| Due from related parties |  | 205825 |
| Other current assets | 15098 | 11642 |
| Right-of-use assets, net | 255224 | 403269 |
| Property and equipment | 7543 | 13186 |
| **Total assets of disposed entities**  | $1010357 | $1364192 |
| **Carrying amounts of major classes of liabilities**  |  |  |
| Bank loans | $199525 | $202405 |
| Accounts payable | 905941 | 65593 |
| Operating lease liabilities | 267955 | 420194 |
| Due to related parties |  | 112105 |
| Other current liabilities | 481969 | 276004 |
| **Total liabilities of disposed entities**  | $1855390 | $1076301 |

---

The following is a reconciliation of the amounts of major classes of operations of disposed entities in the consolidated statements of operations and other comprehensive income (loss) for the period from October 1, 2024 to the date of disposal and for the year ended September 30, 2024.

---

| | | |
|:---|:---|:---|
|  | **For the Period** <br>**from October 1,** <br>**2024 to the Date** <br>**of Disposal**  | **For the** <br>**Year Ended** <br>**September 30,** <br>**2024**  |
| Revenue | $1604649 | $3881787 |
| Cost of revenues | (1453782) | (3704006) |
| Gross profit | 150867 | 177781 |
| Operating expenses | (1125446) | (441279) |
| Loss from operations | (974579) | (263498) |
| Other expenses | (123134) | (53547) |
| Loss before income taxes | (1097713) | (317045) |
| Income tax expenses | - | (811) |
| Net loss | $(1097713) | $(317856) |

---

---

| |
|:---|
| F-35 |
| *[**Table of Contents**](#Tocfs)* |

---

**FARMMI, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**Note 20 - Subsequent events**

Management has reviewed events occurring through the date the consolidated financial statements were issued and, except as disclosed elsewhere in the consolidated financial statements, no subsequent events occurred that require accrual or disclosure, except for:

Farmmi, Inc. (the "Company") convened its extraordinary general meeting of shareholders on December 5, 2025, and passed special resolutions that

---

| | |
|:---|:---|
| 1. | The authorized shares, and the issued and outstanding shares, of the Company be reclassified and redesignated into Class A Ordinary Shares and Class B Ordinary Shares (the "Redesignation"); |
| 2. | The Fourth Amended and Restated Memorandum and Articles of Associations of the Company be adopted (the "Amended and Restated Memorandum and Articles"); |
| 3. | The authorized share capital of the Company be amended from (i) US$12,000,000,000 divided into 5,000,000,000 Ordinary Shares of US$2.40 nominal or par value each, to (ii) US$12,000,000,000 divided into 4,500,000,000 Class A Ordinary Shares of US$2.40 nominal or par value each with one vote per share (the "**Class A Ordinary Shares**"), and 500,000,000 Class B Ordinary Shares of US$2.40 nominal or par value each with fifty votes per share (the "**Class B Ordinary Shares**"), by the redesignation of 4,500,000,000 Ordinary Shares into 4,500,000,000 Class A Shares of US$2.40 nominal or par value each, and the redesignation of 500,000,000 Ordinary Shares into 500,000,000 Class B Shares with a nominal or par value of US$2.40 each. |
|  | The terms of, and rights attaching to the Class A Ordinary Shares and the Class B Ordinary Shares will be materially identical to the existing Ordinary Shares of par value US$2.40 each in the capital of the Company save that the Class B Ordinary Shares: (i) shall have 50 times the voting rights per share of Class A Ordinary Shares, and (ii) shall be convertible into Class A Ordinary Shares, as provided in the Fourth Amended and Restated Memorandum and Articles of Association. |
| 4. | Simultaneously with the Redesignation, the Ordinary Shares in the Company issued and outstanding be redesignated as follows: |

---

---

| |
|:---|
| all the existing authorized and issued Ordinary Shares of the Company be redesignated as Class A Ordinary Shares save for 3,873 Ordinary Shares issued and currently registered in the name of Farmnet Limited; and |
| the 3,873 Ordinary Shares held by Farmnet Limited be redesignated as 3,873 Class B Ordinary Shares. |

---

5. The authorized share capital of the Company be reduced from (i) US$12,000,000,000 divided into 4,500,000,000 Class A Ordinary Shares of US$2.40 nominal or par value each, and 500,000,000 Class B Ordinary Shares of US$2.40 nominal or par value each, to (ii) US$50 divided into 4,500,000,000 Class A Ordinary Shares of US$0.000,000,01 nominal or par value each, and 500,000,000 Class B Ordinary Shares of US$0.000,000,01 nominal or par value each, by the reduction of the par value of each Class A share and each Class B share by US$2.399,999,99 (the "Capital Reduction").

On January 13, 2026, Bluesage Marketing Inc ("Bluesage") was established under the laws of the State of California, the United States of America. Farmmi USA owns 100% equity of Bluesage.

**Note 21 - Condensed financial information of the parent company**

Pursuant to the requirements of Rule 12-04(a), 5-04(c) and 4-08(e)(3) of Regulation S-X, the condensed financial information of the parent company shall be filed when the restricted net assets of consolidated subsidiaries exceed 25 percent of consolidated net assets as of the end of the most recently completed fiscal year. The Company performed a test on the restricted net assets of consolidated subsidiaries in accordance with such requirement and concluded that it was applicable to the Company as the restricted net assets of the Company's PRC subsidiaries exceeded 25% of the consolidated net assets of the Company, therefore, the condensed financial statements for the parent company are included herein.

For purposes of the above test, restricted net assets of consolidated subsidiaries shall mean that amount of the Company's proportionate share of net assets of consolidated subsidiaries (after intercompany eliminations) which as of the end of the most recent fiscal year may not be transferred to the parent company by subsidiaries in the form of loans, advances or cash dividends without the consent of a third party

The condensed financial information of the parent company has been prepared using the same accounting policies as set out in the Company's consolidated financial statements except that the parent company used the equity method to account for investment in its subsidiaries. Such investment is presented on the condensed balance sheets as "Investment in subsidiaries" and the respective profit or loss as "Equity in earnings of subsidiaries" on the condensed statements of income.

The footnote disclosures contain supplemental information relating to the operations of the Company, and, as such, these statements should be read in conjunction with the notes to the consolidated financial statements of the Company. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S GAAP have been condensed or omitted.

The Company did not pay any dividend for the periods presented. As of September 30, 2025 and 2024, there were no material contingencies, significant provisions for long-term obligations, or guarantees of the Company, except for those which have been separately disclosed in the consolidated financial statements, if any.

---

| |
|:---|
| F-36 |
| *[**Table of Contents**](#Tocfs)* |

---

**FARMMI, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**Note 21 - Condensed financial information of the parent company (Continued)**

**Farmmi, Inc.**

**Parent Company Balance Sheets**

---

| | | |
|:---|:---|:---|
|  | **As of** <br>**September 30,** <br>**2025**  | **As of** <br>**September 30,** <br>**2024**  |
| **Assets** | **Assets** | **Assets** |
| **Current assets**  |  |  |
| Cash | $70 | $70 |
| Other receivables | - | 294701 |
| Total current assets | 70 | 294771 |
| **Non-current assets**  |  |  |
| Investment in subsidiaries | 126420113 | 169753151 |
| Total assets | $126420183 | $170047922 |
| **Liabilities and Shareholders' Equity** | **Liabilities and Shareholders' Equity** | **Liabilities and Shareholders' Equity** |
| **Current liabilities**  |  |  |
| Interest payable | 43597 | 31685 |
| Promissory notes | 2519134 | - |
| **Total liabilities**  | 2562731 | $31685 |
| **Commitments and contingencies**  |  |  |
| **Shareholders' equity**  |  |  |
| Ordinary shares, $2.40 par value, 5 billion shares authorized, 5,481,874 and 889,906 shares issued and outstanding as of September 30, 2025 and 2024, respectively | 13156498 | 2135791 |
| Additional paid-in capital | 161426802 | 161571245 |
| (Accumulated losses) Retained earnings | (50725848) | 6309201 |
| **Total shareholders' equity**  | 123857452 | 170016237 |
| **Total liabilities and shareholders' equity**  | $126420183 | $170047922 |

---

---

| |
|:---|
| F-37 |
| *[**Table of Contents**](#Tocfs)* |

---

**FARMMI, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**Note 21 - Condensed financial information of the parent company (Continued)**

**Farmmi, Inc.**

**Parent Company Statements of Operations**

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Years Ended September 30,**  | **For the Years Ended September 30,**  | **For the Years Ended September 30,**  |
|  | **2025** | **2024** | **2023** |
| **Operating expenses:**  |  |  |  |
| General and administrative expenses | $(997285) | $(803483) | $(913948) |
| **Other expenses**  |  |  |  |
| Change in fair value of derivative liability |  |  | 873767 |
| Interest expense | (269091) | (1535732) | (445766) |
| Amortization of debt issuance costs | (294699) | (60301) | (1691609) |
| Other expenses | - | (1061) | (432) |
| Loss from operations | (1561075) | (2400577) | (2177988) |
| Equity in (loss) income of subsidiaries | (51537574) | (2254102) | 4721801 |
| Comprehensive (loss) income attributable to the Company | $(53098649) | $(4654679) | $2543813 |

---

---

| |
|:---|
| F-38 |
| *[**Table of Contents**](#Tocfs)* |

---

**FARMMI, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**Note 21 - Condensed financial information of the parent company (Continued)**

**Farmmi, Inc.**

**Parent Company Statements of Cash Flows**

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Years Ended September 30,**  | **For the Years Ended September 30,**  | **For the Years Ended September 30,**  |
|  | **2025** | **2024** | **2023** |
| **Cash flows from operating activities**  |  |  |  |
| Net (loss) income | $(53098649) | $(4654679) | $2543813 |
| Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities |  |  |  |
| Equity in loss (earnings) of subsidiaries | 51537574 | 2254102 | (4721801) |
| Interest expenses for promissory note redemption | 94166 | 1444191 |  |
| Amortization of debt issuance costs | 294699 | 60301 | 1691609 |
| Change in fair value of derivative liability |  |  | (873767) |
| Other current assets | 2 | 134996 | 98 |
| Other current liabilities | 441343 | - | (50869) |
| Net cash used in operating activities | (730865) | (761089) | (1410917) |
| **Cash flows from investing activities**  |  |  |  |
| Investing in subsidiaries | (7200929) | 1028374 | (10576178) |
| **Net cash (used in) provided by investing activities** | (7200929) | 1028374 | (10576178) |
| **Cash flows from financing activities**  |  |  |  |
| Proceeds from promissory notes |  | 5000000 |  |
| Repayment of promissory notes | (2586986) | (130000) |  |
| Repayment of convertible promissory notes |  | (6050625) |  |
| Issuance of ordinary shares for warrants exercised | 781980 |  |  |
| Issuance of ordinary shares, net | 9850000 | 762703 | 7930000 |
| Proceeds from advances from related parties |  | 150623 |  |
| Repayment of advances from related parties | (113200) | - | - |
| **Net cash provided by (used in) financing activities**  | 7931794 | (267299) | 7930000 |
| **Net decrease in cash**  |  | (14) | (4057095) |
| **Cash, beginning of year**  | 70 | 84 | 4057179 |
| **Cash, end of year**  | $70 | $70 | $84 |

---

## Exhibit 2.2

**EXHIBIT 2.2**

**Description of Securities**

**Registered under Section 12 of the Securities Exchange Act of 1934**

As of September 30, 2025, Farmmi, Inc. (the "Company," "we," "our" or "us") had one class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended, as follows:

---

| | |
|:---|:---|
| **Title of each class** | **Name of each exchange on which** <br> **registered** |
| Ordinary Shares, par value US$2.40 per share<br> FAMI | Nasdaq Capital Market |

---

Capitalized terms used but not defined herein shall have the meanings given to them in the annual report on Form 20-F.

**Description of Ordinary Shares**

The following is a summary of material provisions of our Fourth Amended and Restated Memorandum and Articles of Association currently in effect (the "Memorandum and Articles"), as well as the Companies Act (As Amended) of the Cayman Islands (the "Companies Act") insofar as they relate to the material terms of our Class A ordinary shares. Notwithstanding this, because it is a summary, it may not contain all the information that you may otherwise deem important. For more complete information, you should read the entire Memorandum and Articles filed herewith.

***Type and Class of Securities***

Effective January 5, 2026, the Company is authorized to issue two classes of ordinary shares, Class A Ordinary Shares and Class B Ordinary Shares. The par value of each of our Class A Ordinary Shares and Class B Ordinary Shares is US$2.40 per share. The number of ordinary shares that had been issued as of the end of the latest fiscal year is provided on the cover of the annual report on Form 20-F for such fiscal year.

All of our issued and outstanding ordinary shares are issued credited as fully paid and non-assessable. Our ordinary shares may be held in either certificated or uncertificated form. Our shareholders who are non-residents of the Cayman Islands may freely hold and vote their Class A Ordinary Shares.

***Preemptive Rights***

Our Class A Ordinary Shares are not subject to any pre-emptive or similar rights under the Companies Act or pursuant to the Memorandum and Articles.

***Limitations or Qualifications***

We have a dual-class share structure such that our ordinary shares consist of Class A Ordinary Shares and Class B ordinary shares. In respect of matters requiring a shareholder vote, each holder of Class A Ordinary Shares is entitled to one vote per one Class A Ordinary Share and each holder of Class B Ordinary Shares is entitled to fifty votes per one Class B Ordinary Share. The Class B Ordinary Shares are convertible into Class A Ordinary Shares at any time at the option of the holder on a one-to-one basis. As a result of the super voting power of holders of Class B Ordinary Shares, the voting power of the Class A Ordinary Shares may be materially limited.

***Rights of Other Types of Securities***

Not applicable.

***Rights of Each Class of the Shares***

Our authorized share capital is $12,000,000,000, divided into 4,500,000,000 Class A Ordinary Shares of US$2.40 par value each and 500,000,000 Class B Ordinary Shares of US$2.40 value each. All of our issued and outstanding ordinary shares are fully paid and non-assessable. Holders of Class A Ordinary Shares and Class B Ordinary Shares have the same rights except for voting and conversion rights as set forth in our Memorandum and Articles. In respect of matters requiring a vote of all shareholders, each holder of Class A Ordinary Shares is entitled to one vote per one Class A Ordinary Share and each holder of Class B Ordinary Shares is entitled to fifty votes per one Class B Ordinary Share. Class A Ordinary Shares are not convertible into Class B Ordinary Shares under any circumstances. The Class B Ordinary Shares are convertible into Class A Ordinary Shares, on a one-to-one basis, at any time at the option of the holder and will automatically convert into Class A Ordinary Shares under certain circumstances as set forth in the Memorandum and Articles.

*Dividends*

The holders of our ordinary shares are entitled to such dividends as may be declared by our board of directors, subject to the Companies Act and our Memorandum and Articles. Our Memorandum and Articles provide that dividends may be declared and paid out of funds of our Company lawfully available therefor. Under the laws of the Cayman Islands, our company may pay a dividend out of either profit or share premium account, provided that in no circumstances may a dividend be paid if this would result in our company being unable to pay its debts as they fall due in the ordinary course of business.

*Voting rights*

Subject to any rights or restrictions as to voting attached to any shares, on a show of hands every shareholder who is present in person and every person representing a shareholder by proxy shall have one vote for each Class A Ordinary Share and fifty votes for each Class B Ordinary Share. On a poll, every shareholder who is present in person and every person representing a shareholder by proxy shall have one vote for each Class A Ordinary Share, and fifty votes for each Class B Ordinary Share, of which he or the person represented by proxy is the holder. In addition, all shareholders holding shares of a particular class are entitled to vote at a meeting of the holders of that class of shares. Votes may be given either personally or by proxy.

*Transfer of Ordinary Shares*

Any of our shareholders may transfer all or any of his or her ordinary shares by an instrument of transfer in the usual or common form or any other form approved by our board of directors.

However, our board of directors may, in its absolute discretion, decline to register any transfer of any ordinary share which is not fully paid up or on which our company has a lien. Our board of directors may also decline to register any transfer of any ordinary share unless:

(a) the instrument of transfer is lodged with us, accompanied by the certificate for the ordinary shares to which it relates and such other evidence as our board of directors may reasonably require to show the right of the transferor to make the transfer;

(b) the instrument of transfer is in respect of only one class of ordinary shares;

(c) the instrument of transfer is properly stamped, if required;

(d) the ordinary shares transferred are fully paid up and free of any lien in favor of us; and

(e) any applicable fee of such maximum sum as the applicable stock exchange may determine to be payable, or such lesser sum as our board of directors may from time to time require, related to the transfer is paid to us.

If our directors refuse to register a transfer, they are required, within three months after the date on which the instrument of transfer was lodged, to send to each of the transferor and the transferee notice of such refusal.

*Liquidation*

On a winding up of our company, if the assets available for distribution among our shareholders shall be more than sufficient to repay the whole of the share capital at the commencement of the winding up, the surplus will be distributed among our shareholders in proportion to the par value of the shares held by them at the commencement of the winding up, subject to a deduction from those shares in respect of which there are monies due, of all monies payable to our company for unpaid calls or otherwise. If our assets available for distribution are insufficient to repay all of the paid-up capital, the assets will be distributed so that the losses are borne by its shareholders in proportion to the par value of the shares held by them.

*Calls on ordinary shares and forfeiture of ordinary shares*

Our board of directors may from time to time make calls upon shareholders for any amounts unpaid on their ordinary shares in a notice served to such shareholders at least 14 days prior to the specified time and place of payment. Any ordinary shares that have been called upon and remain unpaid are subject to forfeiture.

***Requirements to Change the Rights of Holders of Ordinary Shares***

If at any time the share capital is divided into different classes of shares, the rights attached to any class of shares (unless otherwise provided by these Articles or the terms of issue of the shares of that class) may be varied with the consent in writing of the holders of two-thirds of the issued shares of that class or with the sanction of a Special Resolution passed at a separate general meeting of the holders of the shares of that class. The necessary quorum shall be one or more persons holding or representing by proxy at least one-third in nominal or par value amount of the issued shares of the relevant class (but so that if at any adjourned meeting of such holders a quorum as above defined is not present, those shareholders who are present shall form a quorum).

The rights conferred upon the holders of the shares of any class issued with preferred or other rights will not, unless otherwise expressly provided by the terms of issue of the shares of that class, be deemed to be materially adversely varied by the creation or issue of further shares ranking pari passu with or subsequent to such existing class of shares or the redemption or purchase of any shares of any class by us.

***Limitations on the Rights to Own Ordinary Shares***

There are no limitations under the laws of the Cayman Islands or under the Memorandum and Articles that limit the right of non-resident or foreign owners to hold or vote ordinary shares.

***Provisions Affecting Any Change of Control***

*Anti-Takeover Provisions.* Some provisions of our Memorandum and Articles may discourage, delay or prevent a change of control of our company or management that shareholders may consider favorable, including provisions that authorize our board of directors to issue preference shares in one or more series and to designate the price, rights, preferences, privileges and restrictions of such preference shares without any further vote or action by our shareholders.

However, under Cayman Islands law, our directors may only exercise the rights and powers granted to them under our Memorandum and Articles for a proper purpose and for what they believe in good faith to be in the best interests of our company.

***Ownership Threshold***

There are no provisions under the laws of the Cayman Islands or under the Memorandum and Articles that govern the ownership threshold above which shareholder ownership must be disclosed.

***Differences Between the Law of Different Jurisdictions***

The Companies Act is modelled after that of England and Wales but does not follow recent statutory enactments in England. In addition, the Companies Act differs from laws applicable to United States corporations and their shareholders. Set forth below is a summary of the significant differences between the provisions of the Companies Act applicable to us and the laws applicable to companies incorporated in the State of Delaware.

*Mergers and Similar Arrangements*

A merger of two or more constituent companies under Cayman Islands law requires a plan of merger or consolidation to be approved by the directors of each constituent company and authorization by a special resolution of the members of each constituent company.

A merger between a Cayman parent company and its Cayman subsidiary or subsidiaries does not require authorization by a resolution of shareholders. For this purpose, a subsidiary is a company of which at least ninety percent (90%) of the issued shares entitled to vote are owned by the parent company.

The consent of each holder of a fixed or floating security interest over a constituent company is required unless this requirement is waived by a court in the Cayman Islands.

Save in certain circumstances, a dissentient shareholder of a Cayman constituent company is entitled to payment of the fair value of his shares upon dissenting to a merger or consolidation. The exercise of appraisal rights will preclude the exercise of any other rights save for the right to seek relief on the grounds that the merger or consolidation is void or unlawful.

In addition, there are statutory provisions that facilitate the reconstruction and amalgamation of companies, provided that the arrangement is approved by a majority in number of each class of shareholders and creditors with whom the arrangement is to be made, and who must, in addition, represent three-fourths in value of each such class of shareholders or creditors, as the case may be, that are present and voting either in person or by proxy at a meeting, or meetings, convened for that purpose. The convening of the meetings and subsequently the arrangement must be sanctioned by the Grand Court of the Cayman Islands. While a dissenting shareholder has the right to express to the court the view that the transaction ought not to be approved, the court can be expected to approve the arrangement if it determines that:

· the statutory provisions as to the required majority vote have been met;

· the shareholders have been fairly represented at the meeting in question and the statutory majority are acting bona fide without coercion of the minority to promote interests adverse to those of the class;

· the arrangement is such that may be reasonably approved by an intelligent and honest man of that class acting in respect of his interest; and the arrangement is not one that would more properly be sanctioned under some other provision of the Companies Act.

When a takeover offer is made and accepted by holders of 90% of the shares within four months, the offeror may, within a two-month period commencing on the expiration of such four month period, require the holders of the remaining shares to transfer such shares on the terms of the offer. An objection can be made to the Grand Court of the Cayman Islands but this is unlikely to succeed in the case of an offer which has been so approved unless there is evidence of fraud, bad faith or collusion.

If an arrangement and reconstruction is thus approved, the dissenting shareholder would have no rights comparable to appraisal rights, which would otherwise ordinarily be available to dissenting shareholders of Delaware corporations, providing rights to receive payment in cash for the judicially determined value of the shares.

*Shareholders' Suits*

In principle, we will normally be the proper plaintiff and as a general rule a derivative action may not be brought by a minority shareholder. However, based on English authorities, which would in all likelihood be of persuasive authority in the Cayman Islands, there are exceptions to the foregoing principle, including when:

· a company acts or proposes to act illegally or ultra vires;

· the act complained of, although not ultra vires, could only be effected duly if authorized by more than a simple majority vote that has not been obtained; and

· those who control the company are perpetrating a "fraud on the minority."

*Indemnification of Directors and Executive Officers and Limitation of Liability*

Cayman Islands law does not limit the extent to which a company's articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against civil fraud or the consequences of committing a crime. Our Memorandum and Articles permit indemnification of officers and directors for losses, damages, costs and expenses incurred in their capacities as such unless such losses or damages arise from dishonesty or fraud which may attach to such directors or officers. This standard of conduct is generally the same as permitted under the Delaware General Corporation Law for a Delaware corporation. In addition, we intend to enter into indemnification agreements with our directors and senior executive officers that will provide such persons with additional indemnification beyond that provided in our Memorandum and Articles.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers or persons controlling us under the foregoing provisions, we have been informed that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

*Anti-Takeover Provisions in the Memorandum and Articles of Association*

Some provisions of our Memorandum and Articles may discourage, delay or prevent a change in control of our company or management that shareholders may consider favorable, including provisions that authorize our board of directors to issue preferred shares in one or more series and to designate the price, rights, preferences, privileges and restrictions of such preferred shares without any further vote or action by our shareholders.

However, under Cayman Islands law, our directors may only exercise the rights and powers granted to them under our Memorandum and Articles, as amended and restated from time to time, for what they believe in good faith to be in the best interests of our company.

*Directors' Fiduciary Duties*

Under Delaware corporate law, a director of a Delaware corporation has a fiduciary duty to the corporation and its shareholders. This duty has two components: the duty of care and the duty of loyalty. The duty of care requires that a director act in good faith, with the care that an ordinarily prudent person would exercise under similar circumstances. Under this duty, a director must inform himself of, and disclose to shareholders, all material information reasonably available regarding a significant transaction. The duty of loyalty requires that a director act in a manner he or she reasonably believes to be in the best interests of the corporation. He or she must not use his or her corporate position for personal gain or advantage. This duty prohibits self-dealing by a director and mandates that the best interest of the corporation and its shareholders take precedence over any interest possessed by a director, officer or controlling shareholder and not shared by the shareholders generally. In general, actions of a director are presumed to have been made on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the corporation. However, this presumption may be rebutted by evidence of a breach of one of the fiduciary duties. Should such evidence be presented concerning a transaction by a director, a director must prove the procedural fairness of the transaction, and that the transaction was of fair value to the corporation.

As a matter of Cayman Islands law, a director of a Cayman Islands company is in the position of a fiduciary with respect to the company and therefore it is considered that he owes the following duties to the company—a duty to act *bona fide* in the best interests of the company, a duty not to make a profit based on his or her position as director (unless the company permits him to do so) and a duty not to put himself in a position where the interests of the company conflict with his or her personal interest or his or her duty to a third party. A director of a Cayman Islands company owes to the company a duty to act with skill and care. It was previously considered that a director need not exhibit in the performance of his or her duties a greater degree of skill than may reasonably be expected from a person of his or her knowledge and experience. However, English and Commonwealth courts have moved towards an objective standard with regard to the required skill and care and these authorities are likely to be followed in the Cayman Islands.

*Shareholder Action by Written Consent*

Under the Delaware General Corporation Law, a corporation may eliminate the right of shareholders to act by written consent by amendment to its certificate of incorporation. Our Memorandum and Articles provide that shareholders may not approve corporate matters by way of a unanimous written resolution signed by or on behalf of each shareholder who would have been entitled to vote on such matter at a general meeting without a meeting being held.

*Shareholder Proposals*

Under the Delaware General Corporation Law, a shareholder has the right to put any proposal before the annual meeting of shareholders, provided it complies with the notice provisions in the governing documents. A special meeting may be called by the board of directors or any other person authorized to do so in the governing documents, but shareholders may be precluded from calling special meetings.

As an exempted Cayman Islands company, we are not obliged by law to call shareholders' annual general meetings or allow our shareholders to requisition a shareholders' meeting. Our Memorandum and Articles allow our shareholders to requisition shareholders' meetings.

*Cumulative Voting*

Under the Delaware General Corporation Law, cumulative voting for elections of directors is not permitted unless the corporation's certificate of incorporation specifically provides for it. Cumulative voting potentially facilitates the representation of minority shareholders on a board of directors since it permits the minority shareholder to cast all the votes to which the shareholder is entitled on a single director, which increases the shareholder's voting power with respect to electing such director. As permitted under Cayman Islands law, our Memorandum and Articles do not provide for cumulative voting. As a result, our shareholders are not afforded any less protections or rights on this issue than shareholders of a Delaware corporation.

*Removal of Directors*

Under the Delaware General Corporation Law, a director of a corporation with a classified board may be removed only for cause with the approval of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. Under our Memorandum & Articles, directors may be removed with or without cause, by an ordinary resolution of our shareholders.

*Transactions with Interested Shareholders*

The Delaware General Corporation Law contains a business combination statute applicable to Delaware corporations whereby, unless the corporation has specifically elected not to be governed by such statute by amendment to its certificate of incorporation, it is prohibited from engaging in certain business combinations with an "interested shareholder" for three years following the date that such person becomes an interested shareholder. An interested shareholder generally is a person or a group who owns or owned 15% or more of the target's outstanding voting stock within the past three years. This has the effect of limiting the ability of a potential acquirer to make a two-tiered bid for the target in which all shareholders would not be treated equally. The statute does not apply if, among other things, prior to the date on which such shareholder becomes an interested shareholder, the board of directors approves either the business combination or the transaction which resulted in the person becoming an interested shareholder. This encourages any potential acquirer of a Delaware corporation to negotiate the terms of any acquisition transaction with the target's board of directors.

Cayman Islands law has no comparable statute. As a result, we cannot avail ourselves of the types of protections afforded by the Delaware business combination statute. However, although Cayman Islands law does not regulate transactions between a company and its significant shareholders, it does provide that such transactions must be entered into *bona fide* in the best interests of the company and for a proper corporate purpose and not with the effect of constituting a fraud on the minority shareholders.

*Dissolution; Winding Up*

Under the Delaware General Corporation Law, unless the board of directors approves the proposal to dissolve, dissolution must be approved by shareholders holding 100% of the total voting power of the corporation. Only if the dissolution is initiated by the board of directors may it be approved by a simple majority of the corporation's outstanding shares. Delaware law allows a Delaware corporation to include in its certificate of incorporation a supermajority voting requirement in connection with dissolutions initiated by the board. Under Cayman Islands law, a company may be wound up by either an order of the courts of the Cayman Islands or by a special resolution of its members or, if the company is unable to pay its debts as they fall due, by an ordinary resolution of its members. The court has authority to order winding up in a number of specified circumstances including where it is, in the opinion of the court, just and equitable to do so.

Under the Companies Act and our Memorandum and Articles, our company may be dissolved, liquidated or wound up by the vote of holders of two-thirds of our shares voting at a meeting.

*Variation of Rights of Shares*

Under the Delaware General Corporation Law, a corporation may vary the rights of a class of shares with the approval of a majority of the outstanding shares of such class, unless the certificate of incorporation provides otherwise. Under Cayman Islands law and our Memorandum and Articles, when our share capital is divided into more than one class of shares, we may vary the rights attached to any class only with the sanction of a special resolution passed at a general meeting of the holders of the shares of that class.

*Amendment of Governing Documents*

Under the Delaware General Corporation Law, a corporation's governing documents may be amended with the approval of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. As permitted by Cayman Islands law, our Memorandum and Articles may only be amended by a special resolution of shareholders.

*Rights of Non-Resident or Foreign Shareholders*

There are no limitations imposed by our Memorandum and Articles on the rights of non-resident or foreign shareholders to hold or exercise voting rights on our shares. In addition, there are no provisions in our Memorandum and Articles governing the ownership threshold above which shareholder ownership must be disclosed.

*Directors' Power to Issue Shares*

Subject to applicable law, our board of directors is empowered to issue or allot shares or grant options and warrants with or without preferred, deferred, qualified or other special rights or restrictions.

***Changes in Capital***

We may from time to time by ordinary resolution:

· increase the share capital by new shares of the amount fixed by that ordinary resolution and with the attached rights, priorities and privileges set out in that ordinary resolution;

· consolidate and divide all or any of our share capital into shares of a larger amount than our existing shares;

· convert all or any of our paid up shares into stock, and reconvert that stock into paid up shares of any denomination;

· sub-divide our existing shares, or any of them into shares of a smaller amount than that fixed by our Memorandum, provided that in the subdivision the proportion between the amount paid and the amount, if any, unpaid on each reduced ordinary share shall be the same as it was in case of the ordinary share from which the reduced ordinary share is derived; and

· cancel any shares that, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person and diminish the amount of its share capital by the amount of the ordinary shares so cancelled or, in the case of shares without nominal par value, diminish the number of shares into which its capital is divided.

We may by special resolution, subject to any confirmation or consent required by the Companies Act, reduce our share capital or any capital redemption reserve in any manner permitted by law.

**Debt Securities**

Not applicable.

**Warrants and Rights**

Not applicable.

**Other Securities** 

Not applicable.

**Description of American Depositary Shares** 

Not applicable.

## Exhibit 4.9

**EXHIBIT 4.9**

**INDEMNIFICATION AGREEMENT**

This Indemnification Agreement (this "<u>Agreement</u>") is entered into as of January 19, 2025 by and between Farmmi, Inc. a Cayman Islands company (the "<u>Company</u>"), and the undersigned, a director and/or an officer of the Company ("<u>Indemnitee</u>"), as applicable.

**RECITALS**

The board of directors of the Company (the "<u>Board of Directors</u>") has determined that the inability to attract and retain highly competent persons to serve the Company is detrimental to the best interests of the Company and its shareholders and that it is reasonable and necessary for the Company to provide adequate protection to such persons against risks of claims and actions against them arising out of their services to the Company.

**AGREEMENT**

In consideration of the premises and the covenants contained herein and subject to the Company's memorandum and articles of association, as may be amended from time to time, the Company and Indemnitee do hereby covenant and agree as follows:

A. DEFINITIONS

The following terms shall have the meanings defined below:

***Expenses*** shall include, without limitation, damages, judgments, fines, penalties, settlements and costs, attorneys' fees and disbursements and costs of attachment or similar bond, investigations, and any other expenses paid or incurred in connection with investigating, defending, being a witness in, participating in (including on appeal), or preparing for any of the foregoing in, any Proceeding.

***Indemnifiable Event*** means any event or occurrence that takes place after the execution of this Agreement, related to the fact that Indemnitee is or was a director or an officer of the Company, or is or was serving at the request of the Company as a director or officer of another corporation, partnership, joint venture or other entity, or related to anything done or not done by Indemnitee in any such capacity; provided, however, that an Indemnifiable Event shall not include any event or occurrence that arises as a result of the Indemnitee's neglect, fraud, reckless or willful misconduct, breach of duty, error, misstatement, misleading statement or omission.

***Participant*** means a person who is a party to, or witness or participant (including on appeal) in, a Proceeding.

***Proceeding*** means any threatened, pending, or completed action, suit, arbitration or proceeding, or any inquiry, hearing or investigation, whether civil, criminal, administrative, investigative or other, including appeal, in which Indemnitee may be or may have been involved as a party or otherwise by reason of an Indemnifiable Event.

B. AGREEMENT TO INDEMNIFY

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. <u>General Agreement</u>. In the event Indemnitee was, is, or becomes a Participant in, or is threatened to be made a Participant in, a Proceeding, the Company shall indemnify the Indemnitee from and against any and all Expenses which Indemnitee incurs or becomes obligated to incur in connection with such Proceeding, to the fullest extent permitted by applicable law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. <u>Indemnification of Expenses of Successful Party</u>. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee has been successful on the merits in defense of any Proceeding or in defense of any claim, issue or matter in such Proceeding, the Company shall indemnify Indemnitee against all Expenses incurred in connection with such Proceeding or such claim, issue or matter, as the case may be.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. <u>Partial Indemnification</u>. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for a portion of Expenses, but not for the total amount of Expenses, the Company shall indemnify the Indemnitee for the portion of such Expenses to which Indemnitee is entitled.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. <u>No Employment Rights</u>. Nothing in this Agreement is intended to create in Indemnitee any right to continued employment with the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. <u>Contribution</u>. If the indemnification provided in this Agreement is unavailable and may not be paid to Indemnitee for any reason other than those set forth in Section B.3, then the Company shall contribute to the amount of Expenses paid in settlement actually and reasonably incurred and paid or payable by Indemnitee in such proportion as is appropriate to reflect (i) the relative benefits received by the Company on the one hand and by the Indemnitee on the other hand from the transaction or events from which such Proceeding arose, and (ii) the relative fault of the Company on the one hand and of the Indemnitee on the other hand in connection with the events which resulted in such Expenses, as well as any other relevant equitable considerations. The relative fault of the Company on the one hand and of the Indemnitee on the other hand shall be determined by reference to, among other things, the parties' relative intent, knowledge, access to information and opportunity to correct or prevent the circumstances resulting in such Expenses, judgments, fines or settlement amounts. The Company agrees that it would not be just and equitable if contribution pursuant to this Section B.5 were determined by pro rata allocation or any other method of allocation which does not take account of the foregoing equitable considerations.

C. INDEMNIFICATION PROCESS

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. <u>Notice and Cooperation by Indemnitee</u>. Indemnitee shall, as a condition precedent to his/her right to be indemnified under this Agreement, give the Company notice in writing as soon as practicable of any claim made against Indemnitee for which indemnification will or could be sought under this Agreement, provided that the delay of Indemnitee to give notice hereunder shall not prejudice any of Indemnitee's rights hereunder, unless such delay results in the Company's forfeiture of substantive rights or defenses. Notice to the Company shall be given in accordance with Section F.7 below. If, at the time of receipt of such notice, the Company has directors' and officers' liability insurance policies in effect, the Company shall give prompt notice to its insurers of the Proceeding relating to the notice. The Company shall thereafter take all necessary and desirable actions to cause such insurers to pay, on behalf of Indemnitee, all Expenses payable as a result of such Proceeding. In addition, Indemnitee shall give the Company such information and cooperation as the Company may reasonably request.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. <u>Indemnification Payment</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) *Advancement of Expenses*. Indemnitee may submit a written request with reasonable particulars to the Company requesting that the Company advance to Indemnitee all Expenses that may be reasonably incurred in advance by Indemnitee in connection with a Proceeding. The Company shall, within 10 business days of receiving such a written request by Indemnitee, advance all requested Expenses to Indemnitee. Any excess of the advanced Expenses over the actual Expenses will be repaid to the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) *Reimbursement of Expenses*. To the extent Indemnitee has not requested any advanced payment of Expenses from the Company, Indemnitee shall be entitled to receive reimbursement for the Expenses incurred in connection with a Proceeding from the Company immediately after Indemnitee makes a written request to the Company for reimbursement unless the Company refers the indemnification request to the Reviewing Party in compliance with Section C.2(c) below.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) *Determination by the Reviewing Party*. If the Company reasonably believes that it is not obligated under this Agreement to indemnify the Indemnitee, the Company shall, within 10 days after the Indemnitee's written request for an advancement or reimbursement of Expenses, notify the Indemnitee that the request for advancement of Expenses or reimbursement of Expenses will be submitted to the Reviewing Party (as hereinafter defined). The Reviewing Party shall make a determination on the request within 30 days after the Indemnitee's written request for an advancement or reimbursement of Expenses. Notwithstanding anything foregoing to the contrary, in the event the Reviewing Party informs the Company that Indemnitee is not entitled to indemnification in connection with a Proceeding under this Agreement or applicable law, the Company shall be entitled to be reimbursed by Indemnitee for all the Expenses previously advanced or otherwise paid to Indemnitee in connection with such Proceeding; <u>provided</u>, <u>however</u>, that Indemnitee may bring a suit to enforce his/her indemnification right in accordance with Section C.3 below.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. <u>Suit to Enforce Rights</u>. Regardless of any action by the Reviewing Party, if Indemnitee has not received full indemnification within 30 days after making a written demand in accordance with Section C.2 above or 50 days if the Company submits a request for advancement or reimbursement to the Reviewing Party under Section C.2(c) above, Indemnitee shall have the right to enforce its indemnification rights under this Agreement by commencing litigation in any court of competent jurisdiction seeking a determination by the court or challenging any determination by the Reviewing Party or any aspect of this Agreement. Any determination by the Reviewing Party not challenged by Indemnitee and any judgment entered by the court shall be binding on the Company and Indemnitee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. <u>Assumption of Defense</u>. In the event the Company is obligated under this Agreement to advance or bear any Expenses for any Proceeding against Indemnitee, the Company shall be entitled to assume the defense of such Proceeding, with counsel approved by Indemnitee, upon delivery to Indemnitee of written notice of its election to do so. After delivery of such notice, approval of such counsel by Indemnitee and the retention of such counsel by the Company, the Company will not be liable to Indemnitee under this Agreement for any fees of counsel subsequently incurred by Indemnitee with respect to the same Proceeding, unless (i) the employment of counsel by Indemnitee has been previously authorized by the Company, (ii) Indemnitee shall have reasonably concluded, based on written advice of counsel, that there may be a conflict of interest of such counsel retained by the Company between the Company and Indemnitee in the conduct of any such defense, or (iii) the Company ceases or terminates the employment of such counsel with respect to the defense of such Proceeding, in any of which events the fees and expenses of Indemnitee's counsel shall be at the expense of the Company. At all times, Indemnitee shall have the right to employ counsel in any Proceeding at Indemnitee's expense.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. <u>Defense to Indemnification, Burden of Proof and Presumptions</u>. It shall be a defense to any action brought by Indemnitee against the Company to enforce this Agreement that it is not permissible under this Agreement or applicable law for the Company to indemnify the Indemnitee for the amount claimed. In connection with any such action or any determination by the Reviewing Party or otherwise as to whether Indemnitee is entitled to be indemnified under this Agreement, the burden of proving such a defense or determination shall be on the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. <u>No Settlement without Consent</u>. Neither party to this Agreement shall settle any Proceeding in any manner that would impose any damage, loss, penalty or limitation on Indemnitee without the other party's written consent. Neither the Company nor Indemnitee shall unreasonably withhold its consent to any proposed settlement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. <u>Company Participation</u>. Subject to Section B.5, the Company shall not be liable to indemnify the Indemnitee under this Agreement with regard to any judicial action if the Company was not given a reasonable and timely opportunity, at its expense, to participate in the defense, conduct and/or settlement of such action.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. <u>Reviewing Party</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) For purposes of this Agreement, the Reviewing Party with respect to each indemnification request of Indemnitee that is referred by the Company pursuant to Section C.2(c) above shall be (A) the Board of Directors by a majority vote of a quorum consisting of Disinterested Directors (as hereinafter defined), or (B) if a quorum of the Board of Directors consisting of Disinterested Directors is not obtainable or, even if obtainable, said Disinterested Directors so direct, by Independent Counsel in a written opinion to the Board of Directors, a copy of which shall be delivered to Indemnitee. If the Reviewing Party determines that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within 10 days after such determination. Indemnitee shall cooperate with the person, persons or entity making such determination with respect to Indemnitee's entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination. Any Independent Counsel or member of the Board of Directors shall act reasonably and in good faith in making a determination under this Agreement of the Indemnitee's entitlement to indemnification. Any reasonable costs or expenses (including reasonable attorneys' fees and disbursements) incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee's entitlement to indemnification) and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom. "<u>Disinterested</u> Director" means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If the determination of entitlement to indemnification is to be made by Independent Counsel, the Independent Counsel shall be selected as provided in this Section C.8(b). The Independent Counsel shall be selected by Indemnitee (unless Indemnitee shall request that such selection be made by the Board of Directors, in which event the proceeding sentence shall apply), and Indemnitee shall give written notice to the Company advising it of the identity of the Independent Counsel so selected. In either event, Indemnitee or the Company, as the case may be, may, within 10 days after such written notice of selection shall have been given, deliver to the Company or to Indemnitee, as the case may be, a written objection to such selection; *provided*, *however*, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of "<u>Independent Counsel</u>" as defined in Section C.8(d) of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person so selected shall act as Independent Counsel. If a written objection is made and substantiated, the Independent Counsel selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court has determined that such objection is without merit. If, within 20 days after submission by Indemnitee of a written request for indemnification, no Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee may petition a court of competent jurisdiction for resolution of any objection which shall have been made by the Company or Indemnitee to the other's selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by the court or by such other person as the court shall designate, and the person with respect to whom all objections are so resolved or the person so appointed shall act as Independent Counsel. The Company shall pay any and all reasonable fees and expenses of Independent Counsel incurred by such Independent Counsel in connection with acting under this Agreement, and the Company shall pay all reasonable fees and expenses incident to the procedures of this Section C.8(b), regardless of the manner in which such Independent Counsel was selected or appointed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) In making a determination with respect to entitlement to indemnification hereunder, the Reviewing Party shall presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with this Agreement, and the Company shall have the burden of proof to overcome that presumption in connection with the making by any person, persons or entity of any determination contrary to that presumption. The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement (with or without court approval), conviction, or upon a plea of *nolo contendere* or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which he/she reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that his/her conduct was unlawful. For purposes of any determination of good faith, Indemnitee shall be deemed to have acted in good faith if Indemnitee's action is based on the records or books of account of the Company and any other corporation, partnership, joint venture or other entity of which Indemnitee is or was serving at the written request of the Company as a director, officer, employee, agent or fiduciary, including financial statements, or on information supplied to Indemnitee by the officers and directors of the Company or such other corporation, partnership, joint venture or other entity in the course of their duties, or on the advice of legal counsel for the Company or such other corporation, partnership, joint venture or other entity or on information or records given or reports made to the Company or such other corporation, partnership, joint venture or other entity by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Company or such other corporation, partnership, joint venture or other entity. In addition, the knowledge and/or actions, or failure to act, of any director, officer, agent or employee of the Company or such other corporation, partnership, joint venture or other entity shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement. The provisions of this Section C.8(c) shall not be deemed to be exclusive or to limit in any way the other circumstances in which the Indemnitee may be deemed to have met the applicable standard of conduct set forth in this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) "<u>Independent Counsel</u>" means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning the Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term "Independent Counsel" shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee's rights under this Agreement. The Company agrees to pay the reasonable fees of the Independent Counsel referred to above and to fully indemnify such counsel against any and all Expenses, claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.

D. DIRECTOR AND OFFICER LIABILITY INSURANCE

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. <u>Good Faith Determination</u>. The Company shall from time to time make the good faith determination whether or not it is practicable for the Company to obtain and maintain a policy or policies of insurance with reputable insurance companies providing the officers and directors of the Company with coverage for losses incurred in connection with their services to the Company or to ensure the Company's performance of its indemnification obligations under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. <u>Coverage of Indemnitee</u>. To the extent the Company maintains an insurance policy or policies providing directors' and officers' liability insurance, Indemnitee shall be covered by such policy or policies, in accordance with its or their terms, to the maximum extent of the coverage available for any of the Company's directors or officers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. <u>No Obligation</u>. Notwithstanding the foregoing, the Company shall have no obligation to obtain or maintain any director and officer insurance policy if the Company determines in good faith that such insurance is not reasonably available in the case that (i) premium costs for such insurance are disproportionate to the amount of coverage provided, or (ii) the coverage provided by such insurance is limited by exclusions so as to provide an insufficient benefit.

E. NON-EXCLUSIVITY; U.S. FEDERAL PREEMPTION; TERM

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. <u>Non-Exclusivity</u>. The indemnification provided by this Agreement shall not be deemed exclusive of any rights to which Indemnitee may be entitled under the Company's current memorandum and articles of association, as may be amended from time to time, applicable law or any written agreement between Indemnitee and the Company (including its subsidiaries and affiliates). The indemnification provided under this Agreement shall continue to be available to Indemnitee for any action taken or not taken while serving in an indemnified capacity even though he/she may have ceased to serve in any such capacity at the time of any Proceeding. In the event of any inconsistencies between the terms as set forth in this Agreement and the provisions in the Company's memorandum and articles of association (as may be amended from time to time), the provisions in the Company's memorandum and articles of association (as may be amended from time to time) shall prevail.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. <u>U.S. Federal Preemption</u>. Notwithstanding the foregoing, both the Company and Indemnitee acknowledge that in certain instances, U.S. federal law or public policy may override applicable law and prohibit the Company from indemnifying its directors and officers under this Agreement or otherwise. Such instances include, but are not limited to, the U.S. Securities and Exchange Commission (the "<u>SEC</u>")'s prohibition on indemnification for liabilities arising under certain U.S. federal securities laws. Indemnitee understands and acknowledges that the Company has undertaken or may be required in the future to undertake with the SEC to submit the question of indemnification to a court in certain circumstances for a determination of the Company's right under public policy to indemnify Indemnitee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. <u>Duration of Agreement</u>. All agreements and obligations of the Company contained herein shall continue during the period Indemnitee is an officer and/or a director of the Company (or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise) and shall continue thereafter so long as Indemnitee shall be subject to any Proceeding by reason of his/her former or current capacity at the Company, whether or not he/she is acting or serving in any such capacity at the time any Expense is incurred for which indemnification can be provided under this Agreement. This Agreement shall continue in effect regardless of whether Indemnitee continues to serve as an officer and/or a director of the Company or any other enterprise at the Company's request.

F. MISCELLANEOUS

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. <u>Amendment of this Agreement</u>. No supplement, modification, or amendment of this Agreement shall be binding unless executed in writing by the parties hereto. No waiver of any of the provisions of this Agreement shall operate as a waiver of any other provisions (whether or not similar), nor shall such waiver constitute a continuing waiver. Except as specifically provided in this Agreement, no failure to exercise or any delay in exercising any right or remedy shall constitute a waiver.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. <u>Subrogation</u>. In the event of payment to Indemnitee by the Company under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Company to bring suit to enforce such rights.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. <u>Assignment; Binding Effect</u>. Neither this Agreement nor any of the rights or obligations hereunder may be assigned by either party hereto without the prior written consent of the other party; except that the Company may, without such consent, assign all such rights and obligations to a successor in interest to the Company which assumes all obligations of the Company under this Agreement. Notwithstanding the foregoing, this Agreement shall be binding upon and inure to the benefit of and be enforceable by and against the parties hereto and the Company's successors (including any direct or indirect successor by purchase, merger, consolidation, or otherwise to all or substantially all of the business and/or assets of the Company) and assigns, as well as Indemnitee's spouses, heirs, and personal and legal representatives.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. <u>Severability and Construction</u>. Nothing in this Agreement is intended to require or shall be construed as requiring the Company to do or fail to do any act in violation of applicable law. The Company's inability, pursuant to a court order, to perform its obligations under this Agreement shall not constitute a breach of this Agreement. In addition, if any portion of this Agreement shall be held by a court of competent jurisdiction to be invalid, void, or otherwise unenforceable, the remaining provisions shall remain enforceable to the fullest extent permitted by applicable law. The parties hereto acknowledge that they each have opportunities to have their respective counsels review this Agreement. Accordingly, this Agreement shall be deemed to be the product of both of the parties hereto, and no ambiguity shall be construed in favor of or against either of the parties hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. <u>Counterparts</u>. This Agreement may be executed in two counterparts, both of which taken together shall constitute one instrument.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. <u>Governing Law</u>. This agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the internal laws of the State of New York, without giving effect to conflicts of laws provisions thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. <u>Notices</u>. All notices, demands, and other communications required or permitted under this Agreement shall be made in writing and shall be deemed to have been duly given if delivered by hand, against receipt, or mailed via postage prepaid, certified or registered mail, return receipt requested, and addressed to the Company at F3 Building No. 1, 888 Tianning Street, Liandu District Lishui, Zhejiang Province People's Republic of China 323000, attention: Yefang Zhang, and to Indemnitee at his/her address last known to the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. <u>Entire Agreement</u>. This Agreement constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof.

[*Signature Page Follows*]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

**Farmmi, Inc.**

---

| | |
|:---|:---|
| By: | */s/ Yefang<u>Z</u>hang* |
| Name: | Yefang Zhang |
| Title: | CEO |

---

**Indemnitee**

Signature:

---

| | |
|:---|:---|
|  | */s/ Chenyang Wang* |
| Name: | Chenyang Wang |

---

[Signature Page to Indemnification Agreement]

## Exhibit 4.15

**EXHIBIT 4.15**

(English Translation)

**SUPPLEMENTARY AGREEMENT TO THE EQUITY TRANSFER AGREEMENT**

**Date of Execution:** April 30, 2025

**Party A (Transferor):** MALONG LIMITED

**Party B (Transferee):** Farmmi International Limited

**Party C:** Lishui Senbo Forestry Co., Ltd.

**WHEREAS:**

Party A and Party B entered into the *Equity Transfer Agreement in relation to EWAYFOREST GROUP LIMITED* on February 28, 2025 (hereinafter referred to as the "Original Agreement");

Party C is an important entity related to the forestry assets of the target company. After mutual consultation, the Parties have agreed on the handling of forest ownership certificates and subsequent arrangements following the transaction, and hereby enter into this Supplementary Agreement.

**Article 1: Commitment on Forest Ownership Certificates**

1. Party A and Party B agree that the target company and its related assets require clear confirmation documents for ownership. The Parties consider forest ownership certificates as reasonable proof of such ownership. Party C also agrees to undertake the responsibility of handling the certificates.

2. Party B and Party C undertake to complete the relevant forest land ownership certificates or reissuance procedures in accordance with the law by August 30, 2025, to ensure the clarity and legality of the ownership of the relevant forestry assets.

**Article 2: Termination of Transaction and Refund of Consideration**

1. As the forest ownership certificates are currently the only documents that can clearly and definitively prove the ownership of forestry assets, if Party C fails to complete the aforementioned certificate procedures by August 30, 2025, Party A and Party B shall mutually agree to terminate the equity acquisition transaction under the Original Agreement.

2. In the event of termination of the Original Agreement, Party A agrees to refund all consideration already paid by Party B under the Original Agreement. The specific method of repayment shall be separately stipulated.

1<br>

3. Upon completion of the refund of the above consideration, Party A and Party B shall have no further claims or liabilities against each other in relation to the transaction under the Original Agreement.

**Article 3: Effectiveness of the Agreement**

1. This Supplementary Agreement shall become effective upon signature or seal by Party A, Party B, and Party C.

2. This Supplementary Agreement constitutes an integral part of the Original Agreement and shall have the same legal effect as the Original Agreement.

3. In the event of any inconsistency between this Supplementary Agreement and the Original Agreement, this Supplementary Agreement shall prevail.

**(End of Text)**

**Party A: MALONG LIMITED (Seal):**

**Party B: Farmmi International Limited (Seal):**

**Party C: Lishui Senbo Forestry Co., Ltd. (Seal):**

2<br>

## Exhibit 4.17

**EXHIBIT 4.17**

**(English Translation)**

**ASSET ACQUISITION TERMINATION AND REFUND AGREEMENT**

Execution Date: September 30, 2025

Party A: MALONG LIMITED

Party B: Farmmi International Limited

Party C: Lishui Senbo Forestry Co., Ltd.

**WHEREAS:**

1. Party A and Party B entered into (i) the Equity Transfer Agreement in relation to EWAYFOREST GROUP LIMITED on February 28, 2025, and (ii) the Supplemental Agreement to the Equity Transfer Agreement on April 30, 2025.

2. Party C issued the Notice Regarding the Inability to Obtain Forest Ownership Certificates on August 30, 2025, confirming that, due to policy reasons, the forest ownership certificates cannot be processed.

3. Based on the foregoing agreements and notice, the ownership of the relevant assets cannot be confirmed. The Parties hereby agree to terminate the original asset/equity acquisition transaction and enter into this Agreement with respect to the refund of the consideration already paid.

**Article 1 Termination of the Transaction**

The Parties unanimously confirm that the Equity Transfer Agreement in relation to EWAYFOREST GROUP LIMITED shall be formally terminated as of the execution date of this Agreement, and all provisions in the original agreement and the supplemental agreement relating to the performance of the transaction shall cease to have effect.

**Article 2 Refund Amount and Arrangements**

1. Party A confirms that the acquisition consideration to be refunded to Party B includes:

(1) all accounts receivable in the amount of USD 35,000,000; and

(2) the cash consideration in the amount of USD 59,625,500.

2. The Parties agree that Party B shall refund the full amount of the accounts receivable of USD 35,000,000 to Party A in a lump sum on or before January 31, 2026.

3. The Parties agree that 40% of the cash consideration, amounting to USD 23,850,200, shall be refunded by Party B to Party A in a lump sum on or before January 31, 2026.

4. The Parties agree that the remaining 60% of the cash consideration, amounting to USD 35,775,300, shall be repaid by Party B to Party A in installments under the following arrangements:

(1) Repayment period: two (2) years, from February 1, 2026 to January 30, 2028.

(2) Interest: interest shall accrue at an annual rate of 2%, payable quarterly. Interest shall be calculated on a daily basis based on the outstanding principal balance.

(3) Principal repayment: the principal shall be repaid semi-annually as follows:

· From February 1, 2026 to July 30, 2026: cumulative repayment of not less than 20%;

· From August 1, 2026 to January 30, 2027: cumulative repayment of not less than 25%;

· From February 1, 2027 to July 30, 2027: cumulative repayment of not less than 25%;

· From August 1, 2027 to January 30, 2028: repayment of the remaining balance in full.

**Article 3 Payment Method**

Party B shall pay the above amounts to the bank account designated by Party A. The specific bank account information shall be separately notified by Party A in writing.

**Article 4 Liability for Breach**

If Party B fails to perform its payment obligations in accordance with the amounts and deadlines stipulated in this Agreement, Party B shall be liable for breach of contract with respect to the overdue amounts. The specific liquidated damages or compensation for losses shall be determined by further negotiation between the Parties or handled in accordance with applicable laws.

**Article 5 Effectiveness**

1. This Agreement shall become effective upon execution (signature or seal) by Party A, Party B, and Party C.

2. This Agreement, together with the original agreement, the supplemental agreement, and the related notice documents, constitutes the complete agreement of the Parties with respect to the termination of the transaction and the refund of consideration.

3. In the event of any inconsistency between this Agreement and the original agreement or the supplemental agreement, this Agreement shall prevail.

**[No further text below]**

**Party A:**

MALONG LIMITED

(Seal / Signature): ______________________

**Party B:**

Farmmi International Limited

(Seal / Signature): ______________________

**Party C:**

Lishui Senbo Forestry Co., Ltd.

(Seal / Signature): ______________________

## Exhibit 4.18

**EXHIBIT 4.18**

**SUBLEASE AGREEMENT**

**THIS SUBLEASE AGREEMENT** (the "Sublease"), dated as of the <u>10th</u><u> </u>day of <u>July</u>, 2024, is made by and between **PORT LOGISTICS GROUP, LLC.,** a Delaware limited liability company, whose address is 6000 Windward Parkway, Attn: Corporate Real Estate, Alpharetta, GA 30005 (the "Sublessor") and **FARMMI USA INC.,** a California corporation whose address is 950 John Daly Blvd; Suite 380; Daly City, CA 94015 (the "Sublessee").

WHEREAS, Sublessor, as Tenant, entered into that certain Standard Industrial Real Estate Lease with BPP Shiraz Telephone LP, as successor in interest to Majestic Realty Co., (the "Landlord") dated as of June 21, 2016, as amended by that certain First Amendment to Lease dated June 23, 2021 (collectively, the "Lease"), for an approximately 315,000 rentable square foot building and all other improvements located on the property, more commonly known as 14210-14380 Telephone Avenue, Chino, California (the "Premises") and

WHEREAS, all capitalized terms used but not separately defined herein shall have the meanings set forth in the Lease; and

WHEREAS, Sublessor desires to sublease to Sublessee and Sublessee desires to sublease from Sublessor the Premises as more fully depicted and/or described on Exhibit A attached hereto and incorporated herein in accordance with the terms and conditions hereinafter set forth; and

NOW THEREFORE, for and in consideration of the mutual covenants hereinafter contained and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

1. **<u>Premises</u>.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. Subject to and in accordance with the terms hereof, Sublessor hereby subleases to Sublessee and Sublessee hereby subleases from Sublessor, to use for the purpose set forth in <u>Section 7</u> hereof, the Premises. Sublessee shall also have the right during the term to use the existing warehouse racks (the "Existing Racks") and the non-exclusive use, in common with Sublessor and others to whom Landlord and/or Sublessor have or may grant similar rights, of the common areas solely for purposes of entering and exiting the Premises. Sublessee's use of the Premises and the common areas are subject to such reasonable rules and regulations for the use thereof as are or may hereinafter be prescribed by Landlord and/or Sublessor, as applicable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. Sublessee shall use the Premises solely for the purpose set forth in <u>Section 7</u>. Sublessee further shall use the Premises subject to and strictly in accordance with the terms and provisions of the Lease and this Sublease, and Sublessee shall not take or fail to take any action that would constitute a breach of any of the terms and provisions of the Lease.

2. **<u>Term.</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. Term: The term ("Term") of this Sublease shall be for twenty-six (26) months, commencing on August 1, 2024 (the "Commencement Date") and terminating on September 30, 2026 (the "Termination Date").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. Sublessee agrees it shall indemnify and save Sublessor harmless from and against all damages, costs, claims, loss or liability resulting from delay by Sublessee in surrendering the Premises upon the expiration or sooner termination of the term, including, without limitation, any claims made by any succeeding tenant or the Landlord founded on such delay. Such obligation shall survive the expiration or sooner termination of the term with respect to the Premises.

3. **<u>Rent.</u>** Sublessee shall pay to Sublessor the following amounts per month ("Rent") for the Premises:

---

| | |
|:---|:---|
| **Period** | **Monthly Base Rent** |
| August 1, 2024 – August 31, 2024 | $63591.66 |
| September 1, 2024 – March 31, 2025 | $315000.00 |
| April 1, 2025 – April 30, 2025 | $66771.24 |
| May 1, 2025 – July 31, 2025 | $315000.00 |
| August 1, 2025 – December 2025 | $326025.00 |
| January 1, 2026 – January 31, 2026 | $70109.81 |
| February 1, 2026 – July 31, 2026 | $326025.00 |
| August 1, 2026 – September 30, 2026 | $337435.88 |

---

Rent is payable monthly in advance on the 1st day of each month of the Term. Rent for any period during the Term hereof which is for less than one month shall be a pro rata portion of the monthly installment. Rent shall be payable in lawful money of the United States to Sublessor at the following address: 6000 Windward Parkway, Alpharetta, GA 30005, or to such other persons or at such other places as Sublessor may designate in writing. All rent shall be paid by wire or electronic means through ACH (Automated Clearing House) in Sublessor's sole discretion; in this regard, upon request by Sublessor, Sublessee shall execute an Automated Clearing House Payment Terms Agreement.

5. **<u>Security Deposit</u>**. Sublessee shall deposit with Sublessor upon execution hereof One Million and 00/100 DOLLARS ($1,000,000.00), as security for Sublessee's faithful performance of Sublessee's obligations hereunder ("Security Deposit"). If Sublessee fails to pay rent or other charges due hereunder or otherwise breaches or defaults with respect to any provision of this Sublease, Sublessor may (but shall not be required to) use, apply or retain all or any portion of said Security Deposit for the payment of any rent or other charge in default or for the payment of any other sum to which Sublessor may become obligated by reason of Sublessee's default, or to compensate Sublessor for any loss or damage which Sublessor may suffer thereby, including, but not limited to, the cost of the removal of the Existing Racks. If Sublessor so uses or applies all or any portion of said Security Deposit, Sublessee shall within ten (10) days after written demand therefore deposit cash with Sublessor in an amount sufficient to restore said Security Deposit to the full amount hereinabove stated and Sublessee's failure to do so shall be a material breach of this Sublease. Sublessor shall not be required to keep said security deposit separate from its general accounts, and Sublessee shall not be entitled to any interest earned on such Security Deposit. Provided that Sublessee shall have fully and faithfully performed every provision of this Sublease to be performed by it, said Security Deposit, or so much thereof as has not theretofore been applied by Sublessor, shall be returned to Sublessee within thirty (30) days after the expiration of the Term and after Sublessee has vacated the Premises; Sublessee waives the provisions of Section 1950.7 of the California Civil Code, any all other provisions of law now, or hereafter in force, that may require the return of the Security Deposit, or any portion thereof, earlier than thirty (30) days after the expiration of the Term and after Sublessee has vacated the Premises. No trust relationship is created herein between Sublessor and Sublessee with respect to said Security Deposit. Sublessee hereby waives the provisions of Section 1950.7 of the California Civil Code, and all other provision of law now, or hereafter in force, which provide that Sublessor may claim from a security deposit only those sums reasonably necessary to remedy defaults in the payment of rent, to repair damage caused by Sublessee or to clean the Premises; it being agreed that Sublessor may, in addition, claim those sums reasonably necessary to compensate Sublessor for any other loss or damage, foreseeable or unforeseeable, caused by the acts or omissions of Sublessee, or any officer, employee, agent, contractor or invitee of Sublessee.

6. <u>**Condition of the Premises**</u>. Sublessee accepts the Premises in "as is" condition and represents, warrants, acknowledges and agrees that (i) Sublessee has inspected the Premises and is fully familiar with all aspects of its condition, (ii) the Premises is adequate to meet its needs, (iii) Sublessor has made no representation or warranty with respect to the Premises or the suitability of the Premises for the conduct of Sublessee's business, (iv) Sublessor has no obligation to provide Sublessee with any allowance, abatement or reimbursement to demise the Premises or make any other alterations or improvements to the Premises, and (v) Sublessor shall have no responsibility for, and shall assume no liability for, the condition of the Premises upon delivery of same to Sublessee.

7. <u>**Use**</u>. The Premises shall be used and occupied for warehousing, storage, packing and distribution of floorings, furniture, clothing, and books, and for office and administrative uses related thereto and for no other purposes. Sublessee agrees to use the Premises solely and strictly in accordance with every applicable statute, law, by-law, rule, regulation, permit, ordinance and order (the "Applicable Laws"), insurance underwriting requirements applicable to any of Landlord's, Sublessor's and/or Sublessee's insurance policies applicable to the Premises, and the terms and provisions of the Lease. In the event of any conflict between the terms and provisions of the Lease and the terms and provisions of this Sublease, (i) the terms and provisions which impose a greater obligation upon Sublessee shall govern and control, and (ii) in the event Sublessor's compliance with any obligation under this Sublease would cause Sublessor to be in breach or default of the Lease, Sublessor's obligation under this Sublease shall be deemed to be waived and excused. In no event shall Sublessee bring any products, materials or other property in the Premises which (a) which are prohibited under the Lease, (b) contain Hazardous Materials or (c) would exceed the load bearing capacity of the floor of the Premises. Sublessor makes no representation or warranty that (i) use and occupancy of the Premises by Sublessee is lawful, (ii) as to any particular products that may be warehoused in the Premises and/or (iii) as to whether any particular use and occupancy of the Premises by Sublessee is permissible pursuant to Applicable Laws and/or the terms and provisions of the Lease.

8. <u>**Utilities**</u>. Sublessee shall be responsible for the cost of all utilities used on the Premises. Sublessee shall pay all utilities directly to the utility providers.

9. <u>**Insurance**</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. Sublessee shall maintain during the term, at its own cost and expense, the policies of insurance required under Section 4.04 of the Lease.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. Upon final execution of this Sublease, Sublessee shall deliver to Sublessor certificates of the required insurance and thereafter copies of renewals as required and the certificate shall provide that thirty (30) days notice shall be given to Sublessor in the event of cancellation or non-renewal of the policy. All such policies shall name Sublessor and Landlord, and any other party in interest designated by Sublessor, as an additional insured.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. The required certificates of insurance shall state that these policies are endorsed to indicate that the policies are primary, without right of contribution from any insurance which may be carried by Sublessor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D. Landlord, by giving Landlord's consent to the Sublease, and Subtenant hereby mutually waive their respective rights of recovery against each other for any loss of, or damage to, either parties' property to the extent that such loss or damage is insured by an insurance policy required to be in effect at the time of such loss or damage. Each party shall obtain any special endorsements, if required by its insurer whereby the insurer waives its rights of subrogation against the other party. This provision is intended to waive fully, and for the benefit of the parties hereto, any rights and/or claims which might give rise to a right of subrogation in favor of any insurance carrier. The coverage obtained by Subtenant pursuant to the Insurance Section of the Lease shall include, without limitation, a waiver of subrogation endorsement attached to the certificate of insurance. The provisions of this Section 9.D shall not apply in those instances in which such waiver of subrogation would invalidate such insurance coverage or would cause either party's insurance coverage to be voided or otherwise uncollectible.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;E. Notwithstanding Sublessee's obligation to provide insurance as set forth above, Sublessor shall not be responsible for or liable for any damage or injury to any property, merchandise, goods, fixtures or furniture, or any person or persons at any time, on the Premises, nor shall Sublessor be in any way responsible for or liable in case of accident or injury to Sublessee or any of Sublessee's servants, employees, agents, customers, visitors or licensees in or about the Premises resulting from any cause or happening whatsoever.

10. <u>**Compliance with Applicable Laws and Rules; Prohibition Against Liens**.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. Sublessee shall, at Sublessee's expense, comply with all Applicable Laws and environmental statutes, ordinances, rules, regulations, orders of any federal, state or municipal government in effect at any time during the Term, restrictions of record, and requirements in effect during the Term or any part of the Term hereof regulating the use by Sublessee of the Premises. Sublessee shall not use or permit the use of the Premises in any manner that will tend to create waste or a nuisance or, if there shall be more than one tenant of the building containing the Premises, which shall tend to disturb such other tenants.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. Sublessee will not take any action which could result in a lien being imposed on the Premises by the state or federal government under any environmental statute. Furthermore, Sublessee shall not generate, store or dispose of any hazardous, toxic or regulated waste, materials or substances on or at the Premises without Sublessor's prior written consent, which consent may be withheld in Sublessor's sole and unlimited discretion.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. Sublessee shall comply with all reasonable rules and regulations imposed by Sublessor and/or Landlord regarding Sublessee's use and occupancy of the Premises.

11. <u>**Indemnification.**</u> Sublessee agrees to indemnify, defend (with counsel reasonably approved by Sublessor), and save Landlord, Sublessor and the directors, officers, shareholders, trustees, employees, and agents of each harmless from and against any claims (including, without limitation, third party claims for personal injury or real or personal property damage), actions, administrative proceedings, judgments, damages, punitive damages, penalties, fines, costs, liabilities (including sums paid in settlement of claims), interest, or losses, including reasonable attorneys' and paralegals' fees and expenses (and including, without limitation, any such fees and expenses incurred in enforcing this Indemnity or collecting any sums due hereunder), consultant fees, and expert fees, together with all other costs and expenses of any kind or nature (collectively, the "Costs") that arise directly or indirectly from or in connection with (i) the acts or omissions of Sublessee or its agents, contractors or employees; (ii) Sublessee's breach of the obligations, representations and warranties herein contained; or (iii) any occurrence in, upon or at the Premises used by Sublessee, any business conducted within the Premises by Sublessee or the occupancy or use by Sublessee of the Premises; (iv) any obligation Sublessor may have to indemnify Landlord under the Lease, to the extent related to the Premises used by Sublessee and/or the acts or omissions of Sublessee, its agents, contractors, suppliers, employees or customers; or (v) the presence, suspected presence, release, or suspected release of any regulated, hazardous or toxic substances, materials or wastes or any other contaminants ("Hazardous Materials") in or into the air, soil, groundwater, or surface water at, on, about, under, or within the Premises, or any portion thereof as a result of any act or omission of the Sublessee or its agents, contractors or employees, or which have migrated from the Premises as a result of any act or omission of the Sublessee or its agents, contractors or employees. In the event Sublessor and/or Landlord shall pay or incur or be found liable for payment of any such Costs, Sublessee shall pay to Sublessor and/or Landlord the total of all such Costs reasonably and actually incurred by Sublessor or Landlord promptly upon demand therefor by Sublessor and/or Landlord. In addition to the foregoing, Sublessor may perform for the account of Sublessee any obligation of Sublessee under this Sublease which Sublessee has failed to perform, the cost of which shall be deemed rent and shall be payable by Sublessee to Sublessor on demand.

12. <u>**Alterations; Surrender.**</u> Sublessee shall not alter, modify, add to or change all or any part of the Premises and shall not undertake any construction in the Premises, change or alter existing systems or installations, nor affix or attach any fixtures or improvements to the Premises either prior to or during the Term, without first receiving the prior written approval of Sublessor, which may be freely withheld in Sublessor's sole and absolute discretion. Any such alterations or improvements as may be approved by Sublessor shall, at Sublessor's option, be deemed to have been attached to the Premises and to have become the property of Sublessor upon such attachment, unless Sublessor shall require their removal, in whole or in part, in which event prior to the expiration of the Term Sublessee shall at its cost and expense remove same and, in accordance with Sublessor's direction, place the Premises (through repair or otherwise) in a clean and orderly condition equal to or better than that existing on the date possession of the Premises was delivered to Sublessee, and in such further superior condition, if any, as the Premises shall be required to be surrendered upon the expiration or sooner termination of the term of the Lease. During the Term, Sublessee shall be responsible for periodic sweeping, cleaning, refuse removal and all other maintenance and repair of the Premises (including, without limitation, the repair of damage caused by Sublessee or any person employed, controlled by or who enters the Premises at the invitation of Sublessee) so that the Premises is at all times kept and maintained in good order, condition and repair and in accordance with the condition required under the Lease. Sublessee shall pay promptly all persons furnishing labor or materials with respect to work performed by Sublessee or its contractors on or about the Premises. In the event any mechanic's or other lien shall at any time be filed against the Premises or any other portion of the property by reason of work, labor services or materials performed or furnished to Sublessee, Sublessee shall forthwith cause same to be discharged of record or bonded to Sublessor's satisfaction in default of which Sublessor may pay or discharge such lien and any expense so paid or incurred shall be payable on demand.

13. <u>**Conduct of Business/Maintenance.**</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. Sublessee shall conduct its business in the Premises in a first class manner, perform all maintenance and repairs to the Premises required to be performed by the Tenant under the Lease, repair all damage to the Premises caused by Sublessee, its agent, employees, contractors and invitees, abide by the terms and provisions of the Lease (including without limitation all rules and regulations of Landlord applicable to the Premises) and abide by all reasonable rules and regulations, if any, existing or established by Landlord or Sublessor from time to time. Sublessee, at its expense, hereby assumes sole responsibility for obtaining, keeping effective and remaining in compliance with all licenses, permits and approvals necessary to allow the lawful operation of the business described in <u>Section 7</u> hereof, and shall otherwise comply with all Applicable Laws concerning such operation and with the requirements of Landlord's and Sublessor's insurance carriers. Except for de minimus quantities of cleaning and pest control substances, which Sublessee shall use, store, maintain and dispose of in accordance with Applicable Laws, Sublessee shall not handle, store, maintain, use, transport or dispose of Hazardous Materials or any other toxic, cancer causing, corrosive or explosive materials anywhere within the Premises or elsewhere in the property and shall be solely responsible for any damage to the Premises and property (and lands adjacent thereto) caused by the use, storage, disposal or transport of Hazardous Materials by Sublessee, its agents, employees, contractors or invitees. Sublessee shall not handle, store, maintain, use or transport any agricultural or food items on the Premises. Sublessor shall have the right to enter the Premises at any time on reasonable advance notice (or, at any time without notice in the case of an emergency) to inspect same, to perform required repairs or for any lawful purpose.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. Sublessor shall have no responsibility for the condition, operation, maintenance repair or management of the Premises.

14. <u>**Existing Racks**</u>: Sublessee shall have the right to use the Existing Racks for the duration of the Lease. Upon the expiration, or early termination, of the Lease, Sublessee shall remove the Existing Racks at Sublessee's sole cost and expense and without liability to Sublessor.

15. <u>**Expiration or Termination/Surrender and Holdover.**</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. **<u>Expiration or Termination</u>:** Sublessee understands and agrees that upon Sublessee's breach of its obligations under this Sublease, Sublessee's rights under this Sublease (including all rights to use the Premises) may be terminated at any time by Sublessor, upon prior written notice to Sublessee, and Sublessee's failure to cure such breach, as provided in Section 21 below.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. **<u>Surrender</u>:**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i. Upon expiration of the Term, or termination of this Sublease, Sublessee shall immediately remove all persons and items of its property including, but not limited to signage and the Existing Racks, from the Premises and shall vacate the Premises and at such time deliver the Premises to Sublessor in the condition which Sublessor is required under the Lease to deliver the Premises to Landlord upon the expiration or sooner termination of the term of the Lease, but in no event in a condition which is less than the condition of the Premises when possession of the Premises was delivered to Sublessee, reasonable wear and tear excepted.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii. In the event Sublessee shall not remove its property, or the Existing Racks, from the Premises upon the expiration or sooner termination of the Term, then such property shall be deemed abandoned by Sublessee and Sublessor may enter the Premises and either sell or use such property for its own purposes or remove, dispose of and/or store the same, all at Sublessee's expense and without liability to Sublessor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. <u>Holdover</u>: In the event that Sublessee fails to surrender the Premises or any portion thereof in the condition required under this Sublease, upon the expiration or earlier termination hereof, then, in addition to Sublessor's other rights and remedies, and in addition to Sublessee's obligation to indemnify Sublessor as set forth <u>herein,</u> until such surrender is accomplished and/or such defect(s) in the Premises' condition shall be corrected, Sublessee shall be obligated to pay on a per diem basis an amount equal to 200% of the monthly rent payable hereunder and shall remain liable for all other obligations and liabilities imposed on Sublessor under this Sublease. No holding-over by Sublessee, nor the payment to Sublessor of the amounts specified above, shall operate to extend the Term of this Sublease with respect to the Premises. Nothing herein contained shall be deemed to permit Sublessee to retain possession of the Premises after the expiration or sooner termination of the Term, and no acceptance by Sublessor of payments from Sublessee after the expiration or sooner termination of the Term shall be deemed to be other than on account of the amount to be paid by Sublessee in accordance with the provisions of this Section 14.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D. The obligations and liabilities of Sublessee pursuant to this <u>Section 14</u> shall survive the expiration or sooner termination of the Term of this Sublease.

16. <u>**Signs.**</u> Sublessee shall not install any signs in or about the Premises or other areas of the property without Sublessor's consent which Sublessor may grant or withhold in its sole discretion. All signage used at the Premises shall conform to the sign criteria established by Landlord and Sublessor, and shall be removed by Sublessee, at its expense, upon the expiration or earlier termination of this Sublease. The size, content, design and location of all signage shall in all respects, conform to the requirements of Applicable Laws and the Lease.

17. <u>**Assignment/Subletting**</u>: Sublessee may not assign this Sublease or its rights under this Sublease or sublease the Premises or any part thereof without the prior written consent of the Sublessor and the Landlord, which consent may be given or withheld in Sublessor's and Landlord's discretion. In the event of an assignment or sublease, Sublessee shall at all times remain liable for the payment of all Rent required to be paid and for the performance of all terms, covenants, and conditions to be performed by Sublessee.

18. **<u>Sublessee's Compliance With Lease Provisions</u>.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. This Sublease shall be expressly subject and subordinate to all of the terms, covenants, conditions, provisions and agreements contained in the Lease. A true copy of the Lease, with certain confidential provisions deleted or redacted, has been delivered to, and reviewed by, Sublessee and is annexed hereto and made a part hereof as <u>Exhibit B</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. Sublessee covenants and agrees to observe and perform all of the terms, covenants, conditions, provisions and agreements to be performed by Sublessor, as Tenant pursuant to the Lease, with respect to the Premises (except for the obligation to pay rent in addition to the rent required hereunder) used by Sublessor, and further covenants and agrees not to do or suffer or permit anything to be done which would result in a default under or cause the Lease to be terminated. Notwithstanding the foregoing, the grace periods specified in the Lease shall, for purposes of determining compliance by Sublessee with the provisions hereof, be each reduced by five (5) days.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. Sublessor does not assume any obligation to perform the terms, covenants, conditions, provisions and agreements contained in the Lease on the part of Landlord to be performed. In the event Landlord shall fail to perform any of the terms, covenants, conditions, provisions and agreements contained in the Lease on its part to be performed, Sublessor shall be under no obligation or liability whatsoever to Sublessee. Sublessor shall cooperate with Sublessee, at no cost to Sublessor, in seeking to obtain the performance of Landlord under the Lease. Sublessee shall not be allowed any abatement or diminution of the Rent under this Sublease because of Landlord's failure to perform any of its obligations under the Lease.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D. This Sublease is at all times subject and subordinate to the Lease. Sublessor does not assume the obligations of Landlord under the Lease, nor shall Sublessor be liable to Sublessee for Landlord's failure to perform its obligations under the Lease.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;E. <u>Landlord Consents</u>. Notwithstanding any provision of this Sublease to the contrary, whenever the consent or approval of Sublessor and Landlord is required for a particular act, event or transaction (a) any such consent or approval by Sublessor will be subject to the consent or approval of Landlord, and (b) should Landlord refuse to grant such consent or approval, under all circumstances, Sublessor will be released from any obligation to grant its consent or approval.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;F. <u>Conflicting Terms</u>. If this Sublease purports to convey any right to Sublessee that Sublessor does not have the right to convey or that conflicts with the terms of the Lease, the provision granting such right shall be unenforceable. Sublessee agrees that it will not exercise or attempt to exercise any right granted herein that would conflict with the rights of Landlord under the Lease or cause a default under the Lease. Sublessee acknowledges that it has reviewed the Lease. Sublessee shall, within ten (10) business days following demand therefor execute, acknowledge and deliver any and all instruments reasonably requested to evidence the subordination of this Sublease to the Lease.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;G. <u>Termination of Lease</u>. Sublessee acknowledges that in the event that the Lease terminates at any time during the term of this Sublease, then this Sublease shall automatically terminate without any liability on the part of either Sublessor or Sublessee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;H. <u>Third Party Beneficiary</u>. Sublessor and Sublessee acknowledge and agree that Landlord is a third party beneficiary of this Sublease.

19. <u>**Attorneys' Fees.**</u> If any party named herein brings an action to enforce the terms hereof or to declare rights hereunder, the prevailing party in any such action, on trial and appeal, shall be entitled to his reasonable attorneys' fees to be paid by the losing party.

20. <u>**OFAC.**</u> Sublessee represents and warrants that (i) neither Sublessee nor any person or entity that directly or indirectly owns an interest in it nor any of its officers, directors, or managing members is a person or entity (each, a "Prohibited Person") with whom U.S. persons or entities are restricted from doing business under regulations of the Office of Foreign Asset Control ("OFAC") of the Department of the Treasury (including those named on OFAC's Specially Designated and Blocked Persons List) or under any statute, executive order (including Executive Order 13224 (the "Executive Order") signed on September 24, 2001 and entitled "Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism"), or other governmental action, (ii) Sublessee's activities do not violate the International Money Laundering Abatement and Financial AntiTerrorism Act of 2001 or the regulations or orders promulgated thereunder (as amended from time to time, the "Money Laundering Act") (i.e., Title III of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the "Patriot Act"), and (iii) throughout the Term Sublessee shall comply with the Executive Order, the Money Laundering Act, and the Patriot Act.

21. <u>**Events of Default/Remedies.**</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. <u>Default by Sublessee</u>. In the event that Sublessee shall: (i) default in the performance, keeping, or observance of any covenant, condition or undertaking to be performed, kept, or observed by Sublessee hereunder and fails to cure such default on or before twenty (20) days (three (3) days in the case of non-payment of rent or other sums due to Sublessor) following the receipt of written notice of such default by Sublessor to Sublessee, (ii) Sublessee fails to vacate the Premises within two (2) business days of the expiration or earlier termination of this Sublease, (iii) Sublessee shall make an assignment for the benefit of creditors, (iv) Sublessee assigns this Sublease or sublets the Premises, then Sublessor shall have all of the following remedies, in addition to same remedies Landlord may have against Sublessor under the Lease.

Upon the occurrence of any event of default by Sublessee, Sublessee shall have, in addition to any other remedies available to Sublessor at law or in equity, the option to pursue any one or more of the following remedies (each and all of which shall be cumulative and non-exclusive) without any notice or demand whatsoever:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Terminate this Sublease, in which event Sublessee shall immediately surrender the Premises to sublessor, and if sublessee fails to do so, sublessor may, without prejudice to any other remedy which it may have for possession or arrearages in rent, enter upon and take possession of the Premises and expel or remove Sublessee and any other person who may be occupying the Premises or any part thereof, without being liable for prosecution for any claim for damages therefor; and Sublessor may recover from Sublessee the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The worth at the time of award of any unpaid rent which has been earned at the time of such termination; plus

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) The worth at the time of award of the amount by which the unpaid rent which would have been earned after termination until the time of award exceeds the amount of such rental loss that Sublessee proves could have been reasonably avoided; plus

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) The worth at the time of award of the amount by which the unpaid rent for the balance of the term after the time of award exceeds the amount of such rental loss that Sublessee proves could have been reasonably avoided; plus

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Any other amount necessary to compensate Sublessor for all the detriment proximately caused by sublessee's failure to perform its obligations under this Sublease or which in the ordinary course of things would be likely to result therefrom, specifically including but not limited to attorneys' fees (in an amount equal to the greater of the actual attorney's incurred by Sublessor or $200,000.00), removal and storage (or disposal) of sublessee's personal property, unreimbursed leasehold improvement costs (e.g., the amounts Sublessor has expended for leasehold improvements which have not been recovered as of the termination of the Sublease when amortized on a straight-line basis over the originally scheduled lease term), free or abated rent, brokerage commissions and advertising expenses incurred, expenses of remodeling the Premises or any portion thereof for a new lessee, whether for the same or a different use, and any special concessions made to obtain a new lessee; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) At Sublessor's election, such other amounts in addition to or in lieu of the foregoing as may be permitted from time to time by applicable law.

The term "rent" as used in this Section 21 shall be deemed to be and to mean all sums of every nature required to be paid by Sublessee pursuant to the terms of this Sublease, whether to Sublessor or to others. As used in (a)(i) and (ii), above, the "worth at the time of award" shall be computed by allowing interest from the date the sums became due at the lesser of (i) the Bank of America prime rate on the due date plus 3%, or (ii) the maximum rate permitted by law. As used in Paragraph (a)(iii) above, the "worth at the time of award" shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus 1%.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If Sublessor does not elect to terminate this Sublease on account of any default by Sublessee, Sublessor may, from time to time, without terminating this Lease, enforce all of its rights and remedies under this Sublease, including the right to recover all rent as it becomes due. Sublessor shall have the remedy described in California Civil Code Section 1951.4, i.e., Sublessor may continue the Sublease in effect after sublessee's breach and abandonment and recover rent as it becomes due, if Sublessee has the right to sublet or assign subject only to reasonable limitations. Notwithstanding Sublessor's exercise of such remedy in respect of any default(s), Sublessor may at any time thereafter, upon notice to Sublessee, terminate this Sublease and Sublessee's right to possession of the Premises and recover damages as provided above.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) All rights, options and remedies of Sublessor contained in this Section 21 and elsewhere in this Sublease shall be construed and held to be cumulative, and no one of them shall be exclusive of the other, and Sublessor shall have the right to pursue any one or more of such remedies or any other remedy or relief which may be provided by law or in equity, whether or not stated in this Sublease. Nothing in this Section 21 shall be deemed to limit or otherwise affect Sublessee's indemnification of Sublessor pursuant to any provision of this Sublease.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Sublessee hereby waives for Sublessee and for all those claiming under Sublessee all right under Section 3275 of the California Civil Code or Section 1174 or 1179 of the California Code of Civil Procedure, or any other law now or hereafter existing, to redeem, reinstate or restore by order or judgment of any court or by any legal process or writ, Sublessee's right of occupancy of the Premises after any termination of this Sublease.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) No reentry or taking possession of the Premises by Sublessor and no acceptance of surrender of the Premises or other action on Sublessor's part, shall be construed as an election to terminate this Sublease unless a written notice of such intention be given to Sublessee or unless the termination thereof be decreed by a court of competent jurisdiction. No waiver by Sublessor or Sublessee of any violation or breach of any of the terms, provisions and covenants herein contained shall be deemed or construed to constitute a waiver of any other or later violation or breach of the same or any other of the terms, provisions, and covenants herein contained. Forbearance by Sublessor in enforcement of one or more of the remedies herein provided upon an event of default shall not be deemed or construed to constitute a waiver of such default. The acceptance of any rent hereunder by Sublessor following the occurrence of any default, whether or not known to Sublessor, shall not be deemed a waiver of any such default, except only a default in the payment of the rent so accepted.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. <u>Default by Sublessor</u>. Sublessor shall not be deemed in default in the performance of any obligation required to be performed by Sublessor under this Sublease unless Sublessor has failed to perform such obligation within thirty (30) days after the receipt of written notice from Sublessee specifying in detail Sublessor's failure to perform; provided however, that if the nature of Sublessor's obligation is such that more than thirty (30) days are required for its performance, then Sublessor shall not be deemed in default if it commences such performance within such thirty (30)day period and thereafter diligently pursues the same to completion. Upon any such uncured default by Sublessor, Sublessee shall be entitled, as Sublessee's sole and exclusive remedy, to recover from Sublessor Sublessee's actual damages (but not lost profits or other incidental or consequential damages) shown by Sublessee to have been directly caused thereby; provided, however: (a) Sublessee shall have no right to offset or abate rent in the event of any default by Sublessor under this Sublease; and (b) Sublessee shall in no event be entitled to terminate this Lease by reason of Lessor's default.

22. <u>**Broker**</u>. Each party warrants to the other that it has had no dealings with any broker or agent in connection with this Sublease except for Cushman & Wakefield (the "Sublessor's Broker") and Pinnacle Real Estate Group (the "Sublessee's Broker"), (collectively, the "Broker"). Sublessor shall be responsible for any commissions or fees due the Broker pursuant to a separate written agreement. In the event any broker (other than the Broker) claims to be entitled to any commission or fee, the party against whom any such claim is made covenants to pay, hold harmless, and indemnify the other party from and against any and all costs (including reasonable attorneys' fees), expenses, or liabilities for any compensation, commissions, and charges claimed by such broker or other agent.

23. <u>**Guaranty**</u>. Contemporaneously with Sublessee's execution of this Sublease and delivery thereof to Sublessor, Sublessee will deliver to Sublessor a guaranty from FARMMI INC., a corporation ("**Guarantor**"), guarantying Lessee's obligations under this Sublease. Such guaranty will be in the form of <u>Exhibit C</u> attached hereto. Sublessee represents and warrants that it is a wholly-owned subsidiary of Guarantor.

24. <u>**Additional Provisions**</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. <u>Notice.</u> If at any time after the execution of this Sublease, it shall become necessary or convenient for one of the parties hereto to serve any notice, demand or communication upon the other party, such notice, demand or communication shall be in writing signed by the party serving the same, deposited in the registered or certified United States mail, return receipt requested, postage prepaid, or by prepaid air courier service, and sent to addresses set forth at the end of this Sublease. Any notice so mailed shall be deemed to have been given upon receipt or rejection.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. <u>Governing Law</u>. This Sublease shall be governed by the laws of the state where the Premises are located.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. <u>Successors and Assigns.</u> All covenants, promises, conditions, representations and agreements herein contained shall be binding upon, apply and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors and assigns.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D. <u>Estoppel Certificates.</u> Sublessee shall deliver such estoppel certificates, attornment agreements and other like documents and agreements with respect to the Premises to the same extent, and at the same time and in the same manner, that Sublessor is required to do so with respect to the Premises.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;E. <u>Counterparts</u>. This Sublease may be executed in multiple counterparts each of which is deemed an original but together constitute one and the same instrument. The parties acknowledge and agree that notwithstanding any law or presumption to the contrary, an electronic or telefaxed signature of either party, whether upon this Sublease or any related document shall be deemed valid and binding and admissible by either party against the other as if same were an original ink signature.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;F. <u>SEVERABILITY</u>. The invalidity of any provision of this Sublease as determined by a court of competent jurisdiction shall in no way affect the validity of any other provision hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;G. <u>Certified Access Specialist (CASp).</u> The Premises has not undergone an inspection by a Certified Access Specialist (CASp). Pursuant to California Civil Code Section 1938(e), Sublessor provides the following statutory notice to Sublessee:

"A Certified Access Specialist (CASp) can inspect the subject premises and determine whether the subject premises comply with all of the applicable construction-related accessibility standards under state law. Although state law does not require a CASp inspection of the subject premises, the commercial property owner or lessor may not prohibit the lessee or tenant from obtaining a CASp inspection of the subject premises for the occupancy or potential occupancy of the lessee or tenant, if requested by the lessee or tenant. The parties shall mutually agree on the arrangements for the time and manner of the CASp inspection, the payment of the fee for the CASp inspection, and the cost of making any repairs necessary to correct violations of construction-related accessibility standards within the premises."

All costs for the CASp inspection and the cost of making any repairs necessary to correct violations of construction-related accessibility standards shall be the sole responsibility of Sublessee. Sublessee shall inform Sublessor in writing prior to obtaining a CASp inspection. Any alterations or repairs related thereto shall be subject to all of the requirements set forth in the Sublease, including, without limitation, obtaining the approval of Sublessor and Landlord for any alterations or repairs. Sublessee shall keep confidential the results of any CASp inspection (including all reports and any subsequent repairs).

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the undersigned have executed this Sublease Agreement as of the dates specified below.

---

| | | |
|:---|:---|:---|
| (SUBLESSEE) | (SUBLESSEE) | (SUBLESSOR) |
| FARMMI USA INC | FARMMI USA INC | PORT LOGISTICS GROUP, LLC. |
| By: | */s/ Yengfang Zhang* | By: |
| Name: | Yengfang Zhang | Name: |
| Title: | Authorized Signatory | Title: |
| Date: | 2024/7/11 | Date: |
| Address for notices:<br> Attn: <u>Jackson Wei</u><br> <u>14210-14380 Telephone Ave</u><br> <u>chino, CA 91710</u> | Address for notices:<br> Attn: <u>Jackson Wei</u><br> <u>14210-14380 Telephone Ave</u><br> <u>chino, CA 91710</u> | Address for notices:<br> Attn: Corporate Real Estate<br> 6000 Windward Parkway<br> Alpharetta, GA 30005<br> With a copy via fax to (305) 500-3381 |

---

LANDLORD CONSENT

Landlord, BPP Shiraz Telephone LP, acknowledges, agrees and consents to the sublease of the Premises to Sublessee from Sublessor pursuant to the terms and conditions stated herein.

---

| |
|:---|
| BPP Shiraz Telephone LP |
| By: |
| Name: |
| Title: |
| Date: |

---

## Exhibit 4.19

**EXHIBIT 4.19**

**<u>MULTI-TENANT INDUSTRIAL TRIPLE NET LEASE</u>**

This Multi-Tenant Industrial Triple Net Lease (this "**Lease**") is made and entered into as of March <u>20</u>, 2025 (the "**Effective Date**"), by and between **JWH Real Estate Holding Corp.**, a New York corporation ("**Landlord**") and FARMMI USA INC., a California corporation ("**Tenant**"). The following exhibits and attachments are incorporated into and made a part of this Lease: **Exhibit A** (Outline and Location of Premises), **Exhibit C** (Prohibited Use), **Exhibit D** (Rules and Regulations), **Exhibit E** (Guaranty), **Exhibit F** (Requirements for Improvements or Alterations by Tenant), **Exhibit G** (Hazardous Materials Survey Form), **Exhibit H** (Move Out Conditions), **Exhibit I** (Extension Options), **Exhibit J** (Parking Plan), **Exhibit K** (Property Site Plan), **Exhibit L** (New Jersey Flood Risk Notice), and **Exhibit M** (Work Letter).

**1. <u>BASIC LEASE INFORMATION</u>.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.1 "**Building**" shall mean the industrial building located at 1100 Randolph Road, Somerset, New Jersey. "**Rentable Square Footage of the Building**" is deemed to be 102,393 square feet.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.2 "**Premises**" shall mean the area identified in hatching and shown on **Exhibit A** to this Lease as containing the Rentable Square Footage of the Premises. The Premises is located within the walls and below the ceiling within a portion of the Building and such other areas as generally shown on **Exhibit A** to this Lease. The "**Rentable Square Footage of the Premises**" is deemed to be **49,755** square feet (including **584.08** pro-rata share of utility space). Landlord and Tenant stipulate and agree that the Rentable Square Footage of the Building and the Rentable Square Footage of the Premises are correct.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.3 "**Base Rent**":

---

| | | |
|:---|:---|:---|
| Months of Term | Annual Base Rent | Monthly Base Rent |
| Commencement Date — Last day of the 12th full calendar month of the Term | $744,833.53\* | $62069.46 |
| First day of the 13th full calendar month of the Term - Last day of the 24th full calendar month of the Term | $770902.71 | $64241.89 |
| First day of the 25th full calendar month of the Term - Last day of the 36th full calendar month of the Term | $797884.30 | $66490.36 |
| First day of the 37th full calendar month of the Term - Last day of the 48th full calendar month of the Term | $825810.25 | $68817.52 |
| First day of the 49th full calendar month of the Term - Last day of the 60th full calendar month of the Term | $854713.61 | $71226.13 |
| First day of the 61st full calendar month of the Term — Termination Date | $884628.59 | $73719.05 |

---

\*Notwithstanding the foregoing, provided Tenant is not in default under this Lease beyond any applicable notice and cure period, Landlord hereby agrees to abate Tenant's obligation to pay Monthly Base Rent for in the amount of $15,517.37 per month for the first twelve (12) moths of the Term for a total abatement of $186,208.38 (such total amount of abated Monthly Base Rent being hereinafter referred to as the "**Abated Amount**" and such period the "**Base Rent Abatement Period**"). During the Base Rent Abatement Period, Tenant will still be responsible for the Base Rent (which after reduction of the monthly Abated Amount shall be $46,552.10 per month) and payment of all other monetary obligations under the Lease, including, without limitation, Operating Expenses and Real Property Taxes. Tenant acknowledges that any default by Tenant under this Lease will cause Landlord to incur costs not contemplated hereunder, the exact amount of such costs being extremely difficult and impracticable to ascertain, therefore, should Tenant at any time during the Term be in default after having been given notice and opportunity to cure, then the total unamortized sum of such Abated Amount (amortized on a straight line basis over the initial Term of this Lease) so conditionally excused shall become immediately due and payable by Tenant to Landlord; provided, however, Tenant acknowledges and agrees that nothing in this subparagraph is intended to limit any other remedies available to Landlord at law or in equity under applicable law, in the event Tenant defaults under this Lease beyond any applicable notice and cure period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4 "**Tenant's Share**": 48.59% of the Building, 16.07% of the Property, provided Tenant's Share may be increased or decreased in Landlord's reasonable discretion to equitably allocate for additional rentable square footage at the Property.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.5 "**Term**": April 1, 2025 (the "**Commencement Date**") and, unless terminated earlier in accordance with this Lease, ending on June 30, 2030 (the "**Termination Date**"), subject to extension as provided in **Exhibit I** hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.6 "**Security Amount**": $232,854.00, as more fully described in Section 5.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.7 "**Brokers**": Rubin Realty Associates, LLC and Top Sky Realty ("**Tenant's Broker**"), which represented Tenant in connection with this transaction, and Advance Industrial Group at Bussel Realty Corp. ("**Landlord's Broker**"), which represented Landlord in connection with this transaction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.8 "**Permitted Use**": Receiving, storage, distribution, and sale (at wholesale only) of materials, goods, products and merchandise made or distributed by Tenant, for furniture repair and for such other lawful purposes as are incidental thereto, and for no other use or purpose, subject to Section 2.2 below.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.9 "**Notice Addresses**":

---

| | |
|:---|:---|
| Landlord:  | Tenant: |
| JWH Real Estate Holding Corp.<br> 43-02 Ditmars Blvd<br> Astoria NY 11105<br> Attn: Andrew Rosenwach<br> Email: amr@rosenwachgroup.com | Prior to the Commencement Date:<br> Farmmi USA Inc.<br> 14210 Telephone Ave<br> Chino, CA 91710<br> Attn: Jeffery Lee |
|  | Email: <u>jeffrey160922@gmail.com</u> |
| and | After the Commencement Date: |
| Greenberg Traurig, LLP<br> One Vanderbilt Avenue<br> New York, New York 10017<br> Attn: Robert J. Ivanhoe, Esq.<br> Email: ivanhoer@gtlaw.com | Farmmi USA Inc.<br> 1100 Randolph Road<br> Somerset, New Jersey<br>Attn: Jeffery Lee<br> Email: jeffrey160922@gmail.com |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.10 "**Property**" means the Building and the parcel(s) of land on which the Building is located (the "**Land**") as presently depicted on **Exhibit K**, and other improvements, if any, serving the Building or any other buildings on the parcel(s) of Land, including, at Landlord's discretion, future buildings.

2. **<u>PREMISES/USE</u>.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1 **Premises**. Landlord hereby leases to Tenant the Premises, but excluding the Common Area (as herein defined) and any other portion of the Building, the Land, and/or the Property. Tenant (i) accepts the Premises "AS-IS,", (ii) acknowledges that the Premises are acceptable for Tenant's use and that, except as expressly set forth in the Work Letter attached hereto as **Exhibit M** (the "**Work Letter**"), neither Landlord nor any broker or agent has made, or shall be deemed to have made, any representations or warranties in connection with the Premises or their fitness for Tenant's use or compliance with Applicable Laws (as herein defined) and (iii) waives all claims of defect in the Premises and any implied warranty that the Premises are suitable for Tenant's intended purposes. Tenant hereby acknowledges that the area of the Premises set forth in the Basic Lease Information is approximate only, and Tenant accepts and agrees to be bound by such figure for all purposes in this Lease. Tenant acknowledges and agrees that as of the Commencement Date, the Premises will be separately demised by a temporary fence (with privacy barrier) and that subsequent to the Commencement Date, Landlord shall construct a demising wall to separate the Premises from the adjacent premises and may reconfigure the mechanical, electrical and plumbing so as to bifurcate the utilities at the Premises. Tenant shall not unreasonably obstruct or unreasonably interfere with Landlord's completion of Landlord's Work or with Landlord's ability to obtain a final certificate of occupancy. In addition, prior to the completion of the Demising Wall (as defined in Exhibit M), Tenant acknowledges that ADA access to the Premises shall be via entry through adjacent tenant's premises through an opening in the temporary chain-link fence (or during construction of Landlord's Work through the constrution zone). Attached to this Lease as **Exhibit L** is a flood risk notice required to be provided by the Landlord in accordance with the New Jersey Flood Hazard Disclosure Law (N.J.S.A. 46:8-50).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2 **Use**. The Premises shall be used only for the Permitted Use and for no other uses without Landlord's written consent. Tenant's use of the Premises shall be in compliance with and subject to all applicable laws, statutes, codes, ordinances, orders, zoning, rules, regulations, conditions of approval and requirements of all federal, state, county, municipal and governmental authorities and all administrative or judicial orders or decrees and all permits, licenses, approvals and other entitlements issued by governmental entities, and rules of common law, relating to or affecting the Property, the Premises or the Building or the use or operation thereof, whether now existing or hereafter enacted, including, without limitation, the Americans with Disabilities Act of 1990, 42 USC 12111 et seq. (the "**ADA**") as the same may be amended from time to time, all Environmental Laws (as defined in Section 15.1), and any covenants, conditions and restrictions encumbering the Land and/or the Property ("**CC&Rs**") or any supplement thereto recorded in any official or public records with respect to the Property or any portion thereof (collectively, "**Applicable Laws**"). Tenant shall be responsible for obtaining any permit, business license, or other permits or licenses required by any governmental agency permitting Tenant's use or occupancy of the Premises and for performing, at Tenant's sole cost, all modifications or additions to the Building, the Premises or the Common Areas as a result of Tenant's Improvements or in order for the Premises or the Common Areas to be in ADA compliance. Notwithstanding anything to the contrary contained herein, Landlord shall have no obligation to bring the Premises or the Common Areas into compliance with ADA. In no event shall the Premises be used for any Prohibited Use (as defined in **Exhibit C**). Tenant shall comply with the rules and regulations attached hereto as **Exhibit D**, together with such additional rules and regulations as Landlord may from time to time prescribe ("**Rules and Regulations**"). Tenant shall not commit waste, overload the floors or structure of the Building, subject the Premises, the Building, the Common Area or the Property to any use which would damage the same or increase the risk of loss or violate any insurance coverage, permit any unreasonable odors, smoke, dust, gas, substances, noise or vibrations to emanate from the Premises, take any action which, as reasonably determined, would constitute a nuisance or would unreasonably disturb, obstruct or endanger any other tenants, take any action which would abrogate any warranties, use or allow the Premises to be used for any unlawful purpose or conduct, or permit to be conducted, any auction upon the Premises. Without limiting the foregoing, Tenant agrees that the Premises shall not be used by Tenant or any Tenant Party for the use, growing, producing, processing, storing (short or long term), distributing, transporting, or selling of marijuana, cannabis, cannabis derivatives, or any cannabis containing substances ("**Cannabis**"), or any office uses related to the same. Any failure by Tenant to comply with each of the terms, covenants, conditions and provisions of the preceeding sentence shall automatically and without the requirement of any notice be an Event of Default that is not subject to cure, and Tenant agrees that upon the occurrence of any such Event of Default, Landlord may elect, in its sole discretion, to exercise all of its rights and remedies under this Lease, at law or in equity with respect to such Event of Default. Tenant shall maintain a policy prohibiting the consumption of the smoked form of Cannabis products by Tenant's officers, employees, agents, servants, licensees, subtenants, concessionaires, contractors and invitees on the Premises as part of the Tenant's employment practices associated with smoking, however, the Tenant shall not be obligated under this Lease to enforce such policies, provided if Tenant does not enforce said policies, Landlord shall have the right to remove said person(s) from the Property.

3. **<u>TERM</u>.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1 The Term of this Lease shall commence on the Commencement Date and this Lease shall continue in full force and effect for the period of time specified as the Term, except as otherwise set forth herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2 Tenant agrees that in the event of delay in Landlord delivering possession of the Premises for any reason, Landlord shall not be liable for any damage resulting from such inability, and Tenant shall not be liable for any rent until the time when Landlord delivers possession of the Premises to Tenant. No such delay or failure shall affect the other obligations of Tenant under this Lease, except that the actual Commencement Date shall be postponed until the date that Landlord delivers possession of the Premises to Tenant.

4. **<u>RENT</u>**. Tenant shall pay to Landlord the Base Rent, Real Property Taxes (as herein defined) and Operating Expenses (as herein defined), without, except as otherwise set forth herein, notice, demand, offset or deduction, in advance, on the first day of each calendar month. All Rent and payments required to be paid by Tenant to Landlord shall be made by Tenant payable to the entity and sent to the address Landlord designates and shall be made by good and sufficient check payable in United States of America currency or by other means acceptable to Landlord or by Electronic Fund Transfer of immediately available federal funds before 5:00 p.m. Eastern Time. Upon the execution of this Lease, Tenant shall pay to Landlord the first month's Base Rent, the Security Amount, and the first monthly installment of estimated Operating Expenses (i.e., $62,100.56) (the "**Pre-Payment**"). If the Term commences (or ends) on a date other than the first (or last) day of a month, Base Rent shall be prorated on the basis of a thirty (30) day month. All sums other than Base Rent which Tenant is obligated to pay under this Lease shall be deemed to be additional rent due hereunder ("**Additional Rent**"), whether or not such sums are designated Additional Rent. The term "**Rent**" means the Base Rent and all Additional Rent payable hereunder. The obligation of Tenant to pay Base Rent and other sums to Landlord and the obligations of Landlord under this Lease are independent obligations. Tenant shall have no right at any time to abate, reduce, or set-off any rent due hereunder except as may be expressly provided in this Lease. If Tenant is delinquent in any monthly installment of Base Rent or Additional Rent for more than five (5) days, Tenant shall pay to Landlord on demand a late charge equal to eight percent (8%) of such delinquent sum and such delinquent sum shall also bear interest from the date such amount was due until paid in full at the lesser of (i) ten percent (10%) per annum; or (ii) at the maximum rate permitted by law ("**Applicable Interest Rate**"). The provision for such late charge shall be in addition to all of Landlord's other rights and remedies hereunder or at law and shall not be construed as a penalty.

5. **<u>SECURITY</u>.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1 **Letter of Credit**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1.1 Tenant shall deposit with Landlord, at the time of the execution and delivery of this Lease, an unconditional, irrevocable letter of credit issued by a bank acceptable to Landlord (referred to as the "**Bank**"), in favor of Landlord, in the sum of Two Hundred Thirty-Two Thousand Eight Hundred Fifty-Four and 00/100 ($232,854.00) DOLLARS (referred to as the "**Security Amount**") in funds available immediately or same day funds in the City of New York, as security for the faithful observance and performance by Tenant of the terms, covenants and conditions of this Lease on Tenant's part to be observed and performed (which amount equates to six (6) months initial Base Rent). Such letter of credit is (x) for a term of not less than one (1) year which term shall be automatically renewed for successive one (1) year terms, unless the Bank gives not less than ninety (90) days prior written notice that it will not so renew the letter of credit for such successive term and the last term of the letter of credit shall end not less than sixty (60) days after the Termination Date and (y) in substantially the same form as **Exhibit B**. If such letter of credit is not automatically renewed as aforesaid, Tenant agrees to cause the Bank to renew such letter of credit, from time to time, during the Term, at least sixty (60) days prior to the expiration of said letter of credit or any renewal or replacement, upon the same terms and conditions. In the event of any transfer of said letter of credit pursuant to Section 5.5, and notice of such transfer to Tenant, Tenant, within twenty (20) days thereafter, shall cause a new letter of credit to be issued by said Bank to the transferee, upon the same terms and conditions, in replacement of the letter of credit so transferred and Landlord agrees that, simultaneously with the delivery of such new letter of credit, it will return to said Bank the letter of credit being replaced. The letter of credit deposited hereunder, and all renewals and replacements, are referred to, collectively, as the "**Letter of Credit**". In amplification and not in limitation of the foregoing, the Letter of Credit shall expressly provide that (i) the Letter of Credit can be drawn down by presentation of a sight draft only without any other documents or statements, (ii) partial drawings are allowed and (iii) the Letter of Credit shall be transferable by Landlord, as beneficiary thereof, without restriction or limitation and with all fees paid by Tenant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1.2 The Letter of Credit shall be held by Landlord for the purposes set forth in this Article and shall not be transferred except for transfer (a) to an agent for collection, or (b) pursuant to the provisions of Section 5.5. In the event Tenant defaults in the performance of its obligations to timely issue a replacement Letter of Credit, or in the observance or performance of Tenant's agreement to cause the Bank to renew the Letter of Credit, Landlord, in addition to all rights and remedies which Landlord may have under this Lease or at law, shall have the right to require the Bank to make payment to Landlord of the entire Security Amount or the undrawn portion thereof, as the case may be, represented by the Letter of Credit, which sum may be held by Landlord as Cash Security (as said term is hereinafter defined) in accordance with the provisions of this Article. If payment of the entire Security Amount or the undrawn portion thereof is made to Landlord by reason of Tenant's failure to renew or replace the Letter of Credit in accordance with the foregoing provisions of this Article, Landlord shall have the right, at any time on behalf of Tenant, to replace said Cash Security with a new Letter of Credit issued by the Bank or any other bank selected by Landlord, in Landlord's sole discretion, and Tenant hereby irrevocably constitutes and appoints Landlord as Tenant's agent and attorney-in-fact to cause the Bank or any such other bank selected by Landlord to issue such a replacement Letter of Credit. The Letter of Credit provides for partial drawings.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2 Upon the occurrence of an Event of Default, or if this Lease and the Term shall expire and come to an end as provided in Section 18.2 or by or under any summary proceeding or any other action or proceeding, or if Landlord shall re-enter the Premises as provided in Section 18.2, or by or under any summary proceeding or any other action or proceeding, then Landlord, in addition to all rights and remedies which Landlord may have under this Lease or at law, may from time to time, draw on the Letter of Credit in one or more drawings for the amount of any Base Rent or additional rent then due and for any amount then due and payable to Landlord under this Lease and pay such sum to Landlord's account. In the event of a partial drawing, as provided in the immediately preceding sentence, Tenant shall, within five (5) days after demand, cause the Bank to issue an amendment to the Letter of Credit restoring the amount available thereunder to the Security Amount. In amplification and not in limitation of the provisions of this Lease, a failure by Tenant to cause the Bank to timely issue an amendment to the Letter of Credit restoring the amount available thereunder to the Security Amount shall be deemed a monetary default in the payment of Base Rent by Tenant under the terms, covenants and conditions of this Lease. Notwithstanding anything to the contrary set forth in this Lease, including, but not limited to, the foregoing provisions of this Article, in addition to all rights granted to Landlord pursuant to the provisions of the Lease, if this Lease and the Term shall expire and come to an end as provided in Section 18.2, or by or under any summary proceeding, or any other action or proceeding, or if Landlord shall re-enter the Premises as provided in Section 18.2, or by or under any summary proceeding or any other action or proceeding, Landlord, in addition to all rights and remedies which Landlord may have under this Lease or at law, shall have the right to require the Bank to make payment to Landlord of the entire Security Amount or the undrawn portion thereof, as the case may be, represented by the Letter of Credit, which sum shall be held and applied by Landlord as Cash Security in accordance with the provisions of this Article. **Application of Cash Security**: Any proceeds of the Letter of Credit held by Landlord and not paid to Landlord for Landlord's account as provided above shall be deemed held by Landlord as Cash Security and is referred to herein as "**Cash Security**". Upon the occurrence of an Event of Default, Landlord may use, apply or retain the whole or any part of any Cash Security held by Landlord under any of the provisions of Section 5.1, to the extent required for the payment of any Base Rent, additional rent or any other sum with respect to which Tenant is in default, or for the payment of any sum which Landlord may expend or incur because of Tenant's default in the observance or performance of any such term, covenant or condition, including, but not limited to, the payment of any damages or deficiency in the reletting of the Premises, whether such damage or deficiency accrued before or after summary proceedings or other re-entry by Landlord, without thereby waiving any other rights or remedies of Landlord with respect to such default, and Landlord shall hold the remainder of such Cash Security as security for the faithful performance and observance by Tenant of the terms, covenants and conditions of this Lease on Tenant's part to be observed and performed with the same rights as hereinabove set forth to use, apply or retain all or any part of such remainder in the event of any further default by Tenant under this Lease. No interest shall accrue on the Cash Security and Landlord is not required to keep the Cash Security separate from Landlord's own funds.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.3 **Restoration of Cash Security**. If Landlord uses, applies or retains the whole or any part of the Cash Security held by Landlord under any of the provisions of Section 5.1 or 5.2, Tenant, within five (5) days after notice thereof, shall deliver to Landlord, in cash or by a cashier's check, or Tenant's certified check, in either case drawn by or on a bank which is a member of the Clearing House Association and payable to the order of Landlord, the sum necessary to restore the Cash Security to the Security Amount. In amplification and not in limitation of the provisions of this Lease, a failure by Tenant to so replenish the Cash Security to the Security Amount shall be an Event of Default.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.4 **Return of Security**. The Letter of Credit and/or any remaining portion of any Cash Security then held by Landlord for the performance of Tenant's obligations under this Lease as security shall be returned to Tenant after (i) the Termination Date and (ii) the full observance and performance by Tenant of all of the terms, covenants and conditions of this Lease on Tenant's part to be observed and performed, including, but not limited to, the provisions of Section 15.4.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.5 **Transfer of Letter of Credit**. In the event of a sale or other transfer of the Land and/or Building, or Landlord's interest in this Lease, Landlord shall transfer the Letter of Credit and/or any remaining portion of any Cash Security then held by Landlord as security for the performance of Tenant's obligations under this Lease to the transferee, and Landlord shall thereupon be released from all liability for the return of such security; Tenant agrees to look solely to the transferee for the return of any such security and it is agreed that the provisions of this sentence shall apply to every sale or transfer of the Land and/or Building or Landlord's interest in this Lease by Landlord named herein or its successors, and to every transfer or assignment made of any such security. Any transferee shall be deemed to have agreed that any Letter of Credit or Cash Security transferred to such transferee pursuant to this Section shall be held in accordance with the provisions of this Article for the purposes of this Article. A lease of the entire Building pursuant to which the lessee shall be entitled to collect the rents hereunder shall be deemed a transfer within the meaning of this Section.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.6 **No Assignment of Security by Tenant**: Tenant agrees that it will not assign, mortgage or encumber, or attempt to assign, mortgage or encumber, the Letter of Credit or any Cash Security held by Landlord under this Lease, and that neither Landlord nor its successors or assigns shall be bound by any such assignment, mortgage, encumbrance, attempted assignment, attempted mortgage or attempted encumbrance. Landlord shall not be required to exhaust its remedies against Tenant before having recourse to the Letter of Credit, the Cash Security or any other security held by Landlord. Recourse by Landlord to the Letter of Credit, the Cash Security or any other security held by Landlord shall not affect any remedies of Landlord which are provided in this Lease or which are available in law or equity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.7 **Initial Cash Deposit.** Notwithstanding anything to the contrary set forth herein, Tenant may initially deliver the Security Amount to Landlord in the form of cash (the "Initial Cash Deposit"), provided that the Initial Cash Deposit is so delivered with sufficient funds to Landlord simultaneously with Tenant's execution of this lease. In such event, within sixty (60) days following the date of execution and delivery of this lease by Landlord and Tenant, Tenant shall deliver to Landlord the Letter in the amount of the Security Amount and in accordance with the requirements of Section 5, and promptly following Landlord's receipt of said Letter, Landlord shall return the Initial Cash Deposit to Tenant. Tenant's failure to timely deliver the Letter of Credit shall be a material default by Tenant under this lease.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.8 **Reduction in Security Amount**. Provided (i) Tenant is in possession of the entire Premises and (ii) no default exists under this Lease and (iii) no default has occurred beyond notice and the expiration of any applicable cure periods during the first twenty-four (24) months of the Term, the Tenant shall have the right to reduce the Security Amount to the sum of One Hundred Sixty-Six Thousand One Hundred Fifty and 77/100 ($166,150.77) DOLLARS (which amount reflects two (2) months of Base Rent and two (2) months initial Estimated Expenses for the third lease year of the Term) on the last day of the 24<sup>th</sup> calendar month of the Term, and shall remain at such amount for the remainder of the Term (the "**Reduction**"). In the event that Tenant does default under the terms of this Lease beyond applicable notice and cure periods prior to the end of the 24<sup>th</sup> calendar month, the Security Amount shall remain at the original Security Amount for the balance of the Term (even if Landlord waives or declines to enforce such default). Such reductions in the Security Amount shall be accomplished, at Tenant's option, by either providing (a) a substitute Letter of Credit in the reduced amount or (b) an amendment to the Letter of Credit reducing it to the reduced amount.

6. **<u>UTILITIES</u>.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1 **Utilities**. Tenant shall pay all charges for heat, water, gas, electricity any other utilities and services used on or provided to the Premises, along with any taxes, penalties, and surcharges related thereto and any maintenance and facility charges in connection with the provision of such utilities. Utilities servicing the Premises exclusively used by Tenant shall be separately metered and Tenant shall pay same directly to the applicable utility company (or to Landlord as Additional Rent to the extent submetred). Where separate metering or submetering is not commercially feasible (including prior to the completion of Landlord's Work pursuant to Exhibit M), utility costs shall be equitably apportioned based on Tenant's Share (or such other equitable percentage as reasonably determined by Landlord) and Tenant shall pay directly to Landlord, as Additional Rent, upon demand, the applicable utility charge. After reconfiguration of the Building as part of Landlord's Work, electric and gas will be metered and paid directly to the applicable utility provider and water will be submetred and paid to Landlord as Additional Rent, upon demand, based on Tenant's consumption as set forth on said submeter. Tenant acknowledges and confirms that Tenant's panel and meter will be outside of the Premises and accessible from the exterior of the Building.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2 **Interruption of Utilities**. Landlord shall have no liability to Tenant for any interruption in utilities or services to be provided to the Premises when such failure is caused by all or any of the following: (a) accident, casualty, breakage or repairs; (b) strikes, lockouts or other labor disturbances or labor disputes of any such character; (c) governmental regulation, moratorium or other governmental action; (d) inability, despite the exercise of reasonable diligence, to obtain electricity, water or fuel; (e) service interruptions or any other unavailability of utilities resulting from causes beyond Landlord's control including without limitation, any electrical power "brown-out" or "black-out"; (f) act or default by Tenant or other party; or (g) any other cause beyond Landlord's reasonable control. In addition, in the event of any such interruption in utilities or services, Tenant shall not be entitled to any abatement or reduction of Rent (except as expressly provided in Section 16 and Section 17 if such failure is a result of any casualty damage or Taking described therein), no eviction of Tenant shall result, and Tenant shall not be relieved from the performance of any covenant or agreement in this Lease. In the event of any stoppage or interruption of services or utilities which are not obtained directly by Tenant, Landlord shall diligently attempt to resume such services or utilities as promptly as practicable. Tenant hereby waives the provisions of any applicable existing or future law, ordinance or governmental regulation concerning constructive eviction or permitting the termination of this Lease due to an interruption, failure or inability to provide any services.

7. **<u>TAXES</u>**. Commencing on the Commencement Date, Tenant shall pay to Landlord Tenant's Share of all Real Property Taxes (as herein defined) for each full or partial calendar year during the Term in accordance with the terms and provisions of Section 8 and Section 9 below. "**Real Property Taxes**" shall mean (a) all taxes, assessments, supplementary taxes, possessory interest taxes, levies, fees, exactions or charges and other governmental charges, together with any interest, charges, fees and penalties in connection therewith, which are assessed, levied, charged, conferred or imposed by any public authority upon the Land, the Building, the Property or any other improvements, fixtures, equipment or other property located at or on the Land, the Building or the Property all capital levies, franchise taxes, any excise, use, margin, transaction, sales or privilege taxes, assessments, levies or charges and other taxes assessed or imposed on Landlord upon the rents payable to Landlord under this Lease (excluding net income taxes imposed on Landlord unless such net income taxes are in substitution for any Real Property Taxes payable hereunder and further provided, in no event shall Tenant be liable for any estate, inheritance, succession, transfer, corporate franchise or income taxes imposed on Landlord unless such income taxes are in substitution for any Real Property Taxes payable hereunder), including but not limited to, gross receipts taxes, assessments for special improvement districts and building improvement districts, governmental charges, fees and assessments for police, fire, traffic mitigation or other governmental service of purported benefit to the Land, Building, Property or Premises, taxes and assessments levied in substitution or supplementation in whole or in part of any such taxes and assessments and the share of the Land, Building, Property and Premises of any real estate taxes and assessments under any reciprocal easement agreement, common area agreement or similar agreement as to the Land, Building, Property or Premises; (b) all personal property taxes for property that is owned by Landlord and used in connection with the operation, maintenance and repair of the Land, Building, Property or Premises; and (c) all costs and fees incurred in connection with seeking reductions in any tax liabilities described in (a) and (b), including, without limitation, any costs incurred by Landlord for compliance, review and appeal of tax liabilities. Prior to delinquency, Tenant shall pay all taxes and assessments, together with any interest, charges, fees and penalties in connection therewith, levied upon trade fixtures, alterations, additions, improvements, inventories, equipment and other personal property located and/or installed on the Premises by Tenant; and, upon request, Tenant shall provide Landlord copies of receipts for payment of all such taxes and assessments. To the extent any such taxes are not separately assessed or billed to Tenant, Tenant shall pay the amount thereof as invoiced by Landlord. Landlord may, but is not obligated to, contest by appropriate legal proceedings the amount, validity, or application of any Real Property Taxes or liens thereof. If Landlord shall receive a refund or reduction to the Real Property Taxes for which Tenant has made an Estimated Expenses payment with respect thereto then, unless Landlord has made an adjustment therefor in connection with an Adjustment pursuant to Section 9.2 below, then Landlord shall credit to Tenant's next due Estimated Expenses payment (or reimburse Tenant in the case the Term has expired), Tenant's Share of such refund or reduction after deducting therefrom the costs and expenses of obtaining such refund or reduction.

8. **<u>OPERATING EXPENSES</u>.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.1 **Operating Expenses**. Commencing on the Commencement Date, Tenant shall pay to Landlord Tenant's Share of Operating Expenses for each full or partial calendar year during the Term, as provided in Section 9 below. It is intended that this Lease be a "triple net lease," and that the Rent to be paid hereunder by Tenant will be received by Landlord without any deduction or offset whatsoever by Tenant, foreseeable or unforeseeable, except as expressly set forth in this Lease. Except as expressly provided to the contrary in this Lease, Landlord shall not be required to make any expenditure, incur any obligation, or incur any liability of any kind whatsoever in connection with this Lease or the ownership, construction, maintenance, operation or repair of the Premises or the Property. To the extent the Building shares certain items or services with other buildings, Landlord shall reasonably allocate items or services between such buildings and/or users.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.2 **Definition of Operating Expenses**. "**Operating Expenses**" means the total costs and expenses incurred by Landlord in the ownership, operation, maintenance, repair, replacement and management of the Building, the Land and/or the Building Common Area, including, but not limited to: (1) repair, replacement maintenance, utility costs and landscaping of the Building Common Area, including, but not limited to, any and all costs of maintenance, repair and replacement of all parking areas (including bumpers, sweeping, striping and slurry coating), common driveways, loading and unloading areas, trash areas, outdoor lighting, sidewalks, walkways, landscaping (including tree trimming), irrigation systems, fences and gates and other costs which are allocable to the Building, the Building Common Area and/or the Land; (2) non-structural maintenance and repair of the roof (and roof membrane), skylights and exterior walls of the Premises (including exterior painting); (3) the costs relating to the insurance maintained by Landlord as described in Section 11.1 below, including, without limitation, Landlord's cost of any deductible or self- insurance retention; (4) intentionally omitted; (5) maintenance, repair, replacement, monitoring and operation costs of all mechanical, electrical and plumbing systems and sewage systems, but only to the extent maintained by Landlord or to the extent used in common with other occupants of the Building or otherwise serving any Common Area; (6) maintenance, repair, replacement, monitoring and operation costs of the fire/life safety and sprinkler system; (7) trash collection and snow removal costs; (8) costs of capital improvements or capital replacements (excluding the roof structure) made to or capital assets acquired for the Building or the Land after the Commencement Date that are intended to reduce Operating Expenses or are reasonably necessary for the operation of the Building or the health and safety of the occupants of the Building or are required under any governmental law or regulation, which capital costs, or an allocable portion thereof, shall be amortized over their useful life, together with interest on the unamortized balance at eight percent (8%); (9) commercially reasonable reserves set aside for maintenance and repair; (10) any other costs incurred by Landlord related to the Building and/or the Land including, but not limited to, paving, parking areas, roads, driveways, alleys, mowing, landscape, heating and ventilation; and (11) assessments, association fees and all other costs assessed or charged under the CC&Rs, if any, that are attributable to the Land and/or the Building in connection with any property owners or maintenance association or operator.

Operating Expenses shall not include (i) replacement of or structural repairs to the roof structure, structural columns or the exterior walls; (ii) repairs to the extent covered by insurance proceeds that are actually received by Landlord, or paid by Tenant or other third parties; (iii) alterations solely attributable to tenants of the Building other than Tenant; (iv) marketing expenses (including leasing commissions and advertising expenses in leasing and procuring new tenants for the Building); (v) penalties for any missed payments by Landlord under any contract or agreement concerning the operation and ownership of the Building or Land; (vi) interest or amortization payments on any mortgage or mortgages which are liens on the Land or Building or on any ground lease; (vii) any cost or expense associated with compliance with any laws, ordinances, rules or regulations regarding any condition existing in the Building or on the Land if such condition existed prior to the Commencement Date; (ix) costs incurred by Landlord as a result of Landlord's gross negligence or willful acts or omissions; (x) salaries, expenses, fringe benefits and other compensation for executives or other personnel of Landlord above the grade of property manager; (xi) capital expenditures except as set forth in (8) above, (xii) legal costs, fines and penalties incurred by Landlord due to violation by Landlord of any Applicable Laws in effect and enforced prior to the Commencement Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.3 **Gross Up**. If the Building is less than ninety-five percent (95%) occupied during any calendar year, the variable components of Operating Expenses as determined by Landlord (using sound accounting and management principles) shall be calculated as if the Building had been 95% occupied for the full calendar year. Any Operating Expenses or Real Property Taxes that are specifically attributable to the Building or to the operation, repair and maintenance thereof, may be allocated entirely to the Building.

9. **<u>ESTIMATED EXPENSES</u>.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.1 **Payment**. "**Estimated Expenses**" for any particular year shall mean Landlord's estimate of Operating Expenses and Real Property Taxes for a calendar year. Tenant shall pay Tenant's Share of the Estimated Expenses with installments of Base Rent in monthly installments of one-twelfth (1/12th) thereof on the first day of each calendar month during such year. If at any time Landlord determines that Operating Expenses and/or Real Property Taxes are projected to vary from the then Estimated Expenses, Landlord may, by notice to Tenant, revise such Estimated Expenses, and Tenant's monthly installments for the remainder of such year shall be adjusted so that by the end of such calendar year Tenant has paid to Landlord Tenant's Share of the revised Estimated Expenses for such year. In addition to the foregoing, in lieu of monthly payments as hereinabove provided, Landlord may invoice Tenant for its share of Operating Expenses and Real Property Taxes on a quarterly, bi-annual or annual basis, and Tenant's installments on account thereof shall be due in its entirety within twenty (20) days thereafter.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.2 **Adjustment**. "**Operating Expenses and Real Property Taxes Adjustment**" (or "**Adjustment**") shall mean the difference between Tenant's Share of Estimated Expenses, on the one hand, and Tenant's Share of Operating Expenses and Real Property Taxes, collectively, on the other hand, for any calendar year. Promptly after the end of each calendar year, Landlord shall deliver to Tenant a statement of Tenant's Share of Operating Expenses and Real Property Taxes for such calendar year, accompanied by a computation of the Adjustment. If Tenant's payments are less than Tenant's Share, then Tenant shall pay the difference within twenty (20) days after receipt of such statement. Tenant's obligation to pay such amount shall survive the expiration or termination of this Lease. If Tenant's payments exceed Tenant's Share, then so long as an Event of Default by Tenant has not occurred and is continuing Landlord shall credit such excess amount to future installments of Tenant's Share for the next calendar year (or pay to Tenant such excess in the event the Term has expired). If an Event of Default by Tenant occurs, Landlord may, but shall not be required to, credit such amount to Rent arrearages.

10. **<u>INDEMNITY AND WAIVER OF CLAIMS</u>.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.1 **Indemnity**. Tenant shall, to the fullest extent permitted by law, indemnify, protect, defend (by counsel acceptable to Landlord) and hold harmless Landlord and Landlord's affiliated entities (including, but not limited to, Landlord's parent entity), and each of their respective trustees, members, managers, principals, beneficiaries, partners, directors, officers, employees, shareholders, Mortgagees, agents, contractors, successors and assigns (individually and collectively, "**Indemnitees**") from and against any and all claims, judgments, causes of action, damages, obligations, penalties, fines, taxes, costs, liens, liabilities, losses, charges and expenses, including without limitation all attorneys' fees and other professional fees (collectively referred to as "**Losses**") which may be imposed upon, incurred by or asserted against Landlord or any of the Indemnitees at any time during or after the Term by any third party and arising out of or in connection with (1) any Event of Default in the performance of any obligation on Tenant's part to be performed under the terms of this Lease, or (2) any damages or injury occurring in the Premises or the Common Areas, Tenant's use of the Premises or the Common Areas, any acts or omissions (including violations of Applicable Laws) of Tenant or any Tenant Party, the conduct of Tenant's business, or any activity, work or things done, permitted or suffered by Tenant or any Tenant Party in or about the Premises, the Building, the Common Area or any other portions of the Property, except to the extent caused by Landlord's gross negligence or willful misconduct. Landlord reserves the right to retain counsel for its defense, in which case Tenant shall be responsible for the costs of such defense. The obligations of Tenant under this Section 10 shall survive the termination of this Lease with respect to any claims or liability arising prior to such termination.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.2 **Waiver of Claims**. Tenant, as a material part of the consideration to Landlord, hereby assumes all risk of illness or injury to persons in, upon or about the Premises, the Building, the Land, the Common Areas or other portions of the Property arising from any cause and all risk of damage to property including, but not limited to, Tenant's Property and all Alterations in, upon or about the Premises, the Building, the Land, the Common Area or other portions of the Property arising from any cause and Tenant hereby expressly releases Landlord and the Indemnitees and waives all claims in respect thereof against Landlord and the Indemnitees; provided, however, subject to Section 11.3.5, the foregoing release and waiver shall not apply to the extent such claims are caused by Landlord's gross negligence or willful misconduct. Without limiting the generality of the foregoing, Landlord shall not be liable for any damages arising from any act or neglect of any contractor or other tenant, if any, of the Building or Landlord's failure to enforce the terms of any agreements with parties other than Tenant.

11. **<u>INSURANCE</u>.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.1 **Landlord**. Landlord shall maintain insurance through individual or blanket policies insuring the Building against fire and extended coverage (including, if Landlord elects, "all risk" or "special cause of loss form" coverage, earthquake/volcanic action, flood and/or surface water insurance) for the full replacement cost of the Building, with deductibles in the form and endorsements of such coverage as selected by Landlord, together with business interruption insurance against loss of Rent in an amount equal to the amount of Rent for a period of at least twelve (12) months commencing on the date of loss. Landlord may also carry such other insurance as Landlord may deem prudent or advisable, including, without limitation, liability insurance in such amounts and on such terms as Landlord shall determine. Tenant shall pay to Landlord, as a portion of the Operating Expenses, the costs of the insurance coverages described herein, including, without limitation, Landlord's cost of any self-insurance deductible or retention.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.2 **Tenant**. Tenant shall, at Tenant's expense, obtain and keep in force at all times the following insurance (and any other commercially reasonable form(s) of insurance Landlord may reasonably require from time to time) in the following coverage amounts, which coverage amounts Landlord may reasonably increase from time to time upon reasonable advance written notice to Tenant in the event Tenant's operations change or Landlord otherwise reasonably determines that such coverage amounts are inadequate under the circumstances:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.2.1 <u>Commercial General Liability Insurance (Occurrence Form)</u>. A policy of commercial general liability insurance ("**CGL Policy**") (occurrence form) having a combined single limit of not less than One Million Dollars ($1,000,000.00) per occurrence and Two Million Dollars ($2,000,000.00) aggregate per location (if Tenant has multiple locations) (and not more than Twenty-Five Thousand Dollars ($25,000.00) self-insured retention/deductible), providing coverage for defense costs outside of the policy limits and including coverage for, among other things, bodily injury, personal injury, property damages arising out of Tenant's operating and contractual liabilities, including coverage formerly known as broad form, blanket contractual liability for both oral and written contracts, premises and operations, products/completed operations, owners and contractors protective, personal and advertising injury, and with an "Additional Insured-Managers or Lessors of Premises Endorsement" and containing the "Amendment of the Pollution Exclusion Endorsement" for damage caused by heat, smoke or fumes from a hostile fire. The CGL Policy shall delete the exclusion for operations within fifty (50) feet of a railroad track (railroad protective liability), if applicable, and if applicable, and, if necessary, Tenant shall provide for restoration of the aggregate limit. The CGL Policy shall not contain any intra-insured exclusions as between insured persons or organizations, but shall include coverage for liability assumed under this Lease as an "insured contract" for the performance of Tenant's indemnity obligations under this Lease;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.2.2 <u>Automobile Liability Insurance</u>. Business automobile liability insurance having a combined single limit of not less than One Million Dollars ($1,000,000.00) per occurrence and insuring Tenant against liability for claims arising out of ownership, maintenance, or use of any owned, hired or non-owned automobiles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.2.3 <u>Workers' Compensation and Employer's Liability Insurance</u>. Workers' compensation insurance having limits not less than those required by applicable state and federal statute, and covering all persons employed by Tenant, including volunteers, in the conduct of its operations on the Premises, together with employer's liability insurance coverage in the amount of at least One Million Dollars ($1,000,000.00) each accident for bodily injury by accident; One Million Dollars ($1,000,000.00) each employee for bodily injury by disease; and One Million Dollars ($1,000,000.00) policy limit for bodily injury by disease;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.2.4 <u>Property Insurance</u>. "All risk" or "special cause of loss form" property insurance including coverage for vandalism, malicious mischief, sprinkler leakage and, if applicable, boiler and machinery comprehensive form, insuring (1) Tenant's fixtures, furniture, equipment (including electronic data processing equipment, if applicable), merchandise, inventory, and all other personal property and other contents contained within the Premises (collectively "**Tenant's Property**") and (2) the Alterations (as hereinafter defined) in an amount equal to the then applicable full replacement cost thereof. Landlord shall be designated as a loss payee with respect to Tenant's property insurance on any Alterations. The foregoing property insurance shall include warehouser's legal liability or bailee customers insurance for the full replacement cost of the property belonging to invitees and located in the Premises, if the property of Tenant's invitees is to be kept in the Premises;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.2.5 <u>Business Interruption</u>. Loss of income and extra expense insurance in amounts as will reimburse Tenant for direct or indirect loss of earnings for a period of not less than twelve (12) months, attributable to all perils included in the "all risk" or "special cause of loss form" property insurance policy required in Section 11.2.4 above or attributable to prevention of access to the Premises as a result of such perils; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.2.6 <u>Environmental Insurance</u>. If required by Landlord because of special environmental concerns regarding Tenant's operations, Pollution Legal Liability Insurance and/or Environmental Impairment Insurance covering claims for damage or injury caused by hazardous materials, including, without limitation, bodily injury, wrongful death, property damage, including loss of use, removal, cleanup and restoration or work and material necessary to return the Premises and any other property of whatever nature located on the Premises to their condition existing prior to the appearance of Tenant's hazardous materials on the Premises. If such coverage is required, Landlord shall determine limits of liability.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.2.7 <u>Umbrella/Excess Insurance</u>. An umbrella liability policy or excess liability policy having a limit of not less than Three Million Dollars ($3,000,000.00), which policy shall be in "following form" and shall provide that if the underlying aggregate is exhausted, the excess coverage will drop down as primary insurance. Such umbrella liability policy or excess liability policy shall include coverage for additional insureds.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.3 **<u>General</u>.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.3.1 <u>Insurance Companies</u>. Insurance required to be maintained by Tenant shall be written by companies licensed to do business in the state in which the Premises are located and having a "Financial Strength Rating" of at least "A-VIII" (or such higher rating as may be required by a Mortgagee [as herein defined] having a lien on the Premises) as determined by A.M. Best Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.3.2 <u>Certificates of Insurance</u>. Tenant shall deliver to Landlord certificates of insurance for all insurance required to be maintained by Tenant in the form of ACORD 28 (Evidence of Commercial Property Insurance) and ACORD 25-S (Certificate of Liability Insurance) (or in a form acceptable to Landlord in its reasonable discretion), no later than seven (7) days after the Effective Date of this Lease (but in any event prior to any entry onto the Premises by Tenant or any employee, agent or contractor of Tenant). Upon request, Tenant shall also provide to Landlord a true, correct and complete copy of the actual insurance policy for all insurance required to be maintained by Tenant hereof. Tenant shall, at least ten (10) days prior to expiration of any required coverage, furnish Landlord with certificates of renewal or "binders" thereof. Acceptance by Landlord of delivery of any certificates of insurance does not constitute approval or agreement by Landlord that the insurance requirements in Section 11.2 have been met, and failure of Landlord to demand such evidence of full compliance with these insurance requirements or failure of Landlord to identify a deficiency from evidence provided will not be construed as a waiver of Tenant's obligation to maintain such insurance. If Tenant fails to maintain any insurance required in this Lease, Tenant shall be liable for all losses and costs suffered or incurred by Landlord (including litigation costs and attorneys' fees and expenses) resulting from said failure. If Tenant fails to deliver any certificate or renewal to Landlord required under this Lease within the prescribed time period or if any such policy is canceled or modified during the Term without Landlord's prior written consent, Landlord may obtain such insurance for the exclusive benefit of Landlord, in which case Tenant shall reimburse Landlord for the cost of such insurance within 15 days after receipt of a statement that indicates the cost of such insurance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.3.3 <u>Additional Insureds; Primary Coverage</u>. Landlord, Landlord's Mortgagee, if any, any property management company of Landlord for the Premises, and any other party designated by Landlord shall be named as additional insureds ("**Additional Insureds**") under Insurance Services Office ("**ISO**") endorsement CG 201012 19 or its equivalent under all of the policies required by Sections 11.2.1, 11.2.2, 11.2.6 and 11.2.7, and such endorsement shall be included with the certificates to be provided to Landlord pursuant to Section 11.3.2 above. The policies carried or required to be carried by Tenant pursuant to Sections 11.2.1, 11.2.2, 11.2.6 and 11.2.7 shall provide for severability of interest and shall be primary and non-contributory as respects the Additional Insureds, and any insurance maintained by the Additional Insureds shall be excess and non-contributing. Landlord is to be insured as its interests may appear and is to be designated as a loss payee on the insurance required to be maintained by Tenant pursuant to Section 11.2.4. Further, none of these policies shall contain any action over exclusion endorsement, cross- suits exclusion or any similar exclusion that excludes coverage for claims brought by an additional insured under the policy against another insured under the policy.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.3.4 <u>Limits of Insurance</u>. The limits and types of insurance maintained by Tenant shall not limit Tenant's liability under this Lease, except as expressly provided in Section 11.3.5 below.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.3.5 <u>Mutual Waiver of Subrogation</u>. Each party waives, and shall cause its insurance carrier to waive, any right of recovery against the other for any loss of or damage which loss or damage is (or, if the insurance required hereunder had been carried, would have been) covered by insurance. For purposes of this Section 11.3.5, any deductible with respect to a party's insurance shall be deemed covered by, and recoverable by such party under, valid and collectable policies of insurance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.3.6 <u>Notification of Incidents</u>. Tenant shall notify Landlord within twenty-four (24) hours after the occurrence of any accidents or incidents in the Premises, the Building, Common Areas or the Property which could give rise to a claim under any of the insurance policies required under this Section 11.

12. **<u>REPAIRS AND MAINTENANCE</u>.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.1 **Tenant Obligations**. Except as otherwise expressly provided in Section 12.2, Tenant, at Tenant's sole cost and expense, shall keep and maintain the interior and exterior of the Premises in good, clean and safe order, condition and repair, including replacement (as necessary), including, without limitation, the following: loading docks, roll up doors and ramps; floors, subfloors and floor coverings; walls and wall coverings (excluding painting of exterior walls); doors, locks and other locking devices, charging stations, windows, glass and plate glass; ceilings, skylights, and lighting systems; all plumbing, electrical and mechanical equipment and systems inside or exclusively serving the Premises; all heating, ventilating and air conditioning equipment and systems inside or exclusively serving the Premises (subject to Landlord's rights described below); and wiring, appliances and devices using or containing refrigerants, or otherwise attached to or part of Tenant's trade-fixtures and/or equipment. Tenant shall enter into regularly scheduled preventive maintenance/service contracts reasonably acceptable to Landlord ("**Service Contracts**") with maintenance contractor(s) reasonably acceptable to Landlord for servicing all heating ventilation, and air conditioning systems and equipment inside or exclusively serving the Premises (collectively, the "**HVAC System**"). Tenant shall deliver full and complete copies of the Service Contracts (and any other service contracts entered into by Tenant) to Landlord within one hundred twenty (120) days after the Commencement Date. Notwithstanding the foregoing, Landlord may elect to maintain the Service Contract respecting the HVAC System, in which case Tenant shall reimburse Landlord within thirty (30) days after Landlord's demand for the cost of the Service Contracts and shall promptly undertake and complete the repairs and/or replacements recommended by such maintenance contractor during the Term of this Lease. All repairs and replacements by Tenant shall be made and performed: (1) at Tenant's cost and expense and at such time and in such manner as Landlord may designate, (2) by contractors or mechanics reasonably approved by Landlord, (3) so that same shall be at least equal in quality, value and utility to the original work or installation, (4) in a manner and using equipment and materials that will not interfere with or impair the operations, use or occupation of the Building or any of the mechanical, electrical, plumbing or other systems in the Building or the Property, and (5) in accordance with the Rules and Regulations and all Applicable Laws. In the event Tenant fails, in the reasonable judgment of Landlord, to maintain the Premises in accordance with the obligations under this Lease, which failure continues at the end of fifteen (15) days following Tenant's receipt of written notice from Landlord stating the nature of the failure, or in the case of an emergency immediately without prior notice, Landlord shall have the right to enter the Premises and perform such maintenance, repairs or refurbishing at Tenant's sole cost and expense (including a sum for overhead to Landlord equal to ten percent (10%) of the costs of maintenance, repairs or refurbishing). Tenant shall maintain written records of maintenance and repair, and shall deliver copies thereof to Landlord upon request.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.2 **Landlord Obligations**. Landlord shall repair, maintain and replace as a cost to be included in Operating Expenses (to the extent permissible), the Common Areas and the structural portions of the roof, foundation and load-bearing portions of walls (excluding wall coverings, painting, glass and doors) of the Building; provided, (a) if any damage is caused by an act or omission of Tenant, or any Tenant Party, then such repairs shall be paid by Tenant within ten (10) days of demand and (b) Landlord shall not be required to make any repair resulting from (1) any alteration or modification to the Building or to mechanical equipment within the Building performed by, for or because of Tenant or to special equipment or systems installed by, for or because of Tenant, (2) the installation, moving, use or operation of Tenant's Property, (3) Tenant's use or occupancy of the Premises in violation of Section 15 of this Lease, (4) fire and other casualty, except as provided by Section 16 of this Lease, or (5) condemnation, except as provided in Section 17 of this Lease. There shall be no abatement of Rent during the performance of such work. Landlord shall not be liable to Tenant for injury or damage that may result from any defect in the construction or condition of the Premises, nor for any damage that may result from interruption of Tenant's use of the Premises during any repairs by Landlord. Tenant waives any right to repair the Premises, the Building and/or the Common Area at the expense of Landlord under any Applicable Laws.

13. **<u>ALTERATIONS</u>.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.1 **Trade Fixtures; Alterations**. Subject to limitations set forth in this Lease, Tenant may install necessary trade fixtures, equipment and furniture in the Premises, provided that all alterations are done in compliance with **Exhibit F** and such items are installed and are removable without structural or material damage to the Premises, or the Building. Tenant shall not construct, nor allow to be constructed, any alterations or physical additions in, about or to the Premises without obtaining the prior written consent of Landlord, which consent shall be conditioned upon Tenant's compliance with the provisions of **Exhibit F** and any other applicable requirements of Landlord regarding construction of improvements and alterations. If Landlord does not respond to a written request from Tenant made in accordance with **Exhibit F** within ten (10) business days, then Landlord shall be deemed to disapprove such request. If requested by Landlord, Tenant shall file a notice of completion after completion of such work and provide Landlord with a copy thereof. Notwithstanding anything to the contrary herein, Tenant shall be permitted to construct non- structural, cosmetic alterations to the extent the cost of which, in each instance, in the aggregate is less than $25,000.00, without Landlord's consent; subject however to Tenant delivering at least ten (10) days' advance written notice to Landlord and completing the Alterations in accordance with **Exhibit F** and all applicable terms of this Lease. Alteration requests shall be sent to each of the following emails tanks@rosenwachgroup.com, mh@rosenwachgroup.com, amr@rosenwachgroup.com and hjr@rosenwachgroup.com.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.2 **Damage; Removal**. Upon the expiration or earlier termination of this Lease, Tenant shall remove any or all trade fixtures, alterations, additions, improvements and partitions ("**Alteration(s)**") made or installed by or for the benefit of Tenant and repair all damage caused by the installation or removal thereof; provided, however, Landlord may require Tenant to have all or any portion of such items designated by Landlord to remain at the Premises, in which event they shall be and become the property of Landlord upon the expiration or earlier termination of this Lease. All such removals and restoration shall be accomplished in a good and workmanlike manner and so as not to cause any damage to the Premises, the Building, the Common Area or the Property whatsoever.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.3 **Liens**. Tenant shall promptly pay and discharge all claims for labor performed, supplies furnished and services rendered at the request of Tenant and shall keep the Premises free of all mechanics' and materialmen's liens in connection therewith. Tenant shall remove or may bond over any such lien within ten (10) business days after notice from Landlord, and if Tenant fails to do so, an Event of Default by Tenant shall have occurred, and in addition, Landlord, without limiting its remedies, may bond, insure over or otherwise pay the amount necessary to cause such removal, whether or not such lien is valid. The amount so paid, together with reasonable attorneys' fees and expenses, shall be reimbursed by Tenant upon demand. Tenant shall provide at least ten (10) days prior written notice to Landlord before any labor is performed, supplies furnished or services rendered on or at the Premises and Landlord shall have the right to post on the Premises notices of non-responsibility.

14. **<u>LANDLORD'S RIGHTS</u>.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.1 Landlord reserves the right to enter the Premises upon reasonable advance notice (which may be oral or telephonic) to Tenant (or without notice in case of an emergency) and/or to undertake the following all without abatement of rent or liability to Tenant: inspect the Premises and/or the performance by Tenant of the terms and conditions hereof; make such alterations, repairs, improvements or additions to the Premises as required or permitted hereunder; change boundary lines of the Land so long as such change does not materially and adversely impact Tenant's use of the parking area and/or access to the Premises; install, use, maintain, repair, alter, relocate or replace any pipes, ducts, conduits, wires, equipment and other facilities in the Common Area or the Building; install, maintain and operate conduit cabling within the utility and/or conduit ducts and risers within the Building, as well as grant lease, license or use rights to third parties, to utilize the foregoing easements or licenses on the Land and/or the Property; grant easements, rights of way, utility raceways and make dedications; dedicate for public use portions of the Land and/or the Property; and record parcel maps, restrictions, covenants, conditions and restrictions affecting the Land and/or the Property and/or amendments to existing CC&Rs which do not unreasonably interfere with Tenant's use of the Premises or impose additional material monetary obligations on Tenant; change the name of the Building and/or the Property; affix reasonable signs and displays on the Building and/or the Land (including rental signs); and, show the Premises to prospective purchasers, current or prospective investors, Mortgagees, ground lessees or insurers, or, during the last twelve (12) months of the Term (or following any Event of Default), prospective tenants. If reasonably necessary, Landlord may temporarily close all or a portion of the Premises to perform repairs, alterations and additions. However, except in emergencies, Landlord will not close the Premises if the work can reasonably be completed on weekends and after normal business hours. Any entry, storage and work or taking back of an insubstantial portion of the Premises in connection with any such repair, installation, alteration or addition shall not constitute an eviction (whether actual or constructive) of Tenant in whole or in part or breach of the covenant of quiet enjoyment, shall not be grounds for any abatement of Rent, and shall not impose any liability on Landlord to Tenant by reason of inconvenience or injury to Tenant's business or to the Premises.

15. **<u>ENVIRONMENTAL MATTERS</u>.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15.1 **Hazardous Materials**. Tenant shall not cause nor permit, nor allow any of Tenant's or Tenant's affiliates' employees, agents, customers, visitors, invitees, licensees, contractors, assignees or subtenants (individually, a "**Tenant Party**" and collectively, "**Tenant's Parties**") to cause or permit, any Hazardous Materials (as defined herein) to be brought upon, stored, manufactured, generated, blended, handled, recycled, treated, disposed or used on, under or about the Premises, the Building, the Common Area or the Property, except for routine office and janitorial supplies in usual and customary quantities (including supplies used for the maintenance of Tenant's equipment) stored, used and disposed of in accordance with all applicable Environmental Laws. Tenant shall not install, operate or maintain any above or below grade tank, sump, pit, pond, lagoon or other storage or treatment vessel or device on the Property without Landlord's prior written consent which may be withheld in Landlord's sole discretion. As used herein, the term "**Environmental Laws**" means all applicable present and future statutes, regulations, ordinances, rules, codes, judgments, orders or other similar enactments of any governmental authority or agency regulating or relating to health, safety, or environmental conditions on, under, or about the Premises or the environment, including without limitation, the following: the Comprehensive Environmental Response, Compensation and Liability Act; the Resource Conservation and Recovery Act; and all state and local counterparts thereto, and any regulations or policies promulgated or issued thereunder. The term "**Hazardous Materials**" means and includes any substance, material, waste, pollutant, or contaminant listed or defined as hazardous or toxic, under any Environmental Laws, asbestos and petroleum, including crude oil or any fraction thereof, natural gas liquids, liquefied natural gas, or synthetic gas usable for fuel (or mixtures of natural gas and such synthetic gas) and explosives, flammables, or radioactive substances of any kind. As defined in Environmental Laws, Tenant is and shall be deemed to be the "operator" of Tenant's "facility" and the "owner" of all Hazardous Materials brought on the Premises by Tenant, its agents, employees, contractors or invitees, and the wastes, by-products, or residues generated, resulting, or produced therefrom. Tenant and Tenant's Parties shall comply with all Environmental Laws and promptly notify Landlord in writing of the violation of any Environmental Law or presence of any Hazardous Materials, other than office and janitorial supplies (including supplies used for the maintenance of Tenant's equipment) as permitted above, in, on, under or about the Premises or the improvements or the soil or groundwater thereunder. Tenant shall neither create or suffer to exist, nor permit any Tenant Party to create or suffer to exist any lien, security interest or other charge or encumbrance of any kind with respect to the Property, including without limitation, any lien imposed pursuant to Section 107(f) of the Superfund Amendments and Reauthorization Act of 1986 (42 U.S.C. Section 9607(1)) or any similar state statute. Landlord shall have the right to enter upon and inspect the Premises and to conduct tests, monitoring and investigations. If such tests indicate the presence of any environmental condition caused or exacerbated by Tenant or any Tenant Party or arising during Tenant's or any Tenant Party's occupancy, Tenant shall reimburse Landlord for the cost of conducting such tests. The phrase "**environmental condition**" shall mean any adverse condition relating to any Hazardous Materials or the environment, including surface water, groundwater, drinking water supply, land, surface or subsurface strata or the ambient air and includes air, land and water pollutants, noise, vibration, light and odors. In the event of any such environmental condition, Tenant shall promptly notify both the property manager and the Landlord and shall promptly take any and all steps necessary to rectify the same to the satisfaction of the applicable agencies and Landlord, or shall, at Landlord's election, reimburse Landlord, upon demand, for the cost to Landlord of performing work. The reimbursement shall be paid to Landlord in advance of Landlord's performing such work, based upon Landlord's reasonable estimate of the cost thereof; and upon completion of such work by Landlord, Tenant shall pay to Landlord any shortfall promptly after receipt of Landlord's bills therefor or Landlord shall promptly refund to Tenant any excess deposit, as the case may be.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15.2 **Indemnification**. Tenant shall, to the fullest extent permitted by law, indemnify, protect, defend (by counsel acceptable to Landlord) and hold harmless the Indemnitees from and against any and all Losses of or in connection with (1) Tenant and/or any Tenant Party's breach of this Section 15, or (2) the presence of Hazardous Materials on, under or about the Premises or other property as a result (directly or indirectly) of Tenant's and/or any Tenant Party's activities, or failure to act, in connection with the Premises. Landlord reserves the right to retain counsel for its defense, in which case Tenant shall be responsible for the cost of such defense. This indemnity shall include, without limitation, any Losses arising from or in connection with (i) the effects of any contamination or injury to person, property or the environment created or suffered by Tenant, (ii) the cost of any required or necessary repair, cleanup or detoxification, and the preparation and implementation of any closure, monitoring or other required plans, whether such action is required or necessary prior to or following the termination of this Lease, (iii) the cost of demolition or rebuilding any improvements on real property, interest, penalties and damages arising from claims brought by or on behalf of employees of Tenant (with respect to which Tenant waives any right to raise as a defense against Landlord any immunity to which it may be entitled under any industrial or worker's compensation laws), (iv) fees, costs or expenses incurred for the services of attorneys, consultants, contractors, experts, laboratories, and all other costs incurred in connection with the investigation or remediation of such Hazardous Materials or violation of such Environmental Laws, and (v) diminution in the fair market value of the Property including without limitation any reduction in fair market rental value or life expectancy of the Property or the improvements located thereon or the restriction on the use of or adverse impact on the marketing of the Property or any portion thereof. Neither the written consent by Landlord to the presence of Hazardous Materials on, under or about the Premises, nor the strict compliance by Tenant with all Environmental Laws, shall excuse Tenant from Tenant's obligation of indemnification pursuant hereto. Tenant's obligations pursuant to the foregoing indemnity shall survive the expiration or termination of this Lease.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15.3 **Environmental Questionnaire Disclosure**. Simultaneously with the execution of this Lease, Tenant shall complete, execute and deliver to Landlord a Hazardous Materials Survey Form in the form of **Exhibit G** attached hereto ("**Survey Form**"), and Tenant shall certify to Landlord that all information contained in the Survey Form is true and correct. The completed Survey Form shall be deemed incorporated into this Lease for all purposes, and Landlord shall be entitled to rely on the information contained therein. Within ten (10) days following receipt by Tenant of a written request therefor from Landlord (which request shall not be made more often than annually), Tenant shall disclose to Landlord in writing any updates to the Survey Form (including the names and amounts of all Hazardous Materials, or any combination thereof, which were stored, generated, used or disposed of on, under or about the Premises for the twelve (12) month period prior to and after each such request, or which Tenant intends to store, generate, use or dispose of on, under or about the Premises. At Landlord's option, Tenant's disclosure obligation under this Subparagraph shall include the requirement that Tenant update, execute and deliver to Landlord the Survey Form, as the same may be modified by Landlord from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15.4 **Surrender**. In the 90 days prior to the expiration or termination of the Lease, and for up to 90 days after the later to occur of: (i) Tenant's full surrender to Landlord of exclusive possession of the Property; and (ii) the termination of this Lease, Landlord may have an environmental assessment of the Property performed. Tenant shall perform, at its sole cost and expense, any clean-up or remedial work recommended by the consultant performing such assessment which is necessary to remove, mitigate or remediate any Hazardous Materials and/or contamination of the Property caused by the acts or omissions of Tenant or any Tenant's Parties. Tenant's obligations under this Section 15.4 shall survive the expiration or termination of this Lease.

16. **<u>DAMAGE AND DESTRUCTION</u>**. If at any time during the Term all or a portion of the Premises are damaged by a fire or other casualty, Landlord shall notify Tenant within sixty (60) days after Landlord becomes aware of such damage as to the amount of time Landlord reasonably estimates it will take to restore the Premises. If the restoration time is estimated to exceed nine (9) months from the issuance of all permits, subject to extensions for Force Majeure, Landlord may elect to terminate this Lease and if such restoration period is greater than twelve (12) months from the issuance of all permits, then Tenant may, as its sole remedy, terminate this Lease on or before thirty (30) days after receipt of Landlord's notice describing the estimated restoration time that is greater than twelve (12) months. In addition, Landlord, by notice to Tenant within ninety (90) days after the date of the fire or other casualty shall have the right to terminate this lease if: (1) any Mortgagee requires that the insurance proceeds be applied to the payment of the mortgage debt or ground lease, or (2) a material uninsured loss to the Building or Premises occurs. If neither party either elects to terminate this Lease as provided above or if neither party has the right to terminate this Lease as provided above, then, subject to receipt of sufficient insurance proceeds, Landlord shall promptly commence to restore the Premises (excluding Tenant's Alterations), subject to delays arising from the collection of insurance proceeds or from Force Majeure events. Such restoration shall be to substantially the same condition that existed prior to the fire or other casualty, except for modifications required by Applicable Laws. Landlord shall not be liable for any inconvenience to Tenant, or injury to Tenant's business resulting in any way from the fire or other casualty, or the repair thereof. If this Lease is not terminated by Landlord or Tenant in accordance with this section, Tenant shall be responsible for and shall pay to Landlord Tenant's Share of any deductible or retention amount payable under the property insurance for the Building following any such casualty. Tenant at Tenant's expense shall promptly perform, subject to delays arising from the collection of insurance proceeds, or from Force Majeure events, all repairs or restoration not required to be done by Landlord and shall promptly re-enter the Premises and commence doing business in accordance with this Lease. Notwithstanding the foregoing, either party may terminate this Lease if the Premises are damaged during the last year of the Term and Landlord reasonably estimates that it will take more than three (3) months to repair such damage. Provided no Event of Default by Tenant has occurred, Base Rent and Tenant's Share of Operating Expenses and Real Property Taxes shall be abated for the period of repair and restoration commencing on the date of such casualty event in the proportion which the area of the Premises, if any, which is untenantable bears to the total area of the Premises. Such abatement shall be the sole remedy of Tenant, and except as provided herein, Tenant waives any right to terminate this Lease by reason of damage or casualty loss. Tenant agrees that the terms of this Section 16 shall govern any damage or destruction and shall accordingly supersede any contrary statute or rule of law.

17. **<u>CONDEMNATION</u>**. If any part of the Premises or the Building should be taken for any public or quasi- public use under governmental law, ordinance, or regulation, or by right of eminent domain, or by private purchase in lieu thereof (a "**Taking**" or "**Taken**"), and the Taking would materially interfere with or impair Landlord's ownership or operation of the Property (as determined by Landlord), then upon written notice by Landlord this Lease shall terminate and Base Rent and Tenant's Share of Operating Expenses and Real Property Taxes shall be apportioned as of said date. If part of the Premises or the Building shall be Taken and such condemnation does not materially interfere with or impair Landlord's ownership or operation of the Property, and this Lease is not terminated as provided above, the Base Rent and Tenant's Share of Operating Expenses and Real Property Taxes payable hereunder during the unexpired Term shall be reduced to such extent as Landlord reasonably determines under the circumstances. In the event of any such Taking, Landlord shall be entitled to receive the entire price or award from any such Taking without any payment to Tenant, and Tenant hereby assigns to Landlord Tenant's interest, if any, in such award. Tenant shall have the right, to the extent that same shall not diminish Landlord's award, to make a separate claim against the condemning authority (but not Landlord) for such compensation as may be separately awarded or recoverable by Tenant for moving expenses and damage to Tenant's trade fixtures, if a separate award for such items is made to Tenant. If only a part of the Premises is subject to a Taking and this Lease is not terminated, Landlord, with reasonable diligence, will restore the remaining portion of the Premises as nearly as practicable to the condition immediately prior to the Taking. Tenant agrees that the terms of this Section 17 shall govern any Taking and shall accordingly supersede any contrary statute or rule of law. In no event shall any governmental action for the purpose of protecting public safety (e.g., to protect against acts of war, the spread of communicable diseases, or an infestation), including but not limited to, any order requiring businesses to close temporarily, be considered a Taking requiring government compensation or entitling Tenant to abatement of rent or any other remedy.

18. **<u>DEFAULT</u>.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18.1 **Event of Default**. The occurrence of any of the following events shall, at Landlord's option, constitute an "**Event of Default**":

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18.1.1 Tenant shall fail to pay any installment of Base Rent or any other payment required herein when due, and such failure shall continue for a period of five (5) days after written notice to Tenant; provided, however, that Landlord shall only be obligated to provide such written notice to Tenant twice within any calendar year and in the event Tenant fails to timely pay Base Rent or any other sum required herein for a third time during any calendar year, then Landlord shall have no obligation or duty to provide notice of such non-payment to Tenant and the same shall, at Landlord's option, constitute an Event of Default.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18.1.2 Tenant or any guarantor or surety of Tenant's obligations hereunder shall (1) make a general assignment for the benefit of creditors; (2) commence any case, proceeding or other action seeking to have an order for relief entered on its behalf as a debtor or to adjudicate it as bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, liquidation, dissolution or composition of it or its debts or seeking appointment of a receiver, trustee, custodian or other similar official for it or for all or of any substantial part of its property (collectively, a "<u>proceeding for relief</u>"); (3) become the subject of any proceeding for relief which is not dismissed within sixty (60) days of its filing or entry; or (4) die or suffer a legal disability (if Tenant, guarantor, or surety is an individual) or be dissolved or otherwise fail to maintain its legal existence (if Tenant, guarantor or surety is a corporation, partnership or other entity).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18.1.3 Any insurance required to be maintained by Tenant pursuant to this Lease shall be cancelled or terminated or shall expire or shall be reduced or materially changed, except, in each case, as permitted in this Lease.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18.1.4 Tenant shall not occupy or shall vacate the Premises whether or not Tenant is in monetary or other default under this Lease; provided, however, that Tenant's vacating of the Premises shall not constitute an Event of Default if, prior to vacating the Premises, Tenant has made arrangements reasonably acceptable to Landlord to (1) ensure that Tenant's insurance for the Premises will not be voided or cancelled with respect to the Premises as a result of such vacancy, (2) ensure that the Premises are secured and not subject to vandalism, and (3) ensure that the Premises will be properly maintained after such vacation, including, but not limited to, keeping the heating, ventilation and cooling systems maintenance contracts required by this Lease in full force and effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18.1.5 There shall occur any assignment, subleasing or other transfer of Tenant's interest in or with respect to this Lease except as otherwise permitted in this Lease.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18.1.6 Tenant shall fail to discharge any lien placed upon the Premises in violation of this Lease within fifteen (15) days after notice that any such lien or encumbrance is filed against the Premises.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18.1.7 Tenant shall fail to deliver or replenish the Security Amount as required under Article 5.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18.1.8 Tenant shall fail to comply with any provision of this Lease other than those specifically referred to in this Section 18.1, and except as otherwise expressly provided herein, such default shall continue for more than thirty (30) days after Landlord shall have given Tenant written notice of such default, or, if such default cannot be corrected within such thirty (30) day period, if Tenant does not commence to correct such default within said thirty (30) day period and thereafter diligently prosecute the correction of same to completion within a reasonable time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18.2 **Landlord's Remedies**. Upon any Event of Default, Landlord shall have, in addition to any other remedies available to Landlord at law or in equity (which shall be cumulative and nonexclusive), the option to pursue any one or more of the following remedies (which shall be cumulative and nonexclusive) without any notice or demand:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18.2.1 Landlord may terminate this Lease, in which event Tenant shall immediately surrender the Premises to Landlord, and if Tenant fails to do so, Landlord may, without prejudice to any other remedy it may have for possession or arrearages in Rent, enter upon and take possession of the Premises and expel or remove Tenant and any other person who may be occupying the Premises or any part thereof, without being liable for prosecution or any claim of damages therefor; and Landlord may recover from Tenant the following: (a) the worth at the time of award of the unpaid Rent which had been earned at the time of such termination; (b) the worth at the time of award of the amount by which the unpaid Rent which would have been earned after termination until the time of award exceeds the amount of such rental loss that Tenant proves could have been reasonably avoided; (c) the worth at the time of award of the amount by which the unpaid Rent for the balance of the Term after the time of award exceeds the amount of such Rent loss that Tenant proves could be reasonably avoided; (d) any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant's failure to perform its obligations hereunder or which in the ordinary course of things would be likely to result therefrom, including brokerage commissions, advertising expenses, expenses of remodeling any portion of the Premises for a new tenant (whether for the same or a different use), and any special concessions made to obtain a new tenant; plus (e) at Landlord's option, such other amounts in addition to or in lieu of the foregoing as may be permitted from time to time by law. As used in subsection (a) and subsection (b) above, the "**worth at the time of award**" shall be computed by allowing interest at a rate per annum equal to the lesser of (i) the annual "Bank Prime Loan" rate cited in the Federal Reserve Statistical Release Publication G.13(415), published on the first Tuesday of each calendar month (or such other comparable index as Landlord shall reasonably designate if such rate ceases to be published) plus two (2) percentage points, or (ii) the highest rate permitted by Law. As used in subsection (c) above, the "**worth at the time of award**" shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus 1%.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18.2.2 If Landlord does not elect to terminate this Lease on account of any Event of Default by Tenant, Landlord may, from time to time, without terminating this Lease, enforce all of its rights and remedies hereunder, including the right to recover all Rent as it becomes due.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18.2.3 Landlord shall at all times have the rights and remedies (which shall be cumulative with each other and cumulative and in addition to those rights and remedies available under Section 18.2.1 and Section 18.2.2, or any law or other provision hereof), without prior demand or notice except as required by law, to seek any declaratory, injunctive or other equitable relief, and specifically enforce this Lease, or restrain or enjoin a violation or breach of any provision hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18.2.4 Unless Landlord provides Tenant with express notice to the contrary, no re-entry, repossession, repair, maintenance, change, alteration, addition, reletting, appointment of a receiver or other action or omission by Landlord shall (a) be construed as an election by Landlord to terminate this Lease or Tenant's right to possession, or to accept a surrender of the Premises, or (b) operate to release Tenant from any of its obligations hereunder. Tenant waives, for Tenant and for all those claiming by, through or under Tenant, by order or judgment of any court or by any legal process or writ, this Lease or Tenant's right of occupancy of the Premises after any termination hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18.2.5 If Landlord elects to cure such Event of Default by Tenant, Landlord may, at Landlord's option, enter into and upon the Premises and correct the same without being deemed in any manner guilty of trespass, eviction or forcible entry and detainer and without incurring any liability for any damage or interruption of Tenant's business resulting therefrom. If any lien is filed and not cured within the fifteen (15) day time period set forth above, then Landlord may take such action as may be necessary to remove such lien. Tenant agrees to pay Landlord an amount equal to one hundred ten percent (110%) of any expenses which Landlord may incur in thus effecting compliance with Tenant's obligations under this Lease, including without limitation, attorney's fees, together with interest thereon at the Applicable Interest Rate from the date of expenditure.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18.2.6 Exercise by Landlord of any one (1) or more remedies hereunder granted or otherwise available shall not be deemed to be an acceptance of surrender of the Premises and/or a termination of this Lease by Landlord, whether by agreement or by operation of law, it being understood that except as provided in Section 18.2.1 and Section 18.2.2 above, such surrender and/or termination can be effected only by the written agreement of Landlord and Tenant. Any law, usage, or custom to the contrary notwithstanding, Landlord shall have the right at all times to enforce the provisions of this Lease in strict accordance with the terms hereof; and the failure of Landlord at any time to enforce its rights under this Lease strictly in accordance with same shall not be construed as having created a custom in any way or manner contrary to the specific terms, provisions, and covenants of this Lease or as having modified the same. Tenant and Landlord further agree that forbearance or waiver by Landlord to enforce its rights pursuant to this Lease or at law or in equity, shall not be a waiver of Landlord's right to enforce one (1) or more of its rights in connection with any subsequent Event of Default. A receipt by Landlord of rent or other payment with knowledge of the breach of any covenant hereof shall not be deemed a waiver of such breach, and no waiver by Landlord of any provision of this Lease shall be deemed to have been made unless expressed in writing and signed by Landlord. To the greatest extent permitted by law, Tenant waives the service of notice of Landlord's intention to re-enter as provided for in any statute, or to institute legal proceedings to that end, and also waives all right of redemption in case Tenant shall be dispossessed by a judgment or by warrant of any court or judge. The terms "enter," "re-enter," "entry" or "re-entry," as used in this Lease, are not restricted to their technical legal meanings. Any reletting of the Premises shall be on such terms and conditions as Landlord in its sole discretion may determine (including without limitation a term different than the remaining Term, rental concessions, alterations and repair of the Premises, lease of less than the entire Premises to any tenant and leasing any or all other portions of the Building before reletting the Premises). Landlord shall not be liable, nor shall Tenant's obligations hereunder be diminished because of, Landlord's failure to relet the Premises or collect rent due in respect of such reletting.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18.2.7 Even if an eviction moratoria exists, to the extent permitted by Applicable Laws, Landlord shall have the right to continue this Lease in effect and bring an action to collect rent due under this Lease (including an action against any guarantors of Tenant's obligations under this Lease) and otherwise exercise Landlord's rights and remedies under this Lease including, but not limited to, Landlord's right to apply or draw upon any security deposit or letter of credit delivered to Landlord pursuant to this Lease.

19. **<u>ASSIGNMENT AND SUBLETTING</u>.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;19.1 Except as provided in Section 19.4 hereto, Tenant shall not assign, sublet, convey, license or otherwise transfer (any of the foregoing, a "**Transfer**"), whether voluntarily or involuntarily or by operation of law, the Premises or any part thereof without Landlord's prior written approval, which shall not be unreasonably withheld. A "Transfer" shall be deemed to include, without limitation, any of the following: (i) the merger of Tenant with any other entity or the indirect or direct transfer of any controlling or managing ownership or beneficial interest in Tenant (provided an initial public offering of Tenant shall not be deemed an assignment or transfer of the Lease), and (ii) the assignment or transfer of a substantial portion of the assets of Tenant, whether or not located at the Premises. If Tenant desires to undertake a Transfer, Tenant shall give Landlord prior written notice thereof with copies of all related documents and agreements associated with the Transfer, including without limitation, the financial statements of any proposed assignee, subtenant or transferee, at least thirty (30) days prior to the anticipated effective date of the Transfer. Tenant shall pay Landlord's reasonable attorneys' and financial consultant's fees incurred in the review of such documentation whether or not a Transfer is consummated or approval is granted. If Landlord fails to notify Tenant in writing of Landlord's approval or disapproval of any proposed Transfer within fifteen (15) business days of Landlord's receipt of all required documentation, Landlord shall be deemed to have disapproved such Transfer. If Landlord approves of such Transfer, the parties shall enter into a consent agreement in a form reasonably designated by Landlord, and in the case of an assignment, the assignee shall assume in writing, for Landlord's benefit, all of Tenant's obligations hereunder. Any purported Transfer contrary to the provisions hereof shall be void and constitute an Event of Default. This Lease may not be assigned by operation of law. In the event of an assignment of this Lease or subletting of more than 20% of the rentable square footage of the Premises for more than 50% of the remaining Term (excluding unexercised options), Landlord shall have the right to recapture the portion of the Premises that Tenant is proposing to assign or sublease, provided however, that the Landlord shall not have a right of recapture in the event of a permissible Transfer to an Affiliate made in accordance with Section 19.4. If Landlord exercises its right to recapture, this Lease shall automatically be amended (or terminated if the entire Premises is being assigned or sublet) to delete the applicable portion of the Premises effective on the proposed effective date of the Transfer, although Landlord may require Tenant to execute a reasonable amendment or other document reflecting such reduction or termination. Landlord may condition any assignment to an increase in the Letter of Credit to twelve (12) months then Base Rent. If Tenant receives rent or other consideration for any such Transfer in excess of the Rent, or in the case of a sublease of a portion of the Premises, in excess of such Rent that is fairly allocable to such portion, after appropriate adjustments to assure that all other payments required hereunder are appropriately taken into account, Tenant shall pay Landlord one hundred percent (100%) of the difference between each such payment of rent or other consideration and the Rent required hereunder, after Tenant's recovery of its actual and reasonable attorney's fees, brokerage commissions and improvement allowances or improvement costs incurred directly in connection with such assignment or subletting, determined on a straight-line basis, provided however, that the Landlord shall not have a right of recapture in the event of a permissible Transfer to an Affiliate made in accordance with Section 19.4. Tenant shall continue to be liable as a principal and not as a guarantor or surety to the same extent as though no assignment had been made, and in no event shall any assignment or other Transfer release or relieve Tenant from any obligation under this Lease. Tenant shall not collaterally assign, mortgage, pledge, hypothecate or otherwise encumber this Lease or any of Tenant's rights hereunder without the prior written consent of Landlord, which consent Landlord may withhold in its sole discretion.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;19.2 Notwithstanding anything to the contrary contained in this Section 19, neither Tenant nor any other person having a right to possess, use, or occupy (for convenience, collectively referred to in this subsection as "**Use**") the Premises shall enter into any lease, sublease, license, concession or other agreement for Use of all or any portion of the Premises which provides for rental or other payment for such Use based, in whole or in part, on the net income or profits derived by any person that leases, possesses, uses, or occupies all or any portion of the Premises (other than an amount based on a fixed percentage or percentages of receipts or sales), and any such purported lease, sublease, license, concession or other agreement shall be absolutely void and ineffective as a Transfer of any right or interest in the Use of all or any part of the Premises.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;19.3 Tenant shall not mortgage, pledge or otherwise encumber its interest in this Lease or in the Premises.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;19.4 Notwithstanding anything in this Lease to the contrary, Landlord hereby consents to a Transfer of the Premises, including a sublease of the Premises or an assignment by Tenant of Tenant's interest under this Lease to any entity which controls, is controlled by, or is under common control with Tenant, to any entity resulting from a merger or consolidation transaction with Tenant, or to any entity which acquires all or substantially all of the assets or equity interests of Tenant (any one of such entities being hereinafter referred to as an "**Affiliate**"), provided that (i) in the case of an assignment, the tangible net worth of the Affiliate is equal to or greater than the greater of Tenant's tangible net worth on the Effective Date of this Lease and Tenant's tangible net worth immediately prior to the effective date of the assignment, (ii) in no event shall Tenant be released from liability under this Lease, (iii) Tenant shall give written notice to Landlord of the proposed assignment or sublease reasonably in advance of the consummation thereof, and (iv) in the case of an assignment, the Affiliate shall unconditionally assume in a writing reasonably acceptable to Landlord all of Tenant's obligations under the Lease effective upon the consummation of the assignment. As used in the immediately preceding sentence, the term "<u>control</u>" means, with respect to a corporation, the right to the exercise, directly or indirectly, of more than 50% of the voting rights attributable to the shares of the controlled corporation, and, with respect to any entity that is not a corporation, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of the controlled entity. Notwithstanding the foregoing, such transfer must not have been entered into, in whole or in part, as a subterfuge to avoid the obligations and restrictions set forth in this Lease.

20. **<u>ESTOPPEL, ATTORNMENT AND SUBORDINATION</u>.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;20.1 **Estoppel**. Within ten (10) business days after written request by Landlord, Tenant shall execute and deliver a commercially reasonable certificate to those parties as are reasonably requested by Landlord (including a Mortgagee or prospective purchaser). Without limitation, such estoppel certificate may include a certification as to the status of this Lease, the knowledge of the existence of any Event of Defaults and the amount of Rent that is due and payable. Tenant's failure to deliver said statement in such time period shall be an Event of Default hereunder and shall be conclusive upon Tenant that (1) this Lease is in full force and effect, without modification except as may be represented by Landlord; (2) there are no uncured Event of Defaults in Landlord's performance and Tenant has no right of offset, counterclaim or deduction against Rent hereunder; and (3) no more than one month's Base Rent has been paid in advance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;20.2 **Subordination**. This Lease shall unconditionally be and at all times remain subject and subordinate to all ground leases, master leases and all mortgages and deeds of trust which now or hereafter affect the Premises, the Property or Landlord's interest therein (including any modifications, renewals or extensions thereof and all amendments thereto) (collectively, referred to as a "**Mortgage**"), all without the necessity of Tenant's executing further instruments to effect such subordination. The party having the benefit of a Mortgage shall be referred to as a "**Mortgagee**". If requested, Tenant shall execute and deliver to Landlord within ten (10) business days after Landlord's request whatever documentation that may reasonably be required to further effect the provisions of this paragraph including a Subordination, Nondisturbance and Attornment Agreement ("**SNDA**") in the form reasonably required by the applicable Mortgagee. Notwithstanding anything contained in this Lease to the contrary, (1) the obligation for commissions under Section 27.19 shall not be binding on, and will not be enforceable against, any of Owner's Mortgagees, and (2) such commission obligation shall be unconditionally subordinate to the lien of any Mortgage, and any commissions otherwise payable under this Lease shall not be due or payable after an event of default under any such mortgage or other security interest. Notwithstanding anything to the contrary contained in this Section 20.2, the holder of any such Mortgage may at any time subordinate its Mortgage to this Lease, without Tenant's consent, by notice in writing to Tenant, and thereupon this Lease shall be deemed prior to such Mortgage without regard to their respective dates of executing, delivery or recording and in the event such Mortgagee shall have the same rights with respect to this Lease as though this Lease has been executed prior to the executing, delivery and recording of such Mortgage and had been assigned to such Mortgagee. Following the full execution and unconditional delivery of this Lease, Landlord shall use commercially reasonable efforts to cause Landlord's lender that holds a first mortgage or first deed of trust with respect to the Building to execute a SNDA (provided that failure to obtain any such SNDA shall not be a default by Landlord nor be deemed a condition precedent to the effectiveness of this Lease). Any costs or fees incurred in connection with such request shall be paid for by Tenant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;20.3 **Attornment**. Tenant hereby agrees that Tenant will recognize as its landlord under this Lease and shall attorn to any person succeeding to the interest of Landlord in respect of the land and the buildings governed by this Lease upon any foreclosure of any Mortgage upon such land or buildings or upon the execution of any deed in lieu of foreclosure in respect to such Mortgage. Tenant shall pay all rental payments required to be made pursuant to the terms of this Lease for the duration of the term of this Lease. Tenant's attornment shall be effective and self- operative without the execution of any further instrument immediately upon Mortgagee's succeeding Landlord's interest in this Lease and giving written notice thereof to Tenant. If requested, Tenant shall execute and deliver an instrument or instruments confirming its attornment as provided for herein; provided, however, that no such Mortgagee or successor- in-interest shall be bound by any payment of Base Rent for more than one (1) month in advance, or any amendment or modification of this Lease made without the express written consent of such Mortgagee where such consent is required under applicable loan documents. Mortgagee shall not be liable for, nor subject to, any offsets or defenses which Tenant may have by reason of any act or omission of Landlord under this Lease, nor for the return of any sums which Tenant may have paid to Landlord under this Lease as and for security deposits, advance rentals or otherwise, except to the extent that such sums are actually delivered by Landlord to Mortgagee. If Mortgagee, by succeeding to the interest of Landlord under this Lease, should become obligated to perform the covenants of Landlord hereunder, then, upon, any further transfer of Landlord's interest by Mortgagee, all such obligations shall terminate as to Mortgagee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;20.4 **Mortgagee Protection**. Tenant agrees to give any Mortgagee of any Mortgage secured by the Premises or the Property, by registered or certified mail or nationally recognized overnight delivery service, a copy of any notice of default served upon the Landlord by Tenant concurrently with delivery to Landlord, provided that, prior to such notice, Tenant has been notified in writing (by way of service on Tenant of a copy of assignment of rents and leases or otherwise) of the address of such Mortgagee. Tenant further agrees that if Landlord shall have failed to cure such default within thirty (30) days after such notice to Landlord (or if such default cannot be cured or corrected within that time, then such additional time as may be necessary if Landlord has commenced within such thirty (30) day period and is diligently pursuing the remedies or steps necessary to cure or correct such default), then the Mortgagee shall have an additional sixty (60) days within which to cure or correct such default (or if such default cannot be cured or corrected within that time, then such additional time as may be necessary if such Mortgagee has commenced within such sixty (60) day period and is diligently pursuing the remedies or steps necessary to cure or correct such default). Notwithstanding the foregoing, in no event shall any Mortgagee have any obligation to cure any default of the Landlord.

21. **<u>LIMITATION OF LIABILITY</u>**. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS LEASE, THE LIABILITY OF LANDLORD (AND OF ANY SUCCESSOR LANDLORD) SHALL BE LIMITED TO THE LESSER OF (A) THE INTEREST OF LANDLORD IN THE BUILDING, OR (B) THE EQUITY INTEREST LANDLORD WOULD HAVE IN THE BUILDING IF THE BUILDING WERE ENCUMBERED BY THIRD PARTY DEBT IN AN AMOUNT EQUAL TO 70% OF THE VALUE OF THE BUILDING. TENANT SHALL LOOK SOLELY TO LANDLORD'S INTEREST IN THE BUILDING FOR THE RECOVERY OF ANY JUDGMENT OR AWARD AGAINST LANDLORD OR ANY LANDLORD INDEMNITEES. NEITHER LANDLORD NOR ANY LANDLORD INDEMNITEES SHALL BE PERSONALLY LIABLE FOR ANY JUDGMENT OR DEFICIENCY, AND IN NO EVENT SHALL LANDLORD OR ANY LANDLORD INDEMNITEES OR MORTGAGEES BE LIABLE TO TENANT FOR LOST PROFIT, DAMAGE TO OR LOSS OF BUSINESS OR ANY FORM OF SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGE. BEFORE FILING SUIT FOR AN ALLEGED DEFAULT BY LANDLORD, TENANT SHALL GIVE LANDLORD AND THE MORTGAGEE(S) WHOM TENANT HAS BEEN NOTIFIED HOLD MORTGAGES, NOTICE AND REASONABLE TIME TO CURE THE ALLEGED DEFAULT. WHENEVER LANDLORD TRANSFERS ITS INTEREST, LANDLORD SHALL BE AUTOMATICALLY RELEASED FROM FURTHER PERFORMANCE UNDER THIS LEASE AND FROM ALL FURTHER LIABILITIES AND EXPENSES HEREUNDER AND THE TRANSFEREE OF LANDLORD'S INTEREST SHALL ASSUME ALL LIABILITIES AND OBLIGATIONS OF LANDLORD HEREUNDER FROM THE DATE OF SUCH TRANSFER.

22. Intentionally omitted.

23. **<u>HOLDING OVER</u>**. In the event that the Tenant does not surrender all of the Premises to Landlord upon the expiration or earlier termination of this Lease, Tenant shall pay, as a use and occupation charge during such "hold- over" period, a monthly amount equal to the sum of (i) two times the Base Rent being due and payable during the last month of the Term, plus (ii) one-twelfth of the Additional Rent being due and payable during the last month of the Term, and shall otherwise be on all the other terms and conditions of this Lease. This Section shall not be construed as Landlord's permission for Tenant to hold over. Acceptance of Rent by Landlord following expiration or termination shall not constitute a renewal of this Lease or extension of the Term except as specifically set forth above. If Tenant fails to surrender the Premises upon expiration or earlier termination of this Lease, Tenant shall, to the fullest extent permitted by law, indemnify and hold Landlord harmless from and against all Losses resulting from or arising out of Tenant's failure to surrender the Premises and continued use, occupancy and possession thereof, including, but not limited to, any amounts required to be paid to any tenant or prospective tenant who was to have occupied the Premises after the expiration or earlier termination of this Lease and any related attorneys' fees and brokerage commissions.

24. **<u>NOTICES</u>**. All demands, approvals, consents or notices (collectively referred to as a "**notice**") shall be in writing and delivered by hand or sent by registered, express, or certified mail, with return receipt requested or with delivery confirmation requested from the U.S. postal service, or sent by overnight or same day courier service at the party's respective Notice Address(es) set forth in Section 1; provided, however, notices sent by Landlord regarding general Building operational matters may be sent via e-mail to the e-mail address provided by Tenant to Landlord for such purpose. In addition, if the Building is closed (whether due to emergency, governmental order or any other reason), then any notice address at the Building shall not be deemed a required notice address during such closure, and, unless Tenant has provided an alternative valid notice address to Landlord for use during such closure, any notices sent during such closure may be sent via e-mail or in any other practical manner reasonably designed to ensure receipt by the intended recipient. Each notice shall be deemed to have been received on the earlier to occur of actual delivery or the date on which delivery is refused, or, if Tenant has vacated the Premises or any other Notice Address of Tenant without providing a new Notice Address, 3 days after notice is deposited in the U.S. mail or with a courier service in the manner described above. Either party may, at any time, change its Notice Address (other than to a post office box address) by giving the other party written notice of the new address.

25. **<u>SURRENDER</u>**. Upon the expiration or earlier termination of this Lease, Tenant shall repair any damage to and restore the condition of the Premises in accordance with Section 13.2. Tenant shall also remove all of Tenant's Property and shall repair all damage to the Premises, the Building, the Common Area or the Property caused by the installation or removal of Tenant's Property. In no event shall Tenant remove from the Building any mechanical or electrical systems, including without limitation, any power wiring or power panels, lighting or lighting fixtures, wall coverings, drapes, blinds or other window coverings, carpets or other floor coverings, heaters, air conditioners or any other heating and air conditioning equipment, fencing or security gates, load levelers, dock lights, dock locks or dock seals, or any wiring or any other aspect of any systems within the Premises, unless Landlord specifically permits or requires such removal in writing. Tenant shall surrender the Premises, together with all keys and security codes, to Landlord broom clean and in as good a condition as when received and generally in the condition described on **Exhibit H** attached hereto, ordinary wear and tear and damage by fire or casualty excepted. Conditions existing because of Tenant's failure to perform maintenance, repairs or replacements shall not be deemed "reasonable wear and tear". If Tenant fails to remove any of Tenant's Property, or to restore the Premises to the required condition, within 5 days after termination of this Lease or Tenant's right to possession, Landlord, at Tenant's cost and expense, shall be entitled (but not obligated) to remove and store Tenant's Property and/or perform such restoration of the Premises. Landlord shall not be responsible for the value, preservation or safekeeping of Tenant's Property. Tenant shall pay Landlord, upon demand, the expenses and storage charges incurred. If Tenant fails to remove Tenant's Property from the Premises or storage, within 30 days after notice, Landlord may deem all or any part of Tenant's Property to be abandoned and, at Landlord's option, title to Tenant's Property shall vest in Landlord or Landlord may dispose of Tenant's Property in any manner Landlord deems appropriate.

26. **<u>STATE SPECIFIC ENVIRONMENTAL PROVISIONS</u>**. In addition to Tenant's obligations under Section 15.1 of this Lease, Tenant shall also be responsible for the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;26.1 Tenant hereby represents, warrants and covenants with Landlord that Tenant's North American Industrial Classification System Number ("**NAICS No.**") is 425120 and that throughout the Term, Tenant's use and occupancy of the Premises shall not be subject to Industrial Site Recovery Act, N.J.S.A. 13:1K-6 et seq., as amended ("**ISRA**"). Tenant shall, at Tenant's own expense, provide to Landlord, within no more than thirty (30) days prior to, but in no event later than, the expiration or sooner termination of this Lease, or upon Landlord's request, an affidavit in form and substance reasonably acceptable to Landlord, which establishes to Landlord's satisfaction that ISRA does not apply to Tenant's operations or any closing of operations or other transaction, transfer or sale. If Tenant's use of the Premises is subject to ISRA, or if there is any release, leak, spill, discharge, disposal or other contamination in, on, under, or about, or migrating from or onto the Premises during the Term for which Tenant is the cause, Tenant shall, at Tenant's sole expense, comply with ISRA, and fully investigate and remediate the Premises in compliance with environmental laws, prior to the expiration or sooner termination of this Lease, which actions shall be evidenced by the delivery to Landlord prior to the expiration or sooner termination of this Lease of an affidavit with respect thereto in form and substance reasonably acceptable to Landlord and an unconditional Response Action Outcome ("**RAO**"). To the extent possible, the RAO shall not include, reference or rely upon, and Tenant shall not allow the Premises to be subject to, any use restrictions, remedial action permit groundwater classification exception area, well restriction area or engineering or institutional control. Tenant shall, at Tenant's expense, repair any damage to the Premises for which Tenant is the cause prior to the expiration or termination of this Lease. All Licensed Site Remediation Professionals ("**LSRP**") and consultants retained or used by Tenant shall be approved in writing in advance by Landlord, which approval shall not be unreasonably withheld, conditioned or delayed. Notwithstanding anything to the contrary set forth in this Lease, in the event, pursuant to this Lease, Tenant is required to undertake any sampling, assessment, investigation or remediation with respect to the Premises, then, if Tenant fails in any such regard and such failure constitutes an Event of Default, at Landlord's discretion, Landlord shall have the right, upon notice to Tenant, from time to time, to perform such activities at Tenant's expense, and all reasonable sums incurred by Landlord shall be paid by Tenant, as additional Rent, upon demand.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;26.2 Promptly following receipt by Tenant or any LSRP, consultant or contractor retained by Tenant, Tenant shall deliver to Landlord all environmental documentation concerning the Premises and Tenant's activities at the Premises including, without limitation, all plans, reports, correspondence and submissions to or from an LSRP or any governmental agency, as the case may be.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;26.3 Tenant shall be solely responsible for all penalties, fines or administrative orders imposed by the New Jersey Department of Environmental Protection and required in connection with its occupancy of the Premises and shall, to the fullest extent permitted by law, indemnify, defend, and hold Landlord harmless from same.

27. **<u>MISCELLANEOUS</u>.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;27.1 **Entire Agreement**. This Lease, Addenda, Exhibits and Schedules set forth all the agreements between Landlord and Tenant concerning the Premises; and there are no agreements either oral or written other than as set forth herein. This Lease may be modified only by a written agreement signed by an authorized representative of Landlord and Tenant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;27.2 **Time of Essence; Business Days**. Time is of the essence with respect to Tenant's exercise of any expansion, renewal or extension rights granted to Tenant. The expiration of the Term, whether by lapse of time, termination or otherwise, shall not relieve either party of any obligations which accrued prior to or which may continue to accrue after the expiration or termination of this Lease. For all purposes herein, a "business day" shall mean Monday through Friday of each week, exclusive of New Year's Day, Presidents Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day ("**Holidays**"). Landlord may designate additional Holidays that are commonly recognized by other industrial buildings in the area where the Building is located.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;27.3 **Attorneys' Fees; Jury Trial Waiver**. Tenant shall pay all reasonable attorneys' fees and other fees and costs that Landlord incurs in interpreting or enforcing this Lease or otherwise protecting its rights hereunder (a) where Tenant has failed to pay Rent when due, (b) where an Event of Default has occurred or (c) in any bankruptcy case, assignment for the benefit of creditors, or other insolvency, liquidation or reorganization proceeding involving Tenant or this Lease. THE PARTIES WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY LITIGATION ARISING OUT OF OR RELATING TO THIS LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT, TENANT'S USE OR OCCUPANCY OF THE PREMISES, AND/OR ANY CLAIM FOR INJURY OR DAMAGE OR ANY EMERGENCY OR STATUTORY REMEDY. IF LANDLORD COMMENCES AGAINST TENANT ANY SUMMARY PROCEEDING OR OTHER ACTION TO RECOVER POSSESSION OF THE PREMISES OR TO RECOVER ANY RENT, TENANT SHALL NOT INTERPOSE ANY COUNTERCLAIM OF WHATEVER NATURE OR DESCRIPTION IN ANY SUCH PROCEEDING OR ACTION (OTHER THAN COMPULSORY COUNTERCLAIMS). TENANT HEREBY WAIVES ANY CLAIM FOR DAMAGES (WHETHER ACTUAL, COMPENSATORY, CONSEQUENTIAL, SPECIAL OR PUNITIVE) IN ANY ACTION OR PROCEEDING (WHETHER JUDICIAL OR AN ARBITRATION) RELATING TO LANDLORD'S WITHHOLDING, DELAYING OR CONDITIONING ANY CONSENT OR APPROVAL OR THE REASONABLENESS OF ANY SUCH WITHHOLDING, DELAY OR CONDITION, TENANT'S SOLE REMEDY THEREFOR BEING AN ACTION OR PROCEEDING FOR SPECIFIC PERFORMANCE, INJUNCTION OR DECLARATORY JUDGMENT.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;27.4 **Severability**. If any provision of this Lease or the application of any such provision shall be held by a court of competent jurisdiction to be invalid, void or unenforceable to any extent, the remaining provisions of this Lease and the application thereof shall remain in full force and effect and shall not be affected, impaired or invalidated.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;27.5 **Law**. This Lease shall be construed and enforced in accordance with the laws of the state in which the Premises are located, and Landlord and Tenant hereby irrevocably consent to the jurisdiction and proper venue of such state.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;27.6 **No Option**. Submission of this Lease to Tenant for examination or negotiation does not constitute an option to lease, offer to lease or a reservation of, or option for, the Premises; and this document shall become effective and binding only upon the execution and delivery hereof by Landlord and Tenant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;27.7 **Successors and Assigns**. This Lease shall be binding upon and inure to the benefit of the successors and assigns of Landlord and, subject to compliance with the terms of Section 19, Tenant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;27.8 **Third Party Beneficiaries**. Nothing herein is intended to create any third party beneficiary.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;27.9 **Memorandum of Lease**. Tenant shall not record this Lease or a short form memorandum hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;27.10 **Agency, Partnership or Joint Venture**. Nothing contained herein nor any acts of the parties hereto shall be deemed or construed by the parties hereto, nor by any third party, as creating the relationship of principal and agent or of partnership or of joint venture by the parties hereto or any relationship other than the relationship of landlord and tenant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;27.11 **Merger**. The voluntary or other surrender of this Lease by Tenant or a mutual cancellation thereof or a termination by Landlord shall not work a merger and shall, at the option of Landlord, terminate all or any existing subtenancies or may, at the option of Landlord, operate as an assignment to Landlord of any or all of such subtenancies.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;27.12 **Headings**. Section headings have been inserted solely as a matter of convenience and are not intended to define or limit the scope of any of the provisions contained therein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;27.13 **Security Measures**. Tenant hereby acknowledges that Landlord shall have no obligation to provide a guard service or other security measures whatsoever.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;27.14 **No Press Release**. Any press release or other similar public statement regarding Tenant's occupancy of the Premises or this Lease shall require the prior written approval of Landlord.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;27.15 **Signs**. All signs and graphics of every kind visible in or from public view or corridors, the Common Areas or the exterior of the Premises (whether located inside or outside of the Premises) shall be subject to Landlord's prior written approval (not to be unreasonably withheld with respect to signage within the Premises) and shall be subject to the CC&Rs and any applicable governmental laws, ordinances, and regulations and in compliance with Landlord's signage program (if any). The installation of any sign on the Premises by or for Tenant shall be subject to the provisions of Section 13 (Alterations). Tenant, at Tenant's sole cost and expense, shall remove all such signs and graphics prior to the termination of this Lease. Such installations and removals shall be made in such manner as to avoid injury or defacement of the Premises; and Tenant shall repair any injury or defacement, including without limitation, discoloration caused by such installation or removal. Unless otherwise expressly agreed herein, Landlord reserves all rights to the use of the flagpoles on the Property and the roof of the Building, including the right to install advertising signs on the Building, including the roof, which do not unreasonably interfere with the conduct of Tenant's business. Landlord shall be entitled to all revenues from such advertising signs. Subject to Landlord's approval of the content and construction of the signs, Tenant shall be permitted to install signage on the existing monument on the Property.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;27.16 **Landlord's Lien/Security Interest**. Tenant hereby grants Landlord a security interest, and this Lease constitutes a security agreement, within the meaning of and pursuant to the Uniform Commercial Code of the state in which the Premises are situated as to all of Tenant's Property (except merchandise sold in the ordinary course of business) as security for all of Tenant's obligations hereunder, including, without limitation, the obligation to pay rent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;27.17 **Waiver**. No waiver of any default or breach hereunder shall be implied from any omission to take action on account thereof, notwithstanding any custom and practice or course of dealing. No waiver by either party of any provision under this Lease shall be effective unless in writing and signed by such party. No waiver shall affect any default other than the default specified in the waiver and then such waiver shall be operative only for the time and to the extent therein stated. Waivers of any covenant shall not be construed as a waiver of any subsequent breach of the same.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;27.18 **Financial Statements**. Tenant shall provide, and cause each Guarantor, if applicable, to provide to any Mortgagee, any purchaser of the Building and/or the Property or Landlord, within ten (10) business days after request, a current, accurate, audited financial statement for Tenant and Tenant's business (and Guarantor and Guarantor's business, if applicable) and financial statements for Tenant and Tenant's business (and Guarantor and Guarantor's business, if applicable) for each of the three (3) years prior to the current financial statement year prepared under generally accepted accounting principles consistently applied and certified by an officer of the Tenant (or Guarantor, if applicable) as being true and correct. Tenant shall also provide, and cause each Guarantor, if applicable, to provide, within said ten (10)-day period such other financial information or tax returns as may be reasonably required by Landlord, any purchaser of the Building and/or the Property or any Mortgagee of either. Tenant hereby authorizes Landlord, and shall cause each Guarantor, if applicable, to authorize Landlord to obtain one (1) or more credit reports on Tenant (and Guarantor, if applicable) at any time, and shall execute such further authorizations as Landlord may reasonably require in order to obtain a credit report.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;27.19 **Brokerage Commission**. Landlord shall pay a brokerage commission to Landlord's Broker specified in the Basic Lease Information in accordance with a separate agreement between Landlord and Landlord's Broker. Landlord shall have no further or separate obligation for payment of any commissions or fees to any other broker, agent or finder. Tenant represents and warrants to Landlord that Tenant's sole contact with Landlord or with the Premises in connection with this transaction has been directly with Landlord, Landlord's Broker and Tenant's Broker specified in the Basic Lease Information, and that no other broker, agent or finder can properly claim a right to a commission or a finder's fee based upon contacts between the claimant and Tenant. Any commissions or fees payable to Tenant's Broker with respect to this transaction shall be paid by Landlord's Broker or Landlord. Subject to the foregoing, Tenant agrees, to the fullest extent permitted by law, to indemnify and hold Landlord harmless from any Losses in connection with a claim by any person for a real estate broker's commission, finder's fee or other compensation based upon any statement, representation or agreement of Tenant, and Landlord agrees, to the fullest extent permitted by law, to indemnify and hold Tenant harmless from any such Losses based upon any statement, representation or agreement of Landlord.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;27.20 **Authorization**. If Tenant signs as a corporation, partnership, limited liability company, trust or other legal entity each of the persons executing this Lease on behalf of Tenant represents and warrants that Tenant has been and is qualified to do business in the state in which the Premises is located, that the entity has full right and authority to enter into this Lease, and that all persons signing on behalf of the entity were authorized to do so by appropriate actions. Tenant agrees to deliver to Landlord, simultaneously with the delivery of this Lease, a corporate resolution, proof of due authorization by partners, opinion of counsel or other appropriate documentation reasonably acceptable to Landlord evidencing the due authorization of Tenant to enter into this Lease.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;27.21 **Joint and Several**. If Tenant consists of more than one person, the obligation of all such persons shall be joint and several. In such event, requests or demands from any one person or entity comprising Tenant shall be deemed to have been made by all such persons or entities, and notices to any one person or entity shall be deemed to have been given to all persons and entities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;27.22 **Covenants and Conditions**. Each provision to be performed by Tenant hereunder shall be deemed to be both a covenant and a condition.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;27.23 **Consents**. Except as otherwise provided elsewhere in this Lease, Landlord's actual reasonable costs and expenses (including, but not limited to, architects', attorneys', engineers' and other consultants' fees) incurred in the consideration of, or response to, a request by Tenant for any Landlord consent, including but not limited to, consents to an assignment, a subletting or the presence or use of a Hazardous Material, shall be paid by Tenant within twenty (20) days after receipt of an invoice and supporting documentation therefor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;27.24 **Force Majeure**. "**Force Majeure**" as used in this Lease means delays resulting from causes beyond the reasonable control of Landlord or Tenant, including, without limitation, any delay caused by any action, inaction, order, ruling, moratorium, regulation, statute, condition or other decision of any private party or governmental agency having jurisdiction over any portion of the Property, over the construction anticipated to occur thereon or over any uses thereof, or by delays in inspections or in issuing approvals by private parties or permits by governmental agencies, or by fire, flood, inclement weather, strikes, lockouts or other labor or industrial disturbance, failure or inability to secure materials, supplies or labor through ordinary sources, earthquake, acts of war or other natural disaster, epidemics, pandemics or other outbreaks of virus or contagious disease or other similar health-related occurrence, or any cause whatsoever beyond the reasonable control (excluding financial inability) of the Landlord or Tenant or any of its contractors or other representatives, whether or not similar to any of the causes hereinabove stated. Except for Tenant's obligation to pay Rent and other charges due under this Lease, the parties shall not be held responsible for delays in the performance of their obligations hereunder when caused by a Force Majeure

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;27.25 **OFAC**. Tenant hereby represents, warrants and certifies that: (i) neither it nor its officers, directors, or controlling owners is acting, directly or indirectly, for or on behalf of any person, group, entity, or nation named by any Executive Order, the United States Department of Justice, or the United States Treasury Department as a terrorist, "Specifically Designated National or Blocked Person," or other banned or blocked person, entity, nation, or transaction pursuant to any law, order, rule or regulation that is enforced or administered by the Office of Foreign Assets Control ("**SDN**"); (ii) neither it nor its officers, directors or controlling owners is engaged in this transaction, directly or indirectly on behalf of, or instigating or facilitating this transaction, directly or indirectly on behalf of, any such person, group, entity, or nation; and (iii) neither it nor its officers, directors or controlling owners is in violation of Presidential Executive Order 13224, the USA PATRIOT Act, (Public Law 107-56), the Bank Secrecy Act, the Money Laundering Control Act or any regulations promulgated pursuant thereto. If the foregoing representations are untrue at any time during the Lease Term, an Event of Default will be deemed to have occurred, without the necessity of notice to Tenant. The provisions of this Paragraph shall survive the expiration or earlier termination of this Lease.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;27.26 **Roof Use by Landlord**. Landlord reserves the right to use the surface of the roof in any manner which does not materially interfere with Tenant's use of the Premises including, but not limited to, installation of telecommunication equipment, solar equipment or any other uses. Landlord shall be responsible for initial payment of all costs of installation and additional roof maintenance or repair costs directly or indirectly attributable to the installation of any system, improvement or equipment that Landlord installs or places on the roof, which may be includable as Operating Expenses to the extent permitted pursuant to Section 8.1.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;27.27 **Parking**. Tenant shall have the right to use up to twenty-four (24) car parking spaces available at the Property as shown in yellow on **Exhibit J** attached hereto. Tenant agrees not to overburden the parking facilities and agrees to cooperate with Landlord and other tenants in the use of parking facilities. Tenant shall comply with all parking regulations promulgated by Landlord from time to time for the orderly use of the vehicle parking areas, including without limitation the following: Parking shall be limited to automobiles, passenger or equivalent vans, motorcycles, light four wheel pickup trucks, (in designated areas) tractor trailers and (in designated areas) bicycles. No vehicles, including trucks, may be left in the parking lot overnight without Landlord's prior written approval (provided trailers may be kept in the trailer parking spaces). With respect to commercial vehicles registered in Tenant's name only, Tenant may seek consent from Landlord for limited overnight parking. No washing, waxing, cleaning, maintenance or servicing of any vehicle in any area on the Property. No trucks shall enter the Property through the Randolph Road entrance. Parked vehicles shall not be used for vending or any other business or other activity while parked in the parking areas. Vehicles shall be parked only in striped parking spaces, except for loading and unloading, which shall occur solely in zones marked for such purpose, and be so conducted as to not unreasonably interfere with traffic flow within the Property or with loading and unloading areas of other tenants. Tractor trailers shall be parked in areas designated for tractor trailer parking. Employee and tenant vehicles shall not be parked in spaces marked for visitor parking or other specific use. All vehicles entering or parking in the parking areas shall do so at owner's sole risk and Landlord assumes no responsibility for any damage, destruction, vandalism or theft. Tenant shall cooperate with Landlord in any measures implemented by Landlord to control abuse of the parking areas, including without limitation access control programs, tenant and guest vehicle identification programs, and validated parking programs, provided that no such validated parking program shall result in Tenant being charged for spaces to which it has a right to free use under its Lease. Each vehicle owner shall promptly respond to any sounding vehicle alarm or horn, and failure to do so may result in temporary or permanent exclusion of such vehicle from the parking areas. Any vehicle which violates the parking regulations may be cited, towed at the expense of the owner, temporarily or permanently excluded from the parking areas, or subject to other lawful consequence. All vehicles shall follow Landlord's designated points of entrance and exit and turn-arounds and circulation routes for the Property.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;27.28 **Common Area**. Tenant may, subject to rules prescribed by Landlord, use the following areas on the Land or within the Building ("**Building Common Area**") that are designated by Landlord to be used in common with Landlord and/or other tenants of the Building: loading docks, doors, hallways, stairwells, entranceways, restroom facilities, refuse facilities, landscaped areas, driveways necessary for access to the Premises, parking spaces and other common facilities located in the Building and/or on the Land designated by Landlord from time to time for the common use of all tenants of the Building. The Building Common Area is sometimes referred to herein as the "**Common Area**". Landlord shall not be responsible for non-compliance by any other tenant or occupant of the Building with, or Landlord's failure to enforce, any of the Rules or Regulations or CC&Rs or any other terms or provisions of such tenant's or occupant's lease. Tenant shall promptly comply with the reasonable requirements of any board of fire insurance underwriters or other similar body now or hereafter constituted. Under no circumstances shall the right herein granted to use the Common Area be deemed to include the right to store any property, temporarily or permanently, in the Common Area. In the event that any unauthorized storage shall occur, then Landlord shall have the right, without notice, in addition to such other rights and remedies that it may have, to remove the property and charge the cost to Tenant, which cost shall be immediately payable upon demand by Landlord. Landlord may change the shape and size of the Common Areas, including the addition of, elimination of or change to any improvements located in the Common Areas, so long as such change does not have a material adverse impact on Tenant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;27.29 **Counterparts**. This Lease may be executed in counterparts and shall constitute an agreement binding on all parties notwithstanding that all parties are not signatories to the original or the same counterpart provided that all parties are furnished a copy or copies thereof reflecting the signature of all parties. Transmission of a facsimile or by email of a pdf copy of the signed counterpart of the Lease shall be deemed the equivalent of the delivery of the original, and any party so delivering a facsimile or pdf copy of the signed counterpart of the Lease by email transmission shall in all events deliver to the other party an original signature promptly upon request.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;27.30 **Light and Air**. This Lease does not grant any rights to light or air over or about the Building. Landlord excepts and reserves exclusively to itself any and all rights not specifically granted to Tenant under this Lease.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;27.31 **Auctions**. Tenant shall not conduct, nor permit to be conducted, either voluntarily or involuntarily, any auction upon the Premises or the Common Areas without first having obtained Landlord's prior written consent, which Landlord may withhold in its sole discretion. Notwithstanding anything to the contrary in this Lease, Landlord shall not be obligated to exercise any standard of reasonableness in determining whether to grant such consent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;27.32 **Unrelated Business Income**. If Landlord is advised by its counsel at any time that any part of the payments by Tenant to Landlord under this Lease may be characterized as unrelated business income under the United States Internal Revenue Code and its regulations, then Tenant shall enter into any amendment proposed by Landlord to avoid such income, so long as the amendment does not require Tenant to make more payments or accept fewer services from Landlord, than this Lease provides.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;27.33 **Waiver of Redemption of Tenant**. Tenant hereby waives, for Tenant and for all those claiming under Tenant, all rights now or hereafter existing to redeem by order or judgment of any court or by any legal process or writ, Tenant's right of occupancy of the Premises or Property after any termination of this Lease.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;27.34 **Independent Covenants**. This Lease shall be construed as though the covenants herein between Landlord and Tenant are independent and not dependent and Tenant hereby expressly waives the benefit of any statute to the contrary and agrees that if Landlord fails to perform its obligations set forth herein, Tenant shall not be entitled to make any repairs or perform any acts hereunder at Landlord's expense or to any setoff of the Rent or other amounts owing hereunder against Landlord.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;27.35 **Confidentiality**. Tenant and Landlord each acknowledge that the content of this Lease and any related documents are confidential information. Each party shall keep such confidential information strictly confidential and shall not disclose such confidential information to any person or entity other than such party's financial, legal and space planning consultants (except for disclosures to auditors and regulatory authorities, and except for other disclosures required by law).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;27.36 **Energy Usage**. If Tenant (or any party claiming by, through or under Tenant) pays directly to the provider for any energy consumed at the Property, Tenant, promptly upon request, shall deliver to Landlord (or, at Landlord's option, execute and deliver to Landlord an instrument enabling Landlord to obtain from such provider) any data about such consumption at the Building that Landlord may request.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;27.37 **Construction on Property**. Tenant acknowledges that (a) during the Term, Landlord may undertake various construction projects, which may include the construction of new and/or additional buildings (each, a "**Project**," and collectively, the "**Projects**"), and (b) customary construction impacts may result therefrom. In no event shall Landlord be liable to Tenant for any compensation or reduction of rent or any other damages arising from the Projects and Tenant shall not have the right to terminate the Lease due to the construction of the Projects, nor shall the same give rise to a claim in Tenant's favor that such construction constitutes actual or constructive, total or partial, eviction from the Premises. Notwithstanding any provision in this Lease to the contrary, in no event shall Tenant seek injunctive or any similar relief to stop, delay or modify any Project. Tenant acknowledges and agrees that Landlord has informed Tenant that Landlord is undertaking a Project at the Property, which is adjacent to the Premises, and Tenant has elected to proceed with entering into this Lease with full knowledge of the existence of such Project.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;27.38 **Guarantors**. The Guarantors, if any, shall each execute a full payment and performance guaranty in a form provided by Landlord. It shall constitute an Event of Default of the Tenant if any Guarantor fails or refuses, upon request to provide: (1) evidence of the execution and continued enforceability of the guaranty, including the authority of the party signing on Guarantor's behalf to obligate Guarantor, and in the case of a corporate Guarantor, a certified copy of a resolution of its board of directors authorizing the making of such guaranty, (2) current financial statements, or (3) written confirmation that the guaranty is still in effect as a valid binding obligation.

[Signature Page Follows]

Landlord and Tenant have executed this Lease under seal in two or more counterparts as of the day and year first above written.

---

| | |
|:---|:---|
| **LANDLORD:** | **LANDLORD:** |
| **JWH REAL ESTATE HOLDING CORP.**, a New York corporation | **JWH REAL ESTATE HOLDING CORP.**, a New York corporation |
| By: | */s/ Andrew Rosenwach* |
| Name: | Andrew Rosenwach |
| Title: | Authorized |
| **TENANT:** | **TENANT:** |
| **FARMMI USA INC**., a California corporation | **FARMMI USA INC**., a California corporation |
| By: | */s/ Yefang Zhang* |
| Name: | Yefang Zhang |
| Title: | CEO, Authorized Signatory |

---

## Exhibit 4.20

**EXHIBIT 4.20**

**INDUSTRIAL LEASE AGREEMENT**

Between

**Landlord:** PPF INDUSTRIAL THREE MONTGOMERY WAY, LLC,

a New Jersey limited liability company

and

**Tenant:** FARMMI USA, INC.,

a California corporation

**Premises:** 3 Montgomery Avenue, Robbinsville Township, New Jersey

**INDUSTRIAL LEASE AGREEMENT**

**1.** **Premises** 5

**2.** **Lease Term** 6

**3.** **Delivery of Possession** 7

**4.** **Quiet Enjoyment** 7

**5.** **Base Rent** 7

**6.** **Rent Payment** 9

**7.** **Operating Expenses/Taxes** 9

**8.** **Late Charge** 12

**9.** **Partial Payment** 12

**10.** **Use of Premises/Environmental Matters** 12

**11.** **Compliance with Laws** 17

**12.** **Waste Disposal** 17

**13.** **Rules and Regulations** 17

**14.** **Utilities** 17

**15.** **Signs** 18

**16.** **Security Deposit** 18

**17.** **Force Majeure** 21

**18.** **Repairs By Landlord** 21

**19.** **Repairs By Tenant** 22

**20.** **Alterations and Improvements** 23

**21.** **Liens** 23

**22.** **Destruction or Damage** 24

**23.** **Eminent Domain** 25

**24.** **Damage or Theft of Personal Property** 25

**25.** **Insurance; Waivers** 25

**26.** **Indemnity** 28

**27.** **Acceptance and Waiver** 28

**28.** **Estoppel** 28

**29.** **Notices** 29

**30.** **Abandonment of Premises** 29

**31.** **Default** 29

**32.** **Landlord's Remedies** 30

**33.** **Service of Notice** 32

**34.** **Advertising** 32

**35.** **Surrender of Premises** 32

**36.** **Cleaning Premises** 32

**37.** **Removal of Fixtures** 32

**38.** **Holding Over** 33

**39.** **Attorneys' Fees** 33

**40.** **Mortgagee's Rights** 33

**41.** **Entering Premises** 34

**42.** **Assignment and Subletting** 35

**43.** **Financial Reports** 36

i<br>

**44.** **Sale** 36

**45.** **Limitation of Liability** 36

**46.** **Broker Disclosure** 37

**47.** **Landlord/Tenant** 37

**48.** **Construction of this Agreement** 37

**49.** **No Estate In Land** 37

**50.** **Section Titles; Severability** 37

**51.** **Cumulative Rights** 37

**52.** **Waiver of Jury Trial** 38

**53.** **Entire Agreement** 38

**54.** **Submission of Agreement** 38

**55.** **Authority** 38

**56.** **Consequential Damages** 38

**57.** **Counterparts; Electronic Signatures** 38

**58.** **Survival** 38

**59.** **Building Certification** 38

**60.** **Guaranty** 39

**61.** **Tenant Improvement Allowance** 39

**62.** **NJ Flood Risk Notification** 40

**63.** **Patriot Act** 40

**64.** **Lease Contingency** 40

LIST OF SCHEDULES AND EXHIBITS:

---

| | |
|:---|:---|
| Exhibit A | Legal Description of Land |
| Exhibit A-1 | Plan Depicting Premises and areas in which Tenant may park |
| Exhibit B | Intentionally Omitted |
| Exhibit C | Commencement Letter |
| Exhibit D | Rules and Regulations |
| Exhibit E | Form of Guaranty |
| Exhibit F | Flood Disclosure Notice |

---

ii<br>

<u>**SUMMARY OF BASIC LEASE PROVISIONS**</u>

This Summary of Basic Lease Provisions (this "<u>Summary</u>") by and between PPF INDUSTRIAL THREE MONTGOMERY WAY, LLC, a New Jersey limited liability company ("<u>Landlord</u>") and FARMMI USA, INC., a California corporation ("<u>Tenant</u>"). In the event of any conflict between the terms and provisions of this Summary and the terms and provisions of the Industrial Lease Agreement (the "<u>Lease</u>"), the terms and provisions of the Lease shall control. In addition to the basic lease provisions contained in this Summary, all of the other terms and conditions of the Lease hereinafter set forth are hereby incorporated as an integral part of this Summary.

---

| | |
|:---|:---|
| 1. Landlord: | PPF Industrial Three Montgomery Way, LLC, a New Jersey limited liability company |
| 2. Tenant: | Farmmi USA, Inc., a California corporation |
| 3. Building/Premises: | Approximately 183,084 rentable square feet of space in the building known as 3 Montgomery Way, Robbinsville, New Jersey (the "<u>Building</u>") |
| 4. Rentable Square Feet of Building: | 183084 |
| 5. Term: |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Initial Term: | Five (5) Lease Years and Five (5) Months. (See Section 2(a)) |
| &nbsp;&nbsp;&nbsp;&nbsp; Commencement Date | The later of (i) the September 1, 2025 or (ii) the date of receipt of the C/O (See Section 3) |
| &nbsp;&nbsp;&nbsp;&nbsp; Rent Commencement Date: | The Commencement Date (See Section 6) |
| &nbsp;&nbsp;&nbsp;&nbsp; Expiration Date: | 11:59 p.m. on the last day of the full calendar month which is sixty-five (65) months following the Commencement Date. |
| &nbsp;&nbsp;&nbsp;&nbsp; Extension Term(s): | One (1) Five-year option. (See Section 2(b)) |

---

6. Base Rent

---

| | | |
|:---|:---|:---|
| **Period** | **Monthly Base Rent** | **Annual Base Rent** |
| 1 | $213598.00 | $2563176.00 |
| 2\* | $220539.94 | $2646479.22 |
| 3\* | $227707.48 | $2732489.79 |
| 4 | $235107.98 | $2821295.71 |
| 5 | $242748.99 | $2912987.82 |
| 6 | $250638.33 | $1,253,191.64\*\* |

---

\* Notwithstanding anything to the contrary in the Lease, provided no default then exists, nor any event with which the giving of notice or passing of time, or both, which would become a default then exists, the monthly installments of Base Rent (but not Additional Rent) shall be abated for the 13th, 14th, 15th, 25th and 26th full calendar months of the Term.

\*\* Calculated based on (5) months in Lease Year 6

---

| | |
|:---|:---|
| 7. Rent Payment Address: | Matrix Development Group Forsgate Drive, CN 4000 Cranbury, NJ 08512 Attn: Mr. Donald Epstein |
| 8. Use of Premises: | General warehousing and distribution (ecommerce fulfillment) of household merchandise, and ancillary office (the "<u>Permitted Use</u>") |
| 9. Tenant's Share: | 100% (See Section 7(a)) |
| 10. Security Deposit: | $640,794.00 (See Section 16) |
| 11. Parking: | See Section 1(d) |
| 12. Tenant Improvement Allowance: | $366,168.00 (See Section 60) |
| 13. Tenant's Required Insurance: | See Section 25 |
| 14. Landlord's Broker: | Matrix Realty Group |
| 15. Tenant's Broker: | Cushman & Wakefield |

---

---

| | |
|:---|:---|
| 16. Notice Addresses: |  |
| Landlord | Tenant |
| PPF Industrial Three Montgomery Way, LLC<br> c/o Matrix Development Group | Farmmi USA, Inc. <br> 14210 Telephone Ave.<br> Chino, CA 91710 |
| 3 Centre Drive<br> Monroe Township, NJ 08831 <br> Attention: Mr. Donald Epstein <br> E-Mail Address: <br> depstein@matrixcompanies.com | Attn: Zhengyu Wang<br> E-Mail Address: ZhengyuW71@gmail.com |
| -and-<br>Morgan Stanley Real Estate Advisor, Inc.<br> 1585 Broadway, Floor 37 <br> New York, NY 10036 <br> Attention: Ms. Neha Shetty <br> E-Mail Address:<br> Neha.Shetty@morganstanley.com |  |

---

17. Guarantor: Farmmi, Inc. (See Section 59)

**[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK. SIGNATURES APPEAR ON NEXT PAGE.]**

**IN WITNESS WHEREOF,** intending to be legally bound, Landlord and Tenant have executed this Summary as of the__ 1__ day of August, 2025.

**Tenant:**

---

| | |
|:---|:---|
| Farmmi USA, Inc., a California corporation | Farmmi USA, Inc., a California corporation |
| Bv: | /s/ Yefang Zhang |
| Name: | Yefang Zhang |
| Title: | CEO |

---

**Landlord:**

PPF INDUSTRIAL THREE MONTGOMERY WAY, LLC,

a New Jersey limited liability company

By: PPF Industrial 7A Montgomery Way Holdings, LLC, a

Delaware limited liability company, its sole member

By: PPF Industrial 1 and 3 Montgomery Way, LLC, a

Delaware limited liability company, its member

By: PPF Industrial, LLC, a Delaware limited

liability company, its member

By: PPF OP, LP, a Delaware limited

partnership, its member

By: PPF OPGP, LLC, a Delaware limited

liability company, its general partner

By: Prime Property Fund, LLC, a

Delaware limited liability company,

its member

By: Morgan Stanley Real Estate

Advisor, Inc., a Delaware

corporation, its Investment

Adviser

---

| | |
|:---|:---|
| By: | /s/ Neha Shetty |
| Name: | Neha Shetty |
| Title: | Vice President |

---

**INDUSTRIAL LEASE AGREEMENT**

THIS INDUSTRIAL LEASE AGREEMENT (this "<u>Lease</u>") is made and entered into as of the _1st_ day of August, 2025 (<u>the "Effective</u> Date") by and between the Landlord and Tenant identified in the Summary.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1. <u>Premises</u>.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Landlord does hereby demise, rent and lease to Tenant and Tenant does hereby accept, rent and lease from Landlord, approximately 183,084 rentable square feet located in the Building identified in the Summary (the "<u>Premises</u>"), situated on the real property described in <u>Exhibit "A"</u> attached hereto (the "<u>Land</u>"). The Premises is more particularly cross-hatched on the drawing attached hereto as <u>Exhibit "A-1"</u> and made a part hereof by reference. The Land and the improvements thereon are hereinafter collectively called the "<u>Property</u>".

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Premises are demised, rented and let subject to (i) the rights of any persons or entities in possession of the remainder of the Property; provided, however, that Tenant shall have exclusive use of the Premises and non-exclusive use of the Common Areas as described below in Section 1(d), (ii) the existing state of title of the Property, including all easements, agreements, covenants and restrictions affecting the Property, (iii) any state of facts which an accurate survey or physical inspection of the Property might show, (iv) all laws and legal requirements, and (v) the condition of the Premises and the remainder of the Property as of the Commencement Date, without representation or warranty by Landlord except as otherwise set forth herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Tenant has inspected the Premises and agrees to accept the same "AS IS," "WHERE IS" "WITH ALL FAULTS" without representation or warranty except as otherwise expressly set forth herein. Notwithstanding the foregoing, Landlord shall paint and carpet the existing offices in the Premises using Landlord's standard building materials (the "<u>Landlord</u> <u>Work</u>"). Tenant agrees to cooperate with Landlord in providing access to the Premises so that Landlord may complete the Landlord Work. No easement for light, air or view is granted hereunder or included within or appurtenant to the Premises.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Tenant shall have the non-exclusive right, to use the grounds, sidewalks, driveways and alleys located on the Land which are intended for the common use of tenants (collectively, the "<u>Common Areas</u>"), subject to the Rules and Regulations (as defined in Section 13). Tenant may park cars in the parking area depicted on <u>Exhibit "A-1"</u> as Tenant's Car Parking Area during normal business hours on a non-exclusive basis, subject to the Rules and Regulations. Tenant shall also have the exclusive use of Tenant's Truck Parking Area depicted on <u>Exhibit "A-1"</u> for the parking of trucks, subject to the Rules and Regulations. Outside storage, including, without limitation, storage in containers, trucks, trailers and other vehicles, is prohibited without Landlord's prior written consent, which may be withheld in Landlord's sole and absolute discretion. Tenant shall not succeed to any of Landlord's easement rights over and relating to the Land, nor shall Tenant have or obtain any rights to the Common Areas other than those rights specifically granted to Tenant in this Lease. Landlord shall have the sole right of control over the use, maintenance, configuration, repair and improvement of the Common Areas. Landlord may make such changes to the use or configuration of, or improvements comprising, or maintenance of or repair to the Common Areas as Landlord may elect without liability to Tenant, provided that Tenant's access to the Premises shall not be materially impaired.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2. <u>Lease Term</u>.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Initial Term</u>. Tenant shall have and hold the Premises for the initial term (the "<u>Term</u>") identified in the Summary commencing on the Commencement Date identified in the Summary, and shall terminate at 11:59 p.m. on the Expiration Date as identified in the Summary, unless sooner terminated or extended as hereinafter provided. Promptly following the Commencement Date, Landlord and Tenant shall enter into a letter agreement in the form attached hereto as <u>Exhibit "C"</u>, specifying and/or confirming the Commencement Date and the Expiration Date and the other matters set forth therein. The initial Term of this Lease (the "<u>Initial Term</u>") shall consist of a series of five (5) full "<u>Lease Years</u>" and a partial sixth (6<sup>th</sup>) <u>Lease Year</u> consisting of five (5) months, as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The first Lease Year shall consist of a year commencing on the Commencement Date and expiring at 11:59 p.m. on the date that is the last day of the twelfth (12th) full calendar month following the Commencement Date (by way of example only, if the Commencement Date is September 15, 2025, then the First Lease Year shall expire at 11:59 p.m. on September 30, 2026).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Each Lease Year thereafter through the end of the fifth Lease Year shall commence on the first day after the date on which the prior Lease Year expires, and shall expire at 11:59 p.m. on the date that is twelve (12) months following the first day of such Lease Year.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) The sixth (6<sup>th</sup>) partial Lease year shall commence on the first day after the date on which the fifth (5<sup>th</sup>) Lease Year expires, and shall expire at 11:59 p.m. on the date that is five (5) months following the first day of such Lease Year.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Option to Extend</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Provided no default by Tenant has occurred and is continuing either at the time the extension option provided herein is exercised or on the date on which the Extension Term (as hereinafter defined) is to commence, Tenant shall have the option to extend the Term of this Lease for one (1) additional period of five (5) years (the "<u>Extension Term</u>"), upon the same terms, covenants and conditions contained in this Lease which were in effect during the Initial Term except that Base Rent for the Extension Terms shall be adjusted as set forth in Section 5(b) below. This option to extend is personal to Tenant and shall not apply to any assignee of Tenant. The Extension Term will commence immediately following the sixth (6<sup>th</sup>) Lease Year.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Tenant may exercise its option to extend this Lease only by giving Landlord written notice of its intention to extend at least nine (9) months but not more than twelve (12) months prior to the expiration of the Initial Term. Tenant's written notice exercising an extension option hereunder, once given to Landlord, shall be irrevocable. If Tenant properly exercises its option to extend this Lease in accordance with the provisions of this Section 2(b), then from and after such date of exercise by Tenant of its option to extend, "Term" shall mean both the Initial Term and the Extension Term.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3. <u>Delivery of Possession</u>.** Landlord shall, at Landlord's expense, make application to the applicable governmental authority for the issuance of a continuing certificate of occupancy (or local equivalent) (a "<u>C/O</u>") for the Premises in its current "as-is", "where-is" condition. Tenant shall cooperate with Landlord in such application and shall provide Landlord and any applicable governmental authority with such information and documentation as may be requested to pursue such process. Landlord shall have no obligation to make any improvements, repairs, replacements or alterations to the Premises or the Building, or to undertake any other work or expend any funds (other than customary application fees to applicable governmental authorities), in connection with the issuance of such C/O. Landlord shall not be liable for damages to Tenant for failure to deliver possession of the Premises to Tenant, except that the commencement of the Term shall be delayed until Landlord delivers possession of the Premises to Tenant (so long as Tenant is not responsible for such failure or delay). If Tenant is responsible for any delay in the occurrence of the Commencement Date (including, without limitation, any delay in the issuance of the C/O), the Commencement Date shall be deemed to be the date on which the Commencement Date would have occurred but for such delay, as reasonably determined by Landlord.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4. <u>Quiet Enjoyment</u>.** Tenant, upon payment in full of the required Rent and upon full performance by Tenant of the terms, covenants and agreements contained in this Lease to be performed by Tenant, and subject to the terms, covenants and conditions imposed upon Tenant's occupancy of the Premises as set forth in this Lease, shall peaceably and quietly have, hold and enjoy the Premises during the Term hereof, subject to this Lease and any ground lease, mortgage or trust deed now or hereafter encumbering the Premises and/or the Property; provided, however, that nothing in this Section 4 is intended to limit the provisions of Section 40 below. Landlord shall not be responsible for the acts or omissions of Tenant, any other tenant, or any third party that may interfere with Tenant's use and enjoyment of the Premises.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5. <u>Base Rent</u>.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Tenant shall pay to Landlord, at the address stated in the Summary or at such other place as Landlord shall designate in writing to Tenant, annual base rent ("<u>Base Rent</u>") as set forth in the Summary. Tenant may, in its discretion, pay Base Rent by EFT payment in which case Landlord shall provide to Tenant account information and wire transfer instructions such that Tenant can pay electronically by wire transfer of immediately available federal funds.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Landlord, within thirty (30) days following receipt of notice from Tenant exercising its option to extend the term of this Lease pursuant to Section 2(b) above, shall advise Tenant in writing as to Landlord's determination of what the Fair Market Rent for the Premises would be for the applicable Extension Term. "<u>Fair Market Rent</u>," as that phrase is used herein, shall mean annual rent in an amount which a landlord willing but not forced to lease and a tenant willing but not forced to rent would accept and pay for the Premises, or space similar to the Premises of the same quality located in the Township of Robbinsville, County of Mercer and State of New Jersey (the "<u>Market Area</u>"), with Landlord, in making such determination, taking into account all relevant economic factors including, but not limited to, the length of the Extension Term, the condition and location of the Premises and the fact that Landlord will not be obligated to provide any tenant allowance or other tenant concessions with respect to any Extension Term; provided, however, in no event shall the Fair Market Rent be less than the Base Rent which is payable during the Lease Year immediately preceding the relevant Extension Term for which Fair Market Rent is being determined (the "<u>Minimum Extension Base Rent</u>"). Tenant shall have twenty (20) days from its receipt of Landlord's notice to notify Landlord in writing that Tenant does not agree with Landlord's determination of the Fair Market Rent and that Tenant elects to determine Fair Market Rent (as calculated below). If Tenant does not notify Landlord of such election within twenty (20) days of its receipt of Landlord's notice, Base Rent for the Premises for the applicable extended term shall be the Base Rent set forth in Landlord's notice to Tenant. In the event Tenant timely notifies Landlord that Tenant does not agree with Landlord's determination of the Fair Market Rent, the Fair Market Rent shall be determined by an appraisal procedure as follows:

In the event that Tenant timely notifies Landlord that Tenant disagrees with Landlord's determination of the market rate and that Tenant elects to determine the Fair Market Rent, then Tenant shall specify, in such notice to Landlord, Tenant's selection of a real estate appraiser who shall act on Tenant's behalf in determining the Fair Market Rent. Within twenty (20) days after Landlord's receipt of Tenant's selection of a real estate appraiser, Landlord, by written notice to Tenant, shall designate a real estate appraiser, who shall act on Landlord's behalf in the determination of the Fair Market Rent. Within twenty (20) days after the selection of Landlord's appraiser, the two (2) appraisers shall render a joint written determination of the Fair Market Rent, which determination shall take into consideration any differences between the Building and those buildings comparable to the Building located in the Market Area, including without limitation age, location, setting and type of building, but in no event shall the Fair Market Rent be less than the Minimum Extension Base Rent. If the two (2) appraisers are unable to agree upon a joint written determination within said twenty (20) day period, the two appraisers shall select a third appraiser within such twenty (20) day period. Within twenty (20) days after the appointment of the third appraiser, the third appraiser shall render a written determination of the Fair Market Rent by selecting, without change, the determination of one (1) of the original appraisers as to the Fair Market Rent and such determination shall be final, conclusive and binding; provided, however, in no event shall the Fair Market Rent be less than the Minimum Extension Base Rent. All appraisers selected in accordance with this subparagraph shall have at least ten (10) years prior experience in the commercial leasing market of the Market Area and shall be members of the American Institute of Real Estate Appraisers or similar professional organization. If either Landlord or Tenant refuses to or fails to timely select an appraiser, the other appraiser shall alone determine the Fair Market Rent. Landlord and Tenant agree that they shall be bound by the determination of Fair Market Rent pursuant to this paragraph; provided, however, in no event shall the Fair Market Rent be less than the Minimum Extension Base Rent. Landlord shall bear the fee and expenses of its appraiser; Tenant shall bear the fee and expenses of its appraiser; and Landlord and Tenant shall share equally the fee and expenses of the third appraiser, if any.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**6. <u>Rent Payment</u>.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Base Rent for each Lease Year shall be payable in equal monthly installments, due on or before the first (1st) day of each calendar month, in advance, in legal tender of the United States of America, without abatement, notice, demand, deduction or offset of any kind whatsoever except as otherwise expressly set forth herein. Monthly installments of Base Rent shall be due and payable on or before the first day of each calendar month following the Commencement Date during the Term hereof. Notwithstanding the foregoing, the Rent Commencement Date or any scheduled monthly Rent payment date falls on a legal holiday or non-business day, such Rent shall be due on the next business day without penalty.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) For the purposes hereof, the term "<u>Rent Commencement Date</u>" means the Commencement Date. If the Rent Commencement Date is not the first day of a calendar month then Base Rent for the month in which the Rent Commencement Date falls shall be prorated, with Tenant to receive an abatement of the Base Rent for the period accruing prior to the Rent Commencement Date, and Tenant shall, on the Rent Commencement Date, pay the prorated amount of the monthly installment of Base Rent accruing for the period from the Rent Commencement Date through the last day of the calendar month in which the Rent Commencement Date falls. Notwithstanding the foregoing, Tenant shall pay Base Rent for the first full calendar month after the Rent Commencement Date upon the execution of this Lease.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Tenant shall pay, as Additional Rent, all other sums due from Tenant under this Lease (the term "<u>Rent</u>", as used herein, means all Base Rent, Additional Rent and all other amounts payable hereunder from Tenant to Landlord).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7. <u>Operating Expenses/Taxes</u>.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Tenant agrees to reimburse Landlord throughout the Term, as Additional Rent hereunder, for Tenant's Share, as defined in the Summary, of: (i) the annual Operating Expenses for each calendar year, or portion thereof, during the Term; and (ii) the annual Taxes for each calendar year, or portion thereof, during the Term. "<u>Tenant's Share</u>" has been determined by dividing the rentable square footage of the Premises by the rentable square footage of the Building. Landlord and Tenant hereby agree that Tenant's Share is the percentage amount set forth in the Summary. Tenant's Share of Operating Expenses and Taxes for any calendar year shall be appropriately prorated for any partial year occurring during the Term.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) "<u>Operating Expenses</u>" means all costs and expenses incurred by Landlord with respect to the ownership, maintenance and operation of the Property including, but not limited to: maintenance, repair and replacement of any plumbing, electrical, mechanical, utility and safety systems which are part of the Property, paving and parking areas, roads and driveways of the Property; maintenance of exterior areas such as gardening and landscaping, snow removal (if provided by Landlord) and signage; maintenance and repair of roof membranes (except that the cost to maintain the roof at the penetration points of Tenant-installed roof vents shall be billed directly to Tenant as Additional Rent), flashings, gutters, downspouts, roof drains, skylights and waterproofing; painting; lighting; cleaning; refuse removal; security; insurance costs, utility services attributable to the Common Areas; personnel costs for employees or agents directly related to the management, operation, repair or maintenance of the Property; personal property taxes (relating to personal property used exclusively at the Property, or if not used exclusively at the Property, the cost of such shall be equitably allocated among the properties at which such is used); assessments or other fees or expenses due under recorded documents affecting the Property, rentals or lease payments paid by Landlord for rented or leased personal property used in the operation or maintenance of the Property; fees for required licenses and permits; a property management fee; costs incurred up to the deductible limit in any insurance policy to repair damage from a casualty; and capital improvements made to or capital assets acquired for the Property after the Commencement Date that (1) are intended to reduce Operating Expenses or (2) are reasonably necessary for the health and safety of the occupants of the Property or (3) are required under any and all applicable laws, statutes, codes, ordinances, orders, rules, regulations, conditions of approval and requirements of all federal, state, county, municipal and governmental authorities and all administrative or judicial orders or decrees and all permits, licenses, approvals and other entitlements issued by governmental entities, and rules of common law, relating to or affecting the Property or the use or operation thereof, whether now existing or hereafter enacted, including, without limitation, the Americans with Disabilities Act of 1990, 42 USC 12111 et seq. (the "<u>ADA</u>") as the same may be amended from time to time, all Environmental Laws (as hereinafter defined), and any CC&Rs, or any corporation, committee or association formed in connection therewith, or any supplement thereto recorded in any official or public records with respect to the Property or any portion thereof ("<u>Permitted Capital</u> <u>Expenses</u>"), which capital costs, or an allocable portion thereof, in excess of $10,000 per improvement shall be amortized over their useful lives, together with interest on the unamortized balance of such costs at the Prime Rate plus three percent (3%); provided, however, that costs savings resulting from capital improvements or capital assets may be included in Operating Expenses to the extent of savings realized in a particular Lease Year without regard to the foregoing amortization requirement. Operating Expenses shall, during any period the Building is not fully occupied, be "grossed up" so that Tenant's Share of such Operating Expenses is computed as though the Building had been fully occupied for such period in question. Operating Expenses do not include: (a) the cost of capital repairs, replacements or improvements, other than Permitted Capital Expenditures (as set forth above); (b) debt service under mortgages or ground rent under ground leases; (c) costs of restoration to the extent of net insurance proceeds received by Landlord or any other cost incurred by Landlord for which Landlord is fully reimbursed by insurance, warranties, service contracts, taking awards or by direct reimbursement by any other tenant of the Property; (d) leasing commissions, advertising costs and tenant improvement costs; (e) litigation expenses relating to disputes with tenants; (f) Taxes; (g) any Landlord asset management fee (other than the property management fee referenced in the immediately preceding sentence), Landlord corporate cost allocations, Landlord computer usage, Landlord office expense, Landlord mark-up or Landlord overhead cost allocation; (h) the maintenance, repair and replacement of any heating, ventilation and air conditioning systems at the Property (it being understood that such are excluded because Tenant is directly responsible for the maintenance, repair and replacement of the heating, ventilation and air conditioning systems within the Premises pursuant to Section 19 of this Lease); (i) depreciation of the Building or any other improvements situated within the Property; (j) any amount paid for products or services to an entity that is an affiliate of Landlord in excess of the fair market value of such services and products; (k) the costs of any utilities which are separately metered to the Premises or to another tenant's premises; (l) any fines or penalties imposed on Landlord for failing to timely perform its obligations under this Lease; (m) salaries of employees or agents not directly related to the management, operation, repair or maintenance of the Premises or Property; (n) expenses resulting from any violation by Landlord of the terms of any lease of space in the Building or other buildings on the Property; (o) any bad debt loss, rental loss, or reserves for bad debts or rental loss; (p) costs (other than the cost of routine maintenance and monitoring) of remediation of Hazardous Materials which are in or on the Property that are not Tenant's responsibility as provided in this Lease; (q) any increase in insurance premiums to the extent caused or attributable to the use or act of another tenant of the Building or Property; or (r) any costs which would allow Landlord a "double recovery" of any other costs for which Landlord is directly reimbursed other than as an Operating Expense.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) "<u>Taxes</u>" means all taxes and assessments of every kind and nature which Landlord shall become obligated to pay with respect to each calendar year of the Term or portion thereof because of or in any way connected with the ownership, leasing, and operation of the Property or any part thereof, subject to the following: (i) the amount of ad valorem real and personal property taxes against Landlord's real and personal property to be included in Taxes shall be the amount required to be paid for any calendar year, notwithstanding that such Taxes are assessed for a different calendar year (the amount of any tax refunds received by Landlord during the Term of this Lease shall be deducted from Taxes for the calendar year to which such refunds are attributable); (ii) the amount of special taxes and special assessments to be included shall be limited to the amount of the installments (plus any interest, other than penalty interest, payable thereon) of such special tax or special assessment payable for the calendar year in respect of which Taxes are being determined; (iii) the amount of any tax or excise levied by the State, County, Township, Borough and/or City where the Property is located, any political subdivision of either, or any other taxing body, on rents or other income from the Property (or the value of the leases thereon) to be included shall not be greater than the amount which would have been payable on account of such tax or excise by Landlord during the calendar year in respect of which Taxes are being determined had the income received by Landlord from the Property, excluding amounts payable under this subsection (iii), been the sole taxable income of Landlord for such calendar year; (iv) there shall be excluded from Taxes all income taxes, except those which may be included pursuant to the preceding subsection (iii) above, excess profits taxes, franchise, capital stock, and inheritance or estate taxes; and (v) Taxes shall also include Landlord's reasonable costs and expenses (including reasonable attorneys' fees) in contesting or attempting to reduce any Taxes. Landlord shall, upon Tenant's written request, furnish Tenant with copies of tax bills relative to the Property. Taxes shall, during any period the Building is not fully occupied, be "grossed up" so that Tenant's share of such Taxes is computed as though the Building had been fully occupied for such period in question.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Landlord shall, on or before the Commencement Date and as soon as reasonably possible after the commencement of each calendar year thereafter, provide Tenant with a statement of the estimated monthly installments of Tenant's Share of Operating Expenses and Taxes which will be due for the remainder of the calendar year in which the Commencement Date occurs or for the next ensuing calendar year, as the case may be. Landlord agrees to keep books and records showing the Operating Expenses in accordance with generally accepted accounting principles (as modified for industrial buildings in a manner comparable to other similar buildings in the commercial area where the Property is located) and practices consistently maintained on a year-to-year basis in compliance with such provisions of this Lease as may affect such accounts, and Landlord shall endeavor to deliver to Tenant within ninety (90) days after the close of each calendar year (including the calendar year in which this Lease terminates), a statement ("<u>Landlord's Statement</u>") as follows (but the failure of Landlord to deliver Landlord's Statement within such time frame shall not affect Tenant's liability for Tenant's Share of Operating Expenses and Taxes): (1) confirming that the books and records covering the operation of the Property have been maintained in accordance with the requirements in this subsection (d); (2) showing the actual Operating Expenses for such calendar year; and (3) showing the actual Taxes for such calendar year. Upon reasonable prior written request given not later than sixty (60) days following the date Landlord's Statement is delivered to Tenant, Landlord will provide Tenant detailed documentation to support Landlord's Statement or provide Tenant with the opportunity to review such supporting information. If Tenant does not notify Landlord of any objection to Landlord's Statement within ninety (90) days after delivery of Landlord's Statement, Tenant shall be deemed to have accepted Landlord's Statement as true and correct and shall be deemed to have waived any right to dispute the Operating Expenses and/or Taxes due pursuant to that Landlord's Statement. Tenant acknowledges that Landlord is not required to maintain its records for the Property at the Property, and Tenant agrees that any review of records under this Section shall be at the sole expense of Tenant and shall be conducted by an accountant or other person experienced in accounting for income and expenses of industrial projects engaged solely by Tenant on terms which do not entail any compensation based or measured in any way upon any savings in Additional Rent or reduction in Operating Expenses achieved through the inspection process. Notwithstanding anything to the contrary contained herein, Tenant shall pay Tenant's Share of Operating Expenses and/or Taxes within the time periods specified in this Lease whether or not Tenant has any objection thereto or is contesting Landlord's Statement. Tenant acknowledges and agrees that any records reviewed under this Section constitute confidential information of Landlord, which shall not be disclosed to anyone other than the person performing the review, the employees and agents of Tenant who receive the results of the review (including its real estate and legal staff and consultants), and Tenant's accounting employees. The disclosure of such information to any other person, whether or not caused by the conduct of Tenant, shall constitute a material breach of this Lease.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Tenant shall pay to Landlord, together with its monthly payment of Base Rent as provided in Section 5 above, as Additional Rent hereunder, Landlord's estimate of the monthly installment of Tenant's Share of Operating Expenses and Taxes for the calendar year in question (assuming that 1/12th of Tenant's annual obligation for the same is to be paid each month). At the end of any calendar year, if Tenant has paid to Landlord an amount in excess of Tenant's Share of Operating Expenses and Taxes for such calendar year, Landlord shall reimburse to Tenant any such excess amount (or shall apply any such excess amount to any amount then owing to Landlord hereunder, and if none, to the next due installment or installments of Additional Rent due hereunder, at the option of Landlord). At the end of any calendar year if Tenant has paid to Landlord less than Tenant's Share of Operating Expenses and Taxes for such calendar year, Tenant shall pay to Landlord any such deficiency within fifteen (15) days after Tenant receives Landlord's Statement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) For the calendar year in which this Lease terminates and is not extended or renewed, the provisions of this Section shall apply, but Tenant's Share for such calendar year shall be subject to a pro rata adjustment based upon the number of days prior to the expiration of the Term of this Lease. Tenant shall make monthly estimated payments of the pro rata portion of Tenant's Share for such calendar year (in the manner provided above) and when the actual prorated Tenant's Share for such calendar year in which the Lease terminates is determined, Landlord shall send Landlord's Statement to Tenant for such year and if Landlord's Statement reveals that Tenant's estimated payments for the prorated Tenant's Share for such calendar year exceeded the actual prorated Tenant's Share for such calendar year, Landlord shall include a refund for that amount along with Landlord's Statement (subject to offset in the event Tenant is in default hereunder). If Landlord's Statement reveals that Tenant's estimated payments for the prorated Tenant's Share for such calendar year were less than the actual prorated Tenant's Share for such calendar year, Tenant shall pay the shortfall to Landlord within fifteen (15) days after the date of receipt of Landlord's Statement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**8. <u>Late Charge</u>.** Other remedies for non-payment of Rent notwithstanding, if any monthly installment of Base Rent or Additional Rent is not received by Landlord within five (5) days after the date due, or if any payment due Landlord by Tenant which does not have a scheduled due date is not received by Landlord on or before the tenth (10<sup>th</sup>) day following the date Tenant was invoiced, a late charge of ten percent (10%) of such past due amount shall be immediately due and payable as Additional Rent hereunder. If any such delinquent amount remains outstanding five (5) days after the same was due, interest shall accrue on all such delinquent amounts, from the date past due until paid, at the lower of a rate of one and one-half (1-1/2%) percent per month or fraction thereof from the date such payment is due until paid (Annual Percentage Rate = 18%), or the highest rate permitted by applicable law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**9. <u>Partial Payment</u>.** No payment by Tenant or acceptance by Landlord of an amount less than the Rent herein stipulated shall be deemed a waiver of any other Rent due. No partial payment or endorsement on any check or any letter accompanying such payment of Rent shall be deemed an accord and satisfaction, but Landlord may accept such payment without prejudice to Landlord's right to collect the balance of any Rent due under the terms of this Lease or any late charge assessed against Tenant hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**10. <u>Use of Premises/Environmental Matters</u>.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>**Use**</u>. Tenant shall use and occupy the Premises solely for the purpose set forth in the Summary and for no other purpose. In no event shall Tenant perform any manufacturing at the Premises or use the Premises for any use which would render the Premises or Tenant's use thereof as an industrial establishment under Environmental Laws (as defined below). The Premises shall not be used for any illegal purpose, nor in violation of any valid law, ordinance or regulation of any governmental body, nor in any manner to create any nuisance or trespass, nor in any manner which might void the insurance or increase the rate of insurance on the Premises or the Property nor in any manner inconsistent with the quality of the Property. Landlord shall, at Landlord's expense, make application to the applicable governmental authority for the issuance of zoning or use approval (or local equivalent) (the "<u>Use Approval</u>") for the Premises for the use set forth in the Summary. Notwithstanding anything set forth in this Lease to the contrary, if Landlord is unable to obtain the Use Approval, Tenant shall have no right to terminate this Lease. Tenant shall cooperate with Landlord in such application and shall provide Landlord and any applicable governmental authority with such information and documentation as may be requested to pursue such process. Notwithstanding the foregoing, Tenant acknowledges that Landlord has made no representations or warranties with respect to the suitability of the Premises for Tenant's proposed use or whether applicable laws permit such use.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) **<u>Environmental Matters</u>.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) For purposes of this Lease:

"<u>Contamination</u>" means the contained or uncontained presence of or release, spillage, leakage, migration, disposal, burial, or placement of Hazardous Substances upon, within, below, or into any surface water, ground water, land surface, subsurface soil or strata, building, or improvement at any portion of the Property including the Land, the Premises and/or the Building.

"<u>Environmental Laws</u>" means (A) all federal, state and local codes, laws (including, without limitation, common law), ordinances, regulations, reporting or licensing requirements, rules, or statutes relating to pollution and/or safety and/or the protection of human health and/or the protection of the environment (including ambient air, surface water, ground water, land surface, or subsurface soil or strata), regardless of whether in existence on the date hereof or enacted thereafter, including, but not limited to, the Clean Water Act, 33 U.S.C. §§ 1251 to 1387; the Clean Air Act, 42 U.S.C. §§ 7401 to 7671q; the Resource, Conservation and Recovery Act, 42 U.S.C. §§ 6901 to 6992k; the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. §§6901 to 6975; the Toxic Substance Control Act, 15 U.S.C. §§ 2601 to 2692; the Occupational Safety and Health Act, 29 U.S.C. § 651, et seq.; and the Emergency Planning and Community Right to Know Act of 1986 (EPCRA), 42 U.S.C.A. §11001, et seq., and (B) any rules, regulations, amendments, guidelines, directives, orders or the like adopted pursuant to or implementing the statutes, laws, codes and ordinances referenced in subsection (A).

"<u>Hazardous Substances</u>" means any chemical, waste, by-product, pollutant, contaminant, compound, product, substance, equipment or fixture defined as or deemed hazardous or toxic under any Environmental Law or otherwise regulated under any Environmental Law, including, without limitation, (A) gasoline, diesel fuel, fuel oil, motor oil, waste oil, and any other petroleum or petroleum hydrocarbon, including any additives or other by-products or constituents associated therewith, (B) pesticides and other agricultural chemicals, (C) asbestos and asbestos containing materials in any form, (D) polychlorinated biphenyls, (E) radioactive materials and radon, (F) mold and (G) urea formaldehyde foam insulation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Tenant covenants that all its activities, and the activities of Tenant's employees, agents, contractors, and any entity related to, affiliated with or acting on behalf of Tenant (collectively, the "<u>Tenant Parties</u>"), on the Premises and on the Property, during the Term will be conducted in compliance with all Environmental Laws. Tenant, at Tenant's sole cost and expense, shall be responsible for obtaining all permits, licenses and/or approvals under Environmental Laws necessary for Tenant's operation of its business on the Premises ("<u>Environmental Permits</u>") and shall make all notifications and registrations required by any applicable Environmental Laws, and promptly provide copies to Landlord. Tenant, at Tenant's sole cost and expense, shall at all times comply with the terms and conditions of all such Environmental Permits, notifications and registrations and with any other applicable Environmental Laws. Tenant covenants that it shall obtain all such Environmental Permits and make all such notifications and registrations required by any applicable Environmental Laws necessary for Tenant's operation of its business on the Premises prior to the Commencement Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Tenant shall not cause or permit any Hazardous Substances to be brought upon, kept or used in or about the Premises or any other portion of the Property without the prior written consent of Landlord, which consent may be granted or withheld by Landlord in its sole discretion; <u>provided</u>, <u>however</u>, that the consent of Landlord shall not be required for the use at the Premises of cleaning supplies, toner for photocopying machines and other similar materials, in containers and quantities reasonably necessary for and consistent with normal and ordinary use by Tenant in the routine operation or maintenance of Tenant's office equipment or in the routine janitorial service, cleaning and maintenance for the Premises, provided such Hazardous Substances are used in compliance with applicable Environmental Laws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Regardless of any consents granted by Landlord pursuant to Section 10(b)(iii), Tenant shall under no circumstances whatsoever cause or permit any Contamination by Tenant or the Tenant Parties. If such Contamination by Tenant or any of the Tenant Parties shall occur, Tenant shall promptly at its expense (A) contain and control, investigate, and clean up, remove, or remedy such Contamination and take any and all other actions required under applicable Environmental Laws, (B) restore the Premises and the Property to the condition existing prior to the Contamination, and (C) notify and keep Landlord reasonably informed of such containment, control, investigation, cleanup, removal, remediation and restoration activities. All such activities shall be conducted by Tenant or the Tenant Parties in accordance with any and all Environmental Laws and other applicable federal, state and local laws and regulations. Landlord shall have the right, but not the obligation, after providing Tenant with notice and a reasonable opportunity to cure, to enter onto the Premises or to take such other actions as Landlord deems necessary or advisable so to contain, control, investigate, clean up, remove, remediate, restore, resolve or minimize the impact of, or otherwise deal with, any such Contamination. All costs and expenses incurred by Landlord in the exercise of any such rights shall be payable by Tenant upon demand as Additional Rent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) Regardless of any consents granted by Landlord pursuant to Section 10(b)(iii), Tenant shall under no circumstances whatsoever cause or permit (A) any activity on the Premises or on any other portion of the Property which would cause the Premises or any other portion of the Property to become subject to regulation as a hazardous waste treatment, storage or disposal facility under the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act, as amended, 42 U.S.C. §§6901 et seq. ("<u>RCRA</u>") or the regulations promulgated thereunder, (B) any activity on the Premises or on any other portion of the Property which would cause the Premises or any other portion of the Property to qualify as a Major Facility under the Spill Compensation and Control Act the "<u>Spill Act</u>"), N.J.S.A. 58:10-23.11a et seq., or the regulations promulgated thereunder, now in existence and as may be amended from time to time, (C) any activity on the Premises or the Property which would cause the Premises or any other portion of the Property to become subject to any lien imposed under or as a result of any Environmental Law, (D) the discharge of Hazardous Substances into the storm sewer or sanitary sewer system serving the Property, (E) the installation of any underground tank, oil/water separator, sump pump, or underground piping on or under the Premises or any other portion of the Property, except in accordance with Section 10(b)(vii), or (F) any activity on the Premises or the Property which would cause the Premises or any other portion of the Property to be considered an "Industrial Establishment" as that term is defined under the New Jersey Industrial Site Recovery Act, N.J.S.A. 13:1K-6, et seq. ("<u>ISRA</u>").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) Landlord shall also have the right prior to the expiration of the Term of this Lease to require Tenant to cause a qualified environmental consultant to perform, at Tenant's sole cost and expense, a Preliminary Assessment of the Premises satisfactory to Landlord in its reasonable discretion. Should Tenant fail to undertake and seek diligently to perform said environmental audit within thirty (30) days of Landlord's request, Landlord shall have the right, but not the obligation, to retain a qualified environmental consultant to perform such environmental audit. All costs and expenses incurred by Landlord in the exercise of such rights shall be payable by Tenant upon demand as Additional Rent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) Tenant shall obtain the prior written approval of Landlord, which may be withheld in Landlord's sole discretion, for the installation of any storage tank, whether above or underground, at the Premises and will comply with all applicable laws as to its design, installation, operation and closure. Upon termination of this Lease, Landlord shall have the option of requiring that Tenant, at Tenant's sole cost and expense, perform tests relating to and/or remove any tank installed by Tenant and associated contaminated material, in which case Tenant shall promptly provide Landlord with copies of any required closure report and no further action letter. Tenant's obligations under this subsection shall survive expiration or sooner termination of this Lease.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) If Tenant's use of any portion of the Premises is for any purpose that results in the requirement to obtain an approval of any kind by any governmental agency administering any Environmental Laws (A) in order to: (aa) change the form or substance of part or all of the ownership of the Premises or the assets thereon by any means or under any circumstances, or (bb) transfer the ownership of part or all of the Premises or the assets thereon by any means or under any circumstances, or (B) due to: (xx) cessation of part or all of the operations on the Premises for any reason, or (yy) a change in the operations on the Premises to a use that does not require such approval, Tenant shall, in compliance with all applicable requirements, and, if relevant, prior to the expiration or termination of this Lease or prior to assigning or transferring an interest in the Premises, at Tenant's sole cost and expense apply for and obtain for Landlord the required approval and perform all remedial actions and any other obligations, including but not limited to establishing a remediation funding source, necessitated in whole or part by Tenant's activities at the Premises. Tenant and Landlord shall cooperate as necessary to prepare any such application and represent and warrant that any such application made pursuant to this subsection shall be true and complete to the best knowledge, information and belief of each. If such a governmental approval requirement exists, but Tenant believes that its operations or planned transaction is not subject to such requirement, Tenant, at its sole cost and expense, shall obtain for Landlord a statement from the applicable governmental agency that the Premises is not subject to such requirement. Tenant's obligations under this subsection shall survive expiration or sooner termination of this Lease.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix) Tenant agrees that any contracts or agreements of any kind entered into or renewed by Tenant after the date of this Lease, for the occupancy of or the performance of activities on the Premises will contain the same limitations on the activities of such other contracting party as are placed on Tenant by this Section 10(b).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) Tenant agrees to permit Landlord and its authorized representatives to enter, inspect and assess the Premises at reasonable times for the purpose of determining Tenant's compliance with the provisions of this Section 10(b). Such inspections and assessments may include obtaining samples and performing tests of soil, surface water, groundwater or other media at Landlord's expense, unless Landlord has a reasonable basis to believe that there has been a violation of Environmental Laws by Tenant at the Premises or Property or any release, spillage or leakage of Hazardous Substances at the Premises, in which case such shall be at Tenant's expense.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xi) Tenant shall not use the Premises for any activity or use identified in N.J.A.C. 7:26B, Appendix C, as such may be amended from time to time. Tenant represents and warrants to Landlord that Tenant's use of the Premises is classified under the North American Industry Classification System (NAICS) as code 423990.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xii) Tenant shall and hereby does indemnify Landlord and hold Landlord harmless from and against any and all expense, loss, and liability suffered by Landlord by reason of the storage, generation, release, spillage, leakage, migration, burial, placement, handling, treatment, transportation, disposal, or arrangement for transportation or disposal, of any Hazardous Substances (whether accidental, intentional, or negligent) by Tenant or any of the Tenant Parties or by reason of Tenant's breach of any of the provisions of this Section 10. Such expenses, losses and liabilities shall include, without limitation, those that Landlord may incur (A) to comply with any Environmental Laws, (B) in studying, removing, disposing, remedying or otherwise addressing any Hazardous Substances and Contamination at, on, under, or from the Premises or any other portion of the Property, or restoring the Premises and the Property to its prior condition, (C) with respect to fines, penalties or other sanctions assessed upon Landlord, (D) with respect to legal and professional fees and costs incurred by Landlord in connection with the foregoing, and (E) with respect to any damages for bodily injury or property damage. The indemnity contained herein shall survive the expiration or earlier termination of this Lease. Tenant's obligations under this subsection shall survive expiration or sooner termination of this Lease.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**11. <u>Compliance with Laws</u>.** Tenant shall comply with all federal, state, and municipal laws, ordinances and regulations (including, without limitation, the Americans with Disabilities Act) applicable to Tenant, Tenant's business and Tenant's use of the Premises. Tenant and Landlord agree to comply with all mandatory and voluntary energy, water or other conservation controls or requirements applicable to industrial buildings issued by the federal, state, county, municipal or other applicable governments, or any public utility or insurance carrier including, without limitation, controls on the permitted range of temperature settings in office buildings or requirements necessitating curtailment of the volume of energy consumption or the hours of operation of the Building. Any terms or conditions of this Lease that conflict or interfere with compliance by Landlord with such controls or requirements shall be suspended for the duration of such controls or requirements. It is further agreed that compliance with such controls or requirements shall not be considered an eviction, actual or constructive, of Tenant from the Premises and shall not entitle Tenant to terminate this Lease or to an abatement or reduction of any rent payable hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**12. <u>Waste Disposal</u>.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Tenant shall be responsible for the removal and disposal of all normal trash and waste (i.e., waste that does not require special handling pursuant to subsection 12(b)) and such shall be deposited in dumpsters located in areas designated therefor by Landlord and arranged for by Tenant at Tenant's cost.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Tenant shall be responsible for the removal and disposal of any waste deemed by any governmental authority having jurisdiction to be hazardous or infectious or requiring special handling, such removal and disposal to be in accordance with any and all applicable governmental rules, regulations, codes, orders or requirements. Tenant agrees to separate and mark appropriately all hazardous, infectious or special waste to be removed and disposed of by Tenant pursuant to this subsection (b) and identify itself as the generator of that waste. Tenant hereby indemnifies and holds harmless Landlord from and against any loss, claims, demands, damage or injury Landlord may suffer or sustain as a result of Tenant's failure to comply with the provisions of this subsection (b), which indemnity shall survive the expiration or sooner termination of this Lease.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**13. <u>Rules and Regulations</u>.** The rules and regulations currently in effect, a copy of which is attached hereto as <u>Exhibit "D"</u> and all reasonable rules and regulations and modifications thereto which Landlord may hereafter from time to time adopt and promulgate after notice thereof to Tenant (collectively, the "<u>Rules and Regulations</u>"), for the government and management of the Property, are hereby made a part of this Lease and shall during the Term be observed and performed by Tenant, its agents, employees and invitees.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**14. <u>Utilities</u>.** Tenant will promptly pay, directly to the appropriate supplier, the cost of all natural gas, heat, cooling, energy, light, power, sewer service, telephone, water, refuse disposal and other utilities and services supplied to the Premises, together with any related installation or connection charges or deposits incurred during the Term. Landlord shall deliver the Premises to Tenant separately-metered with respect to utilities. Any meter so installed may, at Landlord's option, be a "smart meter". Tenant shall pay for the consumption shown on the meter plus any fee applicable to reading the meter, either directly to the third-party utility provider in the case of a direct meter or to Landlord in the case of a submeter or check meter, and Tenant shall report to Landlord Tenant's usage as measured by the meter. Tenant shall be required to submit to Landlord electricity and water consumption data in a format deemed reasonably acceptable by Landlord within thirty (30) days written request by Landlord. Landlord reserves the right to participate in wholesale energy purchase programs and to provide energy to the Property through such programs so long as the cost to Tenant is competitive.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**15. <u>Signs</u>.** Tenant shall not paint or place any signs, placards, or other advertisements of any character upon the Common Areas or on the outside walls or roof of the Building except with the prior written consent of Landlord, which consent may be withheld by Landlord in its sole discretion. Tenant may install dock position numbers on the docks. Tenant may, at Tenant's cost, place its name on the existing monument signage located at the Premises, provided, Tenant's name shall be in the same font and size of the other tenants named thereon.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**16. <u>Security Deposit</u>.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Upon execution of this Lease, Tenant shall deposit with Landlord and through the Term shall keep on deposit with Landlord, either (i) an irrevocable Letter of Credit (the "<u>Letter of Credit</u>") in the amount of Six Hundred Forty Thousand Seven Hundred Ninety-Four and 00/100 Dollars ($640,794.00) (the "<u>Security Amount</u>") or (ii) a cash security deposit in the amount of the Security Amount (the "<u>Cash Security Deposit</u>"), in either case as security for the payment by Tenant of the Rent and all other charges or payment to be paid hereunder and the performance of the covenants and obligations contained herein. The term "<u>Security Deposit</u>" as used herein shall mean either the Letter of Credit or the Cash Security Deposit, whichever deposited by Tenant to Landlord. Tenant may elect to initially deposit the Cash Security Deposit and replace the same with a Letter of Credit. If Tenant so elects to replace a Cash Security Deposit with a Letter of Credit, Landlord shall promptly return to Tenant the Cash Security Deposit so held by Landlord after receipt of the Letter of Credit in form required hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If at any time Tenant shall be in default under any of the provisions of this Lease, Landlord shall be entitled, at its sole discretion, to draw on the Letter of Credit or apply the Cash Security Deposit, as applicable, in the amount necessary, in payment of (i) any Rent or other charge for the payment of which Tenant shall be in default, (ii) any expense incurred by Landlord related to any default of Tenant beyond the applicable notice and cure period set forth in Section 31, and/or (iii) any other sums due to Landlord to which Landlord is entitled pursuant to the terms of this Lease. If any portion of the Security Deposit is used, applied or retained by Landlord for any purpose set forth above, Tenant shall, within ten (10) days after demand therefor is made by Landlord, restore the Letter of Credit or the Cash Security Deposit, as applicable, to its original amount. The Security Deposit, or as much thereof as has not been utilized for such purposes, shall be returned to Tenant within ninety (90) days following the expiration of this Lease and proper surrender of the Premises to Landlord. Notwithstanding the above provisions of this Section 16, if any claims of Landlord exceed the Security Deposit Amount, Tenant shall remain liable for the balance of such claims.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Landlord may transfer the Security Deposit to the purchaser (or other transferee) of Landlord's interest in the Premises in the event such interest is sold (or transferred), and, in such instance, Landlord named herein shall be discharged from any further liability with respect to the Security Deposit and Tenant shall look to Landlord's successor for the return of the Security Deposit.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) If Tenant elects to deposit the Security Deposit as a Letter of Credit, then the required Letter of Credit shall be in the form of an Irrevocable Standby Letter of Credit in favor of Landlord as outlined hereinabove. Under any circumstances under which Landlord is entitled the use of all or a part of the Letter of Credit, then, Landlord, in addition to all other rights and remedies provided under the Lease, shall have the right to draw down such permitted amount of the Letter of Credit and retain the proceeds. The following terms and conditions shall govern the Letter of Credit:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The Letter of Credit shall be in favor of Landlord, shall be issued by a commercial bank reasonably acceptable to Landlord having a Standard & Poors rating of "A" or better, shall comply with all of the terms and conditions of this Section 16, shall be transferrable to a purchaser or other transferee of Landlord's interest in the Premises without charge, and shall otherwise be in form reasonably acceptable to Landlord. The initial Letter of Credit shall have an expiration date not earlier than twelve (12) months after the Commencement Date. A draft of the form of Letter of Credit must be submitted to Landlord for its approval prior to issuance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) The Letter of Credit or any replacement Letter of Credit shall be irrevocable for the term thereof and, shall automatically renew on a year-to-year basis until a period ending not earlier than three (3) months after the then-scheduled expiration date of the Lease (the "<u>End Date</u>") without any action whatsoever on the part of Landlord; provided that the issuing bank shall have the right not to renew the Letter of Credit by giving written notice to Landlord not less than sixty (60) days prior to the expiration of the then-current term of the Letter of Credit that it does not intend to renew the Letter of Credit. Tenant understands that the election by the issuing bank not to renew the Letter of Credit shall not, in any event, diminish the obligation of Tenant to maintain such an irrevocable Letter of Credit in favor of Landlord through such date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Landlord, or its then managing agent, shall have the right from time to time to make one or more draws on the Letter of Credit at any time that a default has occurred and is continuing. The Letter of Credit must state that it can be present for payment at the office of the issuer or an approved correspondent in the New York, New York area and may also be presented for payment via facsimile. Funds may be drawn down on the Letter of Credit upon presentation to the issuing or corresponding bank of Landlord's (or Landlord's then managing agent's) certificate stating as follows:

"Beneficiary is entitled to draw on this credit pursuant to that certain Lease with a Date of Execution as of ___________, 2025 between PPF Industrial Three Montgomery, LLC, a New Jersey limited liability company, as Landlord, and Farmmi USA, Inc., as Tenant, as amended from time to time."

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) It is understood that if Landlord or its managing agent be a corporation, a partnership or other entity, then such statement shall be signed by an officer (if a corporation), a general partner (if a partnership), or any authorized party (if another entity).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) Tenant acknowledges and agrees (and the Letter of Credit shall so state) that the Letter of Credit shall be honored by the issuing bank without inquiry as to the truth of the statements set forth in such draw request and regardless of whether the Tenant disputes the contents of such statement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) Without limiting the generality of the foregoing, if the Letter of Credit expires earlier than the End Date, or the issuing bank notifies Landlord that it will not renew the Letter of Credit, Landlord shall accept a renewal thereof or substitute letter of credit from the issuing bank or another commercial bank meeting the requirements of this Section 16 (such renewal or substitute Letter of Credit to be in effect not later than thirty (30) days prior to the expiration of the expiring Letter of Credit), irrevocable and automatically renewable as above provided to ninety (90) days after the End Date upon the same terms as the expiring Letter of Credit or upon such other terms as may be acceptable to Landlord. However, if (i) the Letter of Credit is not timely renewed, or (ii) a substitute Letter of Credit, complying with all of the terms and conditions of this Section is not received at least thirty (30) days prior to the expiration of the expiring Letter of Credit, then Landlord may present the expiring Letter of Credit to the issuing bank, and the entire sum so obtained shall be paid to Landlord, to be held by Landlord until Tenant would otherwise be entitled to the return of the Letter of Credit, and to be retained by Landlord as security for the payment by Tenant of the Rent and all other charges or payments to be paid hereunder and the performance of the covenants and obligations contained herein (and Landlord shall have the right, from time to time, to apply the same in payment of the amounts referenced in Section 16(b) above).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Provided no default by Tenant has occurred and is continuing, nor any event that with the giving of notice or passage of time would constitute a default by Tenant then exists, on the first day of the third (3<sup>rd</sup>) Lease Year, (the "<u>LOC Reduction Date</u>") the Security Deposit Amount required to be maintained by Tenant hereunder shall be reduced to Four Hundred Fifty-Five Thousand, Four Hundred Fourteen and 96/100 Dollars ($455,414.96). If Tenant has deposited a Letter of Credit, then any reduction in the Letter of Credit Amount shall be accomplished by Tenant providing Landlord with a substitute Letter of Credit in the reduced amount (in the same form as the existing Letter of Credit) or an amendment (reasonably acceptable to Landlord) to the existing Letter of Credit reflecting the reduced amount. Any reduction of the amount of the Letter of Credit by Tenant without the right to do so hereunder shall be a default, and if Tenant fails to cure such default within ten (10) days following a written default notice with respect thereto to Tenant from Landlord, Landlord shall have the right, in addition to all other rights and remedies permitted under the Lease, to draw the entire Letter of Credit and hold the same as a cash security deposit and apply the same as permitted herein. If Tenant has deposited with Landlord a Cash Security Deposit, then provided Tenant is entitled to a reduction of the Security Deposit Amount as set forth herein, Landlord shall return to Tenant from the Security Deposit the amount then held by Landlord in excess of the new required Security Deposit Amount.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**17. <u>Force Majeure</u>.** In the event of a strike, lockout, labor trouble, civil commotion, an act of God, inability to obtain governmental permits (despite Landlord's commercially reasonable efforts), adverse weather conditions, shortage of labor or material, or any other event beyond Landlord's control, whether similar or dissimilar to the foregoing examples (a "<u>force</u> <u>majeure event</u>"), which results in Landlord being unable to timely perform its obligations hereunder, Landlord shall not be in breach hereunder and any relevant time period for Landlord's performance shall be extended on a day-for-day basis to account for such delay.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**18. <u>Repairs By Landlord</u>.** Tenant, by taking possession of any portion of the Premises, shall accept and shall be held to have accepted such portion of the Premises as suitable for the use intended by this Lease. In no event shall Tenant be entitled to compensation or any other damages or any other remedy against Landlord in the event the Premises are not deemed suitable for Tenant's use. Landlord shall not be required to make any repairs or improvements to the Premises or the Property except as otherwise specifically set forth in this Lease. Except for damage caused by casualty and condemnation (which shall be governed by Sections 22 and 23 below), and subject to normal wear and tear, Landlord shall maintain (and the cost of same shall be an Operating Expense (except to the extent that the cost of such is expressly prohibited from being included as an Operating Expense under Section 7(b) of this Lease)) in good repair the structural components of the Building; the roof (including the roof membrane, flashing, gutters (if any) and downspouts (if any)); the exterior walls, footings and foundations of the Building; the floor slabs and columns of the Building; the Fire Safety System (as hereinafter defined); and the electrical, lighting, mechanical, plumbing and HVAC systems, facilities, fixtures and components serving more than just the Premises; provided, however, if Landlord is required to make repairs or replacement to any of the foregoing or any other portion of the Property by reason of the act or omission of Tenant, its employees, agents, contractors, customers or invitees, Tenant agrees to pay Landlord upon demand 100% of the reasonable cost for making such repairs or replacements, as Additional Rent, regardless of whether Landlord would otherwise be prohibited from including the same as an Operating Expense under Section 7(b) of this Lease. Landlord shall also be responsible for maintaining and repairing the Common Areas, including all grounds, drives, parking areas and safety barriers, the cost of which shall be an Operating Expense (except to the extent that the cost of such is expressly prohibited from being included as an Operating Expense under Section 7(b) of this Lease), except as provided in Section 19(b) below. As used herein, "<u>**Fire Safety System**</u>" means the sprinkler system and fire pump, but not the fire extinguishers and emergency signage. In addition, Landlord shall be responsible for any upgrades required to the Fire Safety System as a result of any change in applicable laws, except to the extent such upgrades are required because of the materials or products stored by Tenant in the Premises.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**19. <u>Repairs By Tenant</u>.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Tenant shall, at its own cost and expense, clean and maintain the interior of the Premises in good working order, condition and repair, making all necessary repairs and replacements, including but not limited to: lighting, partitions, doors, fixtures, plate glass, the Building's mechanical, electrical and plumbing systems, the heating, ventilating and air conditioning systems on or within the Premises and serving only the Premises and signs installed by Tenant. If Tenant fails to make such repairs or replacements promptly, Landlord may, at its option, upon prior reasonable written notice to Tenant (except in an emergency) make the required repairs and replacements and the costs of such repairs and/or replacements shall be charged to Tenant as Additional Rent and shall become due and payable by Tenant with the monthly installment of Base Rent next due hereunder. Tenant shall, at its own cost and expense, enter into a regularly scheduled preventive maintenance/service contract with a maintenance contractor for serving all hot water, heating and air conditioning systems and equipment within the Premises. The maintenance contractor and the contract must be approved in writing by Landlord in advance. The service contract shall include all services recommended by the equipment manufacturer within the operation/maintenance manual and shall become effective (and a copy thereof delivered to Landlord) within thirty (30) days following the Commencement Date. Tenant shall promptly deliver to Landlord copies of quarterly service reports (the "<u>Service</u> <u>Reports</u>") for the required scheduled maintenance for the hot water, heating and air conditioning systems within the Premises. Tenant shall additionally repair any damage to the Premises caused by any act or omission of Tenant, its employees, agents, contractors, customers, invitees and licensees (including, but not limited to, any repairs or replacements necessitated by (i) the construction or installation of trade fixtures or other improvements to the Premises and (ii) the moving of any property into or out of the Premises.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Tenant shall have the right, upon at least one hundred eighty (180) days' advance notice to Landlord, to elect to provide snow and ice removal at the Premises. If Tenant elects to provide such snow and ice removal, then effective as of the date set forth in Tenant's notice (which date shall be at least one hundred eighty (180) days after the date of such notice) (i) Tenant shall cause snow and ice to be removed from the sidewalks, parking lots, loading areas and driveways of the Premises within a reasonable period of time after the accumulation thereof, (ii) Landlord shall no longer be obligated to provide snow and ice removal for the Premises and Landlord's Operating Expenses shall not include the cost of snow and ice removal (other than any costs and expenses incurred prior to the date on which Tenant assumes responsibility to provide such services). Supplementing the foregoing, if Tenant exercises its rights pursuant to this Section 19(b), Tenant shall perform such snow and ice removal and landscape maintenance in the same manner provided by owners of first class buildings similar to the Building in Mercer County, New Jersey

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**20. <u>Alterations and Improvements</u>.** Tenant shall not make or allow to be made any alterations, additions or improvements in or to the Premises without first obtaining in writing Landlord's written consent for such alterations or additions, which consent may be granted or withheld in Landlord's sole discretion if the alterations will affect the Building structure or systems or will be visible from outside the Premises, but which consent shall not be unreasonably withheld if the alterations, additions or improvements will not affect the Building structure or systems, will not be visible from outside the Premises and will cost less than Five Thousand and 00/100 Dollars ($5,000.00) in the aggregate. Upon Landlord's request, Tenant shall deliver to Landlord plans and specifications for any proposed alterations, additions or improvements, Tenant shall reimburse Landlord for Landlord's reasonable cost to review such plans. Any alterations, physical additions or improvements shall at once become the property of Landlord; provided, however, that Landlord, at its option, may require Tenant to remove any alterations, additions or improvements upon the expiration or earlier termination of the Lease in order to restore the Premises to the condition existing prior to the performance of the same. All costs of any such alterations, additions or improvements shall be borne by Tenant. All alterations, additions or improvements shall be made in a good, first class, workmanlike manner, free of liens and in a manner that does not disturb other tenants of the Property and Tenant must maintain the builder's risk insurance specified in Section 25(a)(v) throughout the construction. Tenant does hereby indemnify and hold Landlord harmless from and against all claims for damages or death of persons or damage or destruction of property arising out of the performance of any such alterations, additions or improvements made by or on behalf of Tenant, which indemnity shall survive the expiration or sooner termination of this Lease. Under no circumstances shall Landlord be required to pay, during the Term of this Lease and any extensions or renewals hereof, any ad valorem or property tax on such alterations, additions or improvements, Tenant hereby covenanting to pay all such taxes when they become due. In the event any alterations, additions, improvements or repairs are to be performed by contractors or workmen other than Landlord's contractors or workmen, any such contractors or workmen must first be approved, in writing, by Landlord (which approval shall not be unreasonably withheld).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**21. <u>Liens</u>.** Tenant shall have no authority, express or implied, to create or place any lien or encumbrance of any kind or nature whatsoever upon, or in any manner to bind, the interest of Landlord or Tenant in the Premises or to charge the Rent payable hereunder for any claim in favor of any person dealing with Tenant, including those who may furnish materials or perform labor for any alteration, addition, improvement, replacement or repair. Tenant shall pay or cause to be paid all sums legally due and payable by it on account of any labor performed or materials furnished in connection with any work performed by or on behalf of Tenant at the Premises. Tenant shall discharge of record by payment, bonding or otherwise any lien filed against the Premises or the Property on account of any labor performed or materials furnished in connection with any work performed by or on behalf of Tenant at the Premises immediately upon the filing of any claim of lien. Tenant shall indemnify, defend and hold Landlord harmless from and against any and all liability, loss, cost or expense based on or arising out of asserted claims or liens against the leasehold estate or against the right, title and interest of Landlord in the Premises or the Property or this Lease arising from the act or agreement of Tenant, which indemnity shall survive the expiration or sooner termination of this Lease. Tenant agrees to give Landlord immediate written notice of the placing of any lien or encumbrance against the Premises or the Property. Landlord shall have the right, at Landlord's option and after notice to Tenant, of paying and discharging the same or any portion thereof without inquiry as to the validity thereof, and any amounts so paid, including expenses and applicable late charge, shall be Additional Rent immediately due and payable by Tenant upon rendition of a bill therefor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**22. <u>Destruction or Damage</u>.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) If the Premises is totally destroyed by storm, fire, earthquake, or other casualty, or damaged to the extent that, in Landlord's reasonable opinion, the damage cannot be restored within one hundred eighty (180) days of the date Landlord provides Tenant written notice of Landlord's reasonable estimate of the time necessary to restore the damage, or if the damage is not covered by Landlord's property insurance, or if Landlord's lender requires that the insurance proceeds be applied to its loan, Landlord shall have the right to terminate this Lease effective as of the date of such destruction or damage, and Rent shall be accounted for as between Landlord and Tenant as of such date, by written notice delivered to Tenant on or before thirty (30) days following Landlord's notice described in the next sentence. Landlord shall provide Tenant with written notice no later than sixty (60) days following the date of such damage of the estimated time needed to restore, whether the loss is covered by Landlord's insurance coverage and whether or not Landlord's lender requires the insurance proceeds be applied to its loan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If the Premises is damaged by any such casualty or casualties but Landlord is not entitled to or does not terminate this Lease as provided in subsection (a) above, this Lease shall remain in full force and effect, Landlord shall notify Tenant in writing no later than sixty (60) days after the date of such damage that such damage will be restored (and will include Landlord's good faith estimate of the date the restoration will be complete), in which case Rent shall abate as to any portion of the Premises which is not usable for the period of such untenantability, and Landlord shall promptly commence to diligently restore the Premises to substantially the same condition as before such damage occurred as soon as practicable. Full Rent shall recommence on the date that Landlord delivers possession of the restored Premises to Tenant. In the event that Landlord estimates that the Premises cannot be restored to substantially the same condition as before such damage within one hundred eighty (180) days from the date of its notice to Tenant, Tenant may, upon written notice to Landlord within thirty (30) days of Landlord's notice, terminate this Lease effective as of the date of such written notice, and Rent shall be accounted for as between Landlord and Tenant as of such date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) If such damage occurs within the last twelve (12) months of the Term and in Landlord's reasonable opinion, the damage cannot be restored by the end of the Term or 60 days after the casualty, whichever occurs earlier, either party shall have the right, upon delivery of written notice to the other party within thirty (30) days following such damage, to cancel and terminate this Lease as of the date of such damage and Rent shall be accounted for as between Landlord and Tenant as of such date, provided, however, that Tenant may not elect to terminate this Lease if such damage was caused by the act of Tenant, its agents, servants, employees or invitees. If prior to any such election to terminate Tenant has elected to extend the Term pursuant to the provisions of this Lease and such election may not then according to its terms be rescinded or terminated, then, for purposes of this Section 22, the Term shall be deemed to expire on the expiration date of the Extension Term.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Tenant agrees that Landlord's obligation to restore, and the abatement of Rent provided herein, or Tenant's right to terminate as above set forth in this Section 22, shall be Tenant's sole recourse in the event of any casualty damage, and Tenant waives any other rights Tenant may have under any applicable law to terminate this Lease by reason of damage to the Premises or Property.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**23. <u>Eminent Domain</u>.** If all of the Premises shall be condemned or taken, then in such event, this Lease shall automatically terminate upon and the Term hereby granted shall cease from the time when possession thereof is taken by the condemning authority, and Rent shall be accounted for as between Landlord and Tenant as of such date. If twenty percent (20%) or more of the rentable area of the Premises shall be so taken, Tenant may cancel and terminate this Lease effective as of the date possession of such portion condemned shall be taken by such condemning authority, provided that such option to cancel is exercised within twenty (20) days after the receipt of notice by Tenant of such condemnation. If this Lease is not terminated pursuant to one of the preceding two (2) sentences, this Lease shall continue in full force and effect and (1) Landlord shall promptly restore the Premises to substantially its condition immediately prior to the taking, to the extent such restoration is reasonably and financially practicable in Landlord's sole discretion (and to the extent that such restoration is not reasonably and financially practicable in Landlord's sole discretion, Landlord may terminate this Lease); (2) all Rent shall proportionately abate during such restoration for the period and to the extent that Tenant shall be unable to use the Premises; and (3) from and after any such restoration all Rent shall be reduced in the proportion which the area of the Premises taken shall bear to the entire area of the Premises immediately prior to such taking. Tenant shall have no right or claim to any part of any award made to or received by Landlord for such condemnation or taking, and all awards for such condemnation or taking shall be made solely to Landlord, provided however that Tenant shall have the right to pursue any separate award for loss of its equipment and trade fixtures and for moving expenses so long as such action does not reduce the award to which Landlord is entitled.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**24. <u>Damage or Theft of Personal Property</u>.** All personal property brought into the Premises shall be at the risk of Tenant only and Landlord shall not be liable for theft thereof or any damage thereto occasioned by any acts of co-tenants, or other occupants of any portion of the Property, or any other person, except, with respect to damage to the Premises as may be occasioned by the grossly negligent or willful misconduct of Landlord, its employees and agents (but subject to the insurance and waiver of subrogation provisions set forth in Section 25 below).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**25. <u>Insurance; Waivers</u>.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Tenant covenants and agrees that from and after the date of delivery of the Premises from Landlord to Tenant, Tenant will carry and maintain, at its sole cost and expense, the following types of insurance, in the amounts specified and in the form hereinafter provided for:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Commercial General Liability Insurance written on an occurrence basis, covering the Premises and all operations of Tenant in or about the Premises and the Common Areas against claims for bodily injury, property damage and product liability and to include contractual liability coverage insuring Tenant's indemnification obligations under this Lease, to be in limits of not less than $1,000,000 each occurrence for bodily injury and property damage, $2,000,000 for products/completed operations aggregate, $2,000,000 for personal injury, and to have general aggregate limits of not less than $2,000,000 (per location) and Umbrella Liability Insurance in an amount not less than $5,000,000 per occurrence and in the aggregate for each policy year. The general aggregate limits under the Commercial General Liability insurance policy or policies shall apply separately to the Premises and to Tenant's use thereof (and not to any other location or use of Tenant) and such policy shall contain an endorsement to that effect. The certificate of insurance evidencing the Commercial General Liability form of policy shall specify all endorsements required herein and shall specify on the face thereof that the limits of such policy apply separately to the Premises.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Insurance covering all of the items included in Tenant's leasehold improvements, heating, ventilating and air conditioning equipment maintained by Tenant, trade fixtures, merchandise and personal property from time to time in, on or upon the Premises, and alterations, additions, improvements or changes made by Tenant pursuant to Section 20, in an amount not less than one hundred percent (100%) of their full replacement value from time to time during the Term, providing protection against perils included within the standard form of "all-risks" fire and casualty insurance policy including terrorism. Any policy proceeds from such insurance shall be held in trust by Tenant's insurance company for the repair, construction and restoration or replacement of the property damaged or destroyed unless this Lease shall cease and terminate under the provisions of Section 22 of this Lease.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Workers' Compensation and Employer's Liability Insurance affording statutory coverage and containing minimum statutory limits and the Employer's Liability portion thereof having a minimum limit of $1,000,000.00 per accident, disease and in the aggregate, if Tenant has employees, and Tenant shall require any contractors whose employees are working at the Premises to maintain such insurance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Business Interruption Insurance to be written on an actual loss sustained basis (as defined in the standard form of business interruption insurance policy).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) During any period in which any substantial repairs or any alterations, additions and/or improvements are being undertaken, builder's risk insurance covering the total completed value including any "soft costs" (on a completed value, non-reporting basis), replacement cost of work performed and equipment, supplies and materials furnished in connection with such construction or repair, together with such "soft cost" endorsements and such other endorsements as Landlord may reasonably require.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) Business Automobile Liability Policy with a limit per accident of not less than $1,000,000 combined single limit for bodily injury and property damage.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) Such other insurance (or other terms with respect to any insurance required pursuant to this Section 25, including without limitation amounts of coverage, deductibles, form of mortgagee clause) on or in connection with the Premises as Landlord any Landlord lender may reasonably require, which at the time is usual and commonly obtained in connection with properties similar in type, use and location to the Premises.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) All policies of insurance specified in Section 25(a) above shall be issued in form acceptable to Landlord by insurance companies with a rating and financial size of not less than A IX in the most current available "Best's Insurance Reports" (the "<u>Rating</u> <u>Requirements</u>"), and licensed to do business in the state in which the Premises is located. Each and every such policy:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) shall name Landlord and its subsidiaries, affiliates, managers, members, partners, agents, employees, directors, officers, lenders, successors and assigns as an additional insured (as well as any mortgagee of Landlord and any other party reasonably designated by Landlord), except with respect to the insurance described in Section 25(a)(iii) above;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) shall (and a certificate thereof shall be delivered to Landlord at or prior to the execution of this Lease) be delivered to each of Landlord and any such other parties in interest prior to delivery of possession of the Premises to Tenant and thereafter upon inception (or renewal) of each new policy, and as often as any such policy shall expire or terminate. Renewal or additional policies shall be procured and maintained by Tenant in like manner and to like extent;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) shall contain a provision that the insurer will give to Landlord and such other parties in interest at least thirty (30) days' notice in writing (and ten days in the case of non-payment) in advance of any material change, cancellation, termination or lapse, or the effective date of any reduction in the amounts of insurance; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) shall be written as a primary policy which does not contribute to and is not in excess of coverage which Landlord may carry.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Any insurance provided for in Section 25(a) may be maintained by means of a policy or policies of blanket insurance, covering additional items or locations or insureds, provided, however, that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Landlord and any other parties in interest from time to time designated by Landlord to Tenant shall be named as an additional insured thereunder as its interest may appear;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) The coverage afforded Landlord and any such other parties in interest will not be reduced or diminished by reason of the use of such blanket policy of insurance; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) The requirements set forth in this Section 25 are otherwise satisfied.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) During the Term hereof, Landlord shall, in a manner similar to other comparable industrial buildings in the market area where the Property is located, keep in effect (i) commercial property insurance on the Building, its fixtures and equipment, and rent loss insurance for a period and amount of not less than one (1) year of rent, and (ii) a policy or policies of commercial general liability insurance insuring against liability arising out of the risks of death, bodily injury, property damage and personal injury liability with respect to the Common Areas of the Property.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Notwithstanding anything to the contrary set forth hereinabove, Landlord and Tenant do hereby waive any and all claims against one another for damage to or destruction of real or personal property to the extent such damage or destruction can be covered by "all risks" property insurance of the type described in Section 25(a)(ii) and Section 25(d)(i) above. Each party shall also be responsible for the payment of any deductible amounts required to be paid under the applicable "all risks" fire and casualty insurance carried by the party whose property is damaged. These waivers shall apply if the damage would have been covered by a customary "all risks" insurance policy, even if the party fails to obtain such coverage. The intent of this provision is that each party shall look solely to its insurance with respect to property damage or destruction which can be covered by insurance of the type described in Section 25(a)(ii) and Section 25(d)(i). Each such policy shall include a waiver of all rights of subrogation by the insurance carrier against the other party, its agents and employees with respect to property damage covered by the applicable "all risks" fire and casualty insurance policy.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**26. <u>Indemnity</u>.** Tenant does hereby agree to indemnify, defend and save harmless Landlord, its agents, employees, directors, affiliates, partners, members and shareholders (collectively, the "<u>Indemnified Parties</u>") from and against any and all claims, loss, cost or damage arising by, or related to, any injury (including death) to persons or damage to property which takes place in the Premises (or which arises out of actions taking place in the Premises), or which is otherwise caused by the negligence or willful misconduct of Tenant or any Tenant Party, except to the extent the foregoing is caused by the gross negligence or willful misconduct of Landlord. The indemnities set forth hereinabove shall include the obligation to pay reasonable expenses incurred by the indemnified party, including, without limitation, reasonable, actually incurred attorneys' fees. The indemnities contained herein do not override the waivers contained in Section 25(e) above. The indemnity obligations of this Section 26 shall survive expiration or sooner termination of this Lease.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**27. <u>Acceptance and Waiver</u>.** Except to the extent caused by the gross negligence or willful misconduct of Landlord, its agents and employees (but subject to the insurance provisions in Section 25 above, including, without limitation, the waivers contained in Section 25(e) above), Landlord shall not be liable to Tenant, its partners, members, agents, employees, guests or invitees for any damage caused to any of them due to the Building, the Common Areas or any other part of the Property or any appurtenances thereof being improperly constructed or being or becoming out of repair, or arising from the leaking of gas, water, sewer or steam pipes, or from electricity, but Tenant, by moving into the Premises and taking possession thereof, shall accept, and shall be held to have accepted the Premises as suitable for the purposes for which the same are leased, and shall accept and shall be held to have accepted the Premises and every appurtenances thereof, and Tenant by said act waives any and all defects therein; provided, however, that this Section shall not preclude Tenant from seeking recovery from any third party responsible for such damage or injury.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**28. <u>Estoppel</u>.** Tenant agrees to, upon not less than ten (10) days prior written request by Landlord, execute, acknowledge and deliver to Landlord a written statement certifying that this Lease is unmodified and in full force and effect (or, if there have been modifications, that the same is in full force and effect as modified and stating the modifications), the dates to which the Rent has been paid, that there are no known defaults hereunder (or, if there is a default, specifying the nature of the default), whether Tenant has any offsets or defenses against Landlord under this Lease, and any other matter reasonably requested Landlord, it being intended that any such statement delivered pursuant to this Section may be relied upon by a prospective purchaser of Landlord's interest or by a mortgagee of Landlord's interest or assignee of any security deed upon Landlord's interest in the Property and/or the Premises.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**29. <u>Notices</u>.** Any notice which is required or permitted to be given by either party under this Lease shall be in writing and must be given only by certified mail, return receipt requested, by hand delivery or by nationally recognized overnight courier service at the addresses set forth in the Summary. Each party shall further use reasonable efforts to provide the other party with a courtesy copy of any notice by fax and by electronic mail. Any such notice shall be deemed given on the earlier of two business days after the date sent in accordance with one of the permitted methods described above or the date of actual receipt thereof, provided that receipt of notice solely by fax or electronic mail shall not be deemed to be delivery of notice hereunder. The time period for responding to any such notice shall begin on the date the notice is deemed received. Either party may change its notice address by notice to the other party in accordance with the terms of this Section 29. Notices on behalf of a party may be given by such party's legal counsel.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**30. <u>Abandonment of Premises</u>.** If Tenant abandons or vacates the Premises for more than twenty (20) days, such shall be a default under this Lease, whereupon Landlord may pursue any and all remedies provided by this Lease, at law or in equity (including, without limitation, the termination of this Lease). Tenant shall be solely responsible for any increase in Landlord's insurance premium caused by such abandonment or vacation, and such shall be payable by Tenant as Additional Rent hereunder within fifteen (15) days following written demand for the same. If Tenant abandons or vacates the Premises and Landlord does not terminate this Lease, Tenant agrees to maintain in effect the security systems that Tenant employed while Tenant occupied the Premises and to take reasonable measures to monitor and secure the Premises.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**31. <u>Default</u>.**

Each of the following shall constitute a default under this Lease by Tenant:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) If Tenant shall default in the payment of Rent herein reserved when due and fails to cure such default within five (5) days after written notice of such default is given to Tenant by Landlord.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If Tenant shall fail to perform any of the terms, conditions or provisions of this Lease (other than the provisions requiring the payment of Rent), and fails to cure such non-monetary default within thirty (30) days after written notice of such default is given to Tenant by Landlord, <u>provided</u> <u>however</u> that if such non-monetary default is of such a nature that it cannot through the exercise of diligent and reasonable efforts be cured within thirty (30) days, then Tenant shall not be in default in such instance if Tenant promptly commences and diligently pursues the cure of such non-monetary default to completion as soon as possible and in all events within ninety (90) days after such initial notice.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) If Tenant or Guarantor is adjudicated a bankrupt, becomes insolvent or admits in writing that it is not generally able to pay its debts as they become due.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) If a permanent receiver is appointed for Tenant's or Guarantor's property and such receiver is not removed within sixty (60) days after appointment thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) If, whether voluntarily or involuntarily, Tenant or Guarantor takes advantage of any debtor relief proceedings under any present or future laws, whereby the Rent or any part thereof, is, or is proposed to be, reduced or payment thereof deferred.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) If Tenant's or Guarantor effects should be levied upon or attached and such levy or attachment is not satisfied or dissolved within thirty (30) days after such levy or attachment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) If Tenant is an individual, in the event of the death of the individual and the failure of the executor, administrator or personal representative of the estate of the deceased individual to have assigned this Lease within three (3) months after such death to an assignee approved by Landlord.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) If the Letter of Credit is not timely renewed pursuant to Section 16 or if a substitute Letter of Credit complying with all of the terms of Section 16 is not received at least thirty (30) days prior to the expiration of the expiring Letter of Credit.

Notwithstanding the foregoing, Landlord shall not be required to give written notice of default under Sections 31(a) or 31(b) above more than once during any twelve (12) month period during the Term of the Lease, it being the intention of the parties that any subsequent default occurring during such twelve (12) month period after the first notice has been given shall be a default hereunder without the requirement of additional notice to Tenant or the expiration of any grace period.

In any of such events, Landlord, at its sole option, may exercise any or all of the remedies set forth in Section 32 below.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**32. <u>Landlord's Remedies</u>.** Upon the occurrence of any default set forth in Section 31 above which is not cured by Tenant within the applicable cure period provided therein, if any, Landlord may exercise all or any of the following remedies:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) declare due and payable and sue for and recover, all unpaid Rent for the unexpired period of the Term as if by the terms of this Lease the same were payable in advance, or sue for Rent monthly as it accrues;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) terminate this Lease by giving Tenant written notice of termination, in which event this Lease shall terminate on the date specified in such notice and all rights of Tenant under this Lease shall expire and terminate as of such date, Tenant shall remain liable for all obligations under this Lease up to the date of such termination and Tenant shall surrender the Premises to Landlord on the date specified in such notice; and if Tenant fails to so surrender, Landlord shall have the right, without notice, to enter upon and take possession of the Premises and to expel and remove Tenant and all persons and entities claiming by, through or under Tenant, and Tenant's and their personal property and other effects without being liable for prosecution or any claim of damages therefor;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) terminate this Lease as provided in the immediately preceding subsection and recover from Tenant all damages Landlord may incur by reason of Tenant's default, including without limitation, the then present value (discounted at a rate equal to the then issued treasury bill having a maturity approximately equal to the remaining Term of this Lease had such default not occurred) of (i) the total Rent which would have been payable hereunder by Tenant for the period beginning with the day following the date of such termination and ending with the Expiration Date of the Term as originally scheduled hereunder (but as extended by the Extension Term if Tenant has exercised its option pursuant to Section 2(b) above), minus (ii) the aggregate reasonable rental value of the Premises for the same period (as determined by a real estate appraiser selected by Landlord who is licensed in the state where the Property is located, who has at least ten (10) years' experience immediately prior to the date in question in evaluating industrial space, taking into account all relevant factors including, without limitation, the length of the remaining Term, the then current market conditions in the general area, the likelihood of reletting for a period equal to the remainder of the Term, net effective rates then being obtained by landlords for similar type space in similar buildings in the general area, vacancy levels in the general area, current levels of new construction in the general area and how that would affect vacancy and rental rates during the period equal to the remainder of the Term and inflation), plus (iii) the costs of recovering the Premises, and all other expenses incurred by Landlord due to Tenant's default, including, without limitation, reasonable attorneys' fees, plus (iv) the unpaid Rent earned as of the date of termination, plus interest, all of which sum shall be immediately due and payable by Tenant to Landlord;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) without terminating this Lease, and without notice to Tenant, Landlord may in its own name, but as agent for Tenant enter into and take possession of the Premises and re-let the Premises, or any portion thereof, as agent of Tenant, upon any terms and conditions as Landlord may deem necessary or desirable (Landlord shall have no obligation to attempt to re-let the Premises or any part thereof except to the extent required by applicable law). Upon any such re-letting, all rentals received by Landlord from such re-letting shall be applied first to the costs incurred by Landlord in accomplishing any such re-letting, and thereafter shall be applied to the Rent owed by Tenant to Landlord during the remainder of the Term of this Lease and Tenant shall pay any deficiency between the remaining Rent due hereunder and the amount received by such re-letting as and when due hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) allow the Premises to remain unoccupied and collect Rent from Tenant as it becomes due; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) pursue such other remedies as are available at law or in equity.

Notwithstanding anything herein or any law or custom to the contrary, Landlord shall have no legal obligation to mitigate its damages. In calculating future Rent for purposes of this Section 32, Landlord's reasonable and good faith estimate of future Operating Expenses and Taxes shall be conclusive and binding on the parties. In addition, Landlord may include as an item of Rent its reasonable attorney's fees and costs in enforcing its rights hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**33. <u>Service of Notice</u>.** Except as otherwise provided by law, Tenant hereby appoints as its agent to receive the service of all dispossessory or distraint proceedings and notices thereunder, the person in charge of or occupying the Premises at the time of such proceeding or notice; and if no person be in charge or occupying the Premises, then such service may be made by attaching the same to the front entrance of the Premises.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**34. <u>Advertising</u>.** Landlord may advertise the Premises as being "For Rent" (including, without limitation, the right to place a sign on the Premises advertising the same are "For Rent") at any time following a default by Tenant which remains uncured after the applicable cure period and at any time within twelve (12) months prior to the expiration, cancellation or termination of this Lease for any reason, and, during any such periods, Landlord may exhibit the Premises to prospective tenants upon forty-eight (48) hours prior telephonic or email notice to Tenant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**35. <u>Surrender of Premises</u>.** Whenever under the terms hereof Landlord is entitled to possession of the Premises, Tenant at once shall surrender the Premises and the keys thereto to Landlord in substantially the same condition as on the Commencement Date hereof, normal wear and tear, casualty and condemnation only excepted, and Tenant shall remove all of its personalty therefrom and shall, if directed to do so by Landlord as set forth in Section 20, remove all alterations, additions and improvements made pursuant to Section 20 and restore the Premises to its original condition prior to the construction of any such alterations, additions and improvements which have been made therein by or on behalf of Tenant pursuant to Section 20. Landlord may forthwith re-enter the Premises and repossess same and remove all persons, entities, personal property and other effects therefrom, using such force as may be reasonably necessary without being guilty of forcible entry, detainer, trespass or other tort. Tenant's obligation to observe or perform these covenants shall survive the expiration or other termination of the Term of this Lease. If the last day of the Term of this Lease or any renewal falls on a Saturday, Sunday or a legal holiday, this Lease shall expire on the business day immediately preceding.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**36. <u>Cleaning Premises</u>.** Upon vacating the Premises, Tenant agrees to return the Premises to Landlord broom clean and in substantially the same condition when Tenant's possession commenced, ordinary wear and tear, casualty and condemnation excepted.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**37. <u>Removal of Fixtures</u>.** If Tenant is not in default hereunder beyond applicable cure periods, Tenant may, prior to the expiration of the Term of this Lease, or any extension thereof, remove any trade fixtures and equipment which Tenant has placed in the Premises which can be removed without significant damage to the Premises, provided Tenant promptly repairs all damage to the Premises caused by such removal.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**38. <u>Holding Over</u>.** In the event Tenant remains in possession of the Premises after the expiration of the Term hereof, with Landlord's written consent, Tenant shall be a month-to-month tenant and such tenancy shall be subject to all the provisions hereof, except that the monthly base rental shall be at 200% of the monthly Base Rent payable hereunder upon such expiration of the Term. In the event Tenant remains in possession of the Premises after the expiration of the Term hereof, without Landlord's written consent, Tenant shall be a tenant at sufferance and may be evicted by Landlord without any notice, but Tenant shall be obligated to pay Rent for such period that Tenant holds over without written consent at the same rate provided in the previous sentence and shall also be liable for any and all other damages Landlord suffers as a result of such holdover including, without limitation, the loss of a prospective tenant for such space. There shall be no renewal of this Lease by operation of law or otherwise. Nothing in this Section shall be construed as a consent by Landlord for any holding over by Tenant after the expiration of the Term hereof, and Landlord expressly reserves the right to require Tenant to surrender possession of the Premises upon the expiration of the Term or upon the earlier termination hereof and to assert any remedy in law or equity to evict Tenant and/or collect damages in connection with such holding over.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**39. <u>Attorneys' Fees</u>.** In case Landlord shall, without fault on its part, be made a party to any litigation commenced by or against Tenant, then Tenant shall pay all costs, expenses and reasonable attorneys' fees incurred or paid by Landlord in connection with such litigation. In the event of any action, suit or proceeding brought by Landlord or Tenant to enforce any of the other's covenants and agreements in this Lease, the prevailing party shall be entitled to recover from the non-prevailing party any costs, expenses and reasonable attorneys' fees incurred in connection with such action, suit or proceeding. This provision shall survive the termination of this Lease.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**40. <u>Mortgagee's Rights</u>.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Tenant agrees that this Lease shall be subject and subordinate to (i) any mortgage, deed of trust or other security interest now encumbering the Property and to all advances which may be hereafter made, to the full extent of all debts and charges secured thereby and to all renewals or extensions of any part thereof, and to any mortgage, deed of trust or other security interest which any owner of the Property may hereafter, at any time, elect to place on the Property; (ii) any assignment of Landlord's interest in the leases and rents from the Property (which includes this Lease) which now exists or which any owner of the Property may hereafter, at any time, enter into; and (iii) any Uniform Commercial Code Financing Statement covering the personal property rights of Landlord or any owner of the Property which now exists or which any owner of the Property may hereafter, at any time, elect to place on the foregoing personal property (all of the foregoing instruments set forth in (i), (ii) and (iii) above being hereafter collectively referred to as "<u>Security Documents</u>"). Tenant agrees, upon request of the holder of any Security Documents ("<u>Holder</u>"), to hereafter execute any documents which counsel for Landlord or Holder may reasonably deem necessary to evidence the subordination of this Lease to the Security Documents. Within ten (10) business days after request therefor, if Tenant fails to execute any such commercially reasonable requested documents, Landlord or Holder is hereby empowered to execute such documents in the name of Tenant evidencing such subordination, as the act and deed of Tenant, and this authority is hereby declared to be coupled with an interest and not revocable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) In the event of a foreclosure pursuant to any Security Documents, Tenant shall at the election of Landlord, thereafter remain bound pursuant to the terms of this Lease as if a new and identical Lease between the purchaser at such foreclosure ("<u>Purchaser</u>"), as landlord, and Tenant, as tenant, had been entered into for the remainder of the Term hereof and Tenant shall attorn to Purchaser upon such foreclosure sale and shall recognize Purchaser as Landlord under this Lease. Such attornment shall be effective and self-operative without the execution of any further instrument on the part of any of the parties hereto. Tenant agrees, however, to execute and deliver at any time and from time to time, upon the request of Landlord or of Holder, any instrument or certificate that may be necessary or appropriate in any such foreclosure proceeding or otherwise to evidence such attornment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) If Holder of any Security Document or Purchaser upon the foreclosure of any of the Security Documents shall succeed to the interest of Landlord under this Lease, such Holder or Purchaser shall have the same remedies, by entry, action or otherwise for the non-performance of any agreement contained in this Lease, for the recovery of Rent or for any other default or event of default hereunder that Landlord had or would have had if any such Holder or Purchaser had not succeeded to the interest of Landlord. Any such Holder or Purchaser which succeeds to the interest of Landlord hereunder, shall not be (a) liable for any act or omission of any prior Landlord (including Landlord) unless such act or omission is of a continuing nature; or (b) subject to any offsets or defenses which Tenant might have against any prior Landlord (including Landlord); or (c) bound by any Rent which Tenant might have paid for more than the current month to any prior Landlord (including Landlord); or (d) bound by any amendment or modification of this Lease made without its consent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Notwithstanding anything to the contrary set forth in this Section 40, the Holder of any Security Documents shall have the right, at any time, to elect to make this Lease superior and prior to its Security Document. No documentation, other than written notice to Tenant, shall be required to evidence that this Lease has been made superior and prior to such Security Documents, but Tenant hereby agrees to execute any documents reasonably requested by Landlord or Holder to acknowledge that this Lease has been made superior and prior to the Security Documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**41. <u>Entering Premises</u>.** Landlord may enter the Premises at reasonable hours provided that Landlord's entry shall not unreasonably interrupt Tenant's business operations and that twenty-four (24) hours prior telephonic or email notice is given when reasonably possible (and, if in the opinion of Landlord any emergency exists, at any time and without notice): (a) to make repairs, perform maintenance and provide other services described in Section 18 above which Landlord is obligated to make to the Premises pursuant to the terms of this Lease; (b) to inspect the Premises; (c) to remove from the Premises any articles or signs kept or exhibited therein in violation of the terms hereof; (d) to run pipes, conduits, ducts, wiring, cabling or any other mechanical, electrical, plumbing or HVAC equipment through the areas behind the walls, below the floors or above the ceilings in the Premises; and (e) to exercise any other right or perform any other obligation that Landlord has under this Lease. Landlord shall be allowed to take all material into and upon the Premises that may be required to make any repairs, improvements, additions or alterations, without in any way being deemed or held guilty of trespass and without constituting a constructive eviction of Tenant. The Rent reserved herein shall not abate while such repairs, improvements, alterations or additions are being made and Tenant shall not be entitled to maintain a set-off or counterclaim for damages against Landlord by reason of loss from interruption to the business of Tenant because of the prosecution of any such work. All such repairs, alterations, additions and improvements may be done during ordinary business hours, or, if any such work is at the request of Tenant to be done during any other hours, Tenant shall pay all overtime and other extra costs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**42. <u>Assignment and Subletting</u>.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Tenant may not, without the prior written consent of Landlord (which may be granted or withheld in Landlord's sole and absolute discretion), assign this Lease or any interest hereunder, or sublet the Premises or any part thereof, or permit the use of the Premises by any party other than Tenant (each, a "<u>Transfer</u>"). In the event that Tenant is a corporation or entity other than an individual or an entity whose stock is traded on a recognized public stock exchange, any transfer of a majority or controlling interest in Tenant (whether by stock transfer, merger, operation of law or otherwise) shall be considered a Transfer for purposes of this Section and shall require Landlord's prior written consent (which may be granted or withheld in Landlord's sole and absolute discretion). Consent to one assignment or sublease shall not destroy or waive this provision, and all later assignments and subleases shall likewise be made only upon the prior written consent of Landlord (which may be granted or withheld in Landlord's sole and absolute discretion). Subtenants or assignees shall become liable to Landlord for all obligations of Tenant hereunder, without relieving Tenant's liability hereunder and, in the event of any default by Tenant under this Lease, Landlord may, at its option, but without any obligation to do so, elect to treat a sublease as a direct Lease with Landlord and collect rent directly from the subtenant. In addition, upon any request by Tenant for Landlord's consent to an assignment or sublease, Landlord may elect to terminate this Lease and recapture all of the Premises (in the event of an assignment request) or the applicable portion of the Premises (in the event of a subleasing request). If Tenant desires to assign or sublease, Tenant shall provide written notice to Landlord describing the proposed transaction in detail and providing all documentation (including detailed financial information for the proposed assignee or subtenant) reasonably necessary to permit Landlord to evaluate the proposed transaction. Landlord shall notify Tenant within twenty (20) days of Landlord's receipt of such notice whether Landlord elects to exercise Landlord's recapture right and, if not, whether Landlord consents to the requested assignment or sublease. If Landlord fails to respond within such twenty (20) day period, Landlord will be deemed not to have elected to recapture and not to have consented to the assignment or sublease.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Any subletting or assignment hereunder shall not release or discharge Tenant of or from any liability, whether past, present or future, under this Lease, and Tenant shall remain fully liable hereunder. Any subtenant or assignee shall agree in a form reasonably satisfactory to Landlord to comply with and be bound by all of the terms, covenants, conditions, provisions and agreements of this Lease (to the extent of the space sublet in the case of a sublease), and Tenant shall deliver to Landlord promptly after execution, an executed copy of each such sublease or assignment and an agreement of compliance by each such subtenant or assignee. Tenant agrees to pay to Landlord all reasonable out-of-pocket costs incurred by Landlord (including fees paid to consultants (as may be required) and attorneys) in connection with any request by Tenant for Landlord to consent to any assignment or subletting by Tenant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) In the event of any assignment or sublease, whether or not requiring Landlord's consent, Landlord shall be entitled to receive, as additional rent hereunder, fifty percent (50%) of any consideration (including, without limitation, payment for leasehold improvements) paid by the assignee or subtenant for the assignment or sublease) and, in the case of a sublease, fifty percent (50%) of the excess of the amount of rent paid for the sublet space by the subtenant over the amount of Base Rent and Additional Rent payable by Tenant hereunder attributable to the sublet space for the corresponding month. To effect the foregoing, Tenant shall deduct from the monthly amounts received by Tenant from the subtenant or assignee as rent or consideration, the Base Rent and Additional Rent payable by Tenant to Landlord for the subject space, plus reasonable brokerage and legal fees, marketing costs, allowances, rent concessions and all other reasonable costs incurred by Tenant in connection with procuring the assignment or sublease, and fifty percent (50%) of the then remaining sum shall be paid promptly to Landlord. Upon Landlord's request, Tenant shall assign to Landlord all amounts to be paid to Tenant by any such subtenant or assignee and that belong to Landlord and shall direct such subtenant or assignee to pay the same directly to Landlord. If there is more than one sublease under this Lease, the amounts (if any) to be paid by Tenant to Landlord pursuant to this Paragraph 42(c) shall be separately calculated for each sublease and amounts due Landlord with regard to any one sublease may not be offset against rental and other consideration pertaining to or due under any other sublease.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**43. <u>Financial Reports</u>.** Within ten (10) business days' following Landlord's request therefor, Tenant shall submit to Landlord Tenant's and Guarantor's most recent audited financial statement (including any notes to them), or if no such audited statements have been prepared, such other financial statements (and notes to them), certified by an officer of Tenant and by Guarantor, as may have been prepared by an independent certified public accountant, or failing those, Tenant's and Guarantor's internally prepared financial statements certified by an officer of Tenant. If Tenant or Guarantor is a publicly traded corporation, Tenant or Guarantor (as applicable) may satisfy its obligations hereunder by providing to Landlord Tenant's most recent annual and quarterly reports. Landlord acknowledges that all such financial information which is not publicly available is to remain confidential for Landlord's benefit subject to the terms of this Section 43, and Landlord will not disclose any aspect of Tenant's or Guarantor's financial statements except (a) to Landlord's mortgagee, prospective mortgagees or purchasers of the Building or prospective investors in Landlord, (b) in litigation between Landlord and Tenant, and/or (c) if required by court order or applicable law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**44. <u>Sale</u>.** In the event the original Landlord hereunder, or any successor owner of the Property, shall sell or convey the Premises and/or the Property, all liabilities and obligations on the part of the original Landlord, or such successor owner, under this Lease accruing thereafter shall terminate (but not liabilities and obligations accruing prior to such sale or other conveyance), and thereupon all such liabilities and obligations shall be binding upon the new owner. Tenant agrees to attorn to such new owner.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**45. <u>Limitation of Liability</u>.** Landlord's obligations and liability with respect to this Lease shall be limited solely to Landlord's interest in the Property, as such interest is constituted from time to time, and neither Landlord nor any partner or member of Landlord, or any officer, director, shareholder, or partner or member of any partner or member of Landlord, shall have any individual or personal liability whatsoever with respect to this Lease.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**46. <u>Broker Disclosure</u>.** Landlord's Broker identified in the Summary, who is a real estate broker licensed in the State where the Property is located, has acted as agent for Landlord in this transaction and is to be paid a commission by Landlord pursuant to a separate agreement. Tenant's Broker identified in the Summary, who is a real estate broker licensed in the State where the Property is located, has acted as agent for Tenant in this transaction and is to be paid a commission by Landlord's Broker pursuant to a separate agreement. Landlord represents that Landlord has dealt with no other broker other than Landlord's Broker and Tenant's Broker identified herein. Landlord agrees that, if any other broker makes a claim for a commission based upon the actions of Landlord, Landlord shall indemnify, defend and hold Tenant harmless from any such claim. Tenant represents that Tenant has dealt with no broker other than Landlord's Broker and Tenant's Broker. Tenant agrees that, if any other broker makes a claim for a commission based upon the actions of Tenant, Tenant shall indemnify, defend and hold Landlord harmless from any such claim. Tenant will cause Tenant's Broker to execute a customary lien waiver, adequate under applicable law, to extinguish any lien claims such broker may have in connection with this Lease.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**47. <u>Landlord/Tenant</u>.** "Landlord" shall include the party named in the first paragraph hereof, its representatives, assigns and successors in title to the Property. "Tenant" shall include the party named in the first paragraph hereof, its heirs and representatives, and, if this Lease shall be validly assigned or sublet, shall also include Tenant's assignees or subtenants, as to the Premises, or portion thereof, covered by such assignment or sublease. "Landlord" and "Tenant" include male and female, singular and plural, corporation, partnership, limited liability company (and the officers, members, partners, employees or agents of any such entities) or individual, as may fit the particular parties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**48. <u>Construction of this Agreement</u>.** No failure of either party to exercise any power given thereto hereunder, or to insist upon strict compliance by the other party of its obligations hereunder, and no custom or practice of the parties at variance with the terms hereof shall constitute a waiver of such party's right to demand exact compliance with the terms hereof. Time is of the essence of this Lease. This Lease shall be interpreted and enforced without the aid of any canon, custom or rule of law requiring or suggesting construction against the party drafting or causing the drafting of the provision in question.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**49. <u>No Estate In Land</u>.** This Lease shall create the relationship of landlord and tenant between Landlord and Tenant. No estate shall pass out of Landlord. Tenant has only a right of use, not subject to levy or sale, and not assignable by Tenant except with Landlord's consent or as otherwise provided in this Lease. Landlord does not, in any way or for any purpose, become a partner of Tenant in the conduct of its business, or otherwise, or joint venturer or member a joint enterprise with Tenant. This Lease establishes a relationship solely of that of a landlord and tenant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**50. <u>Section Titles; Severability</u>.** The section titles used herein are not to be considered a substantive part of this Lease, but merely descriptive aids to identify the section to which they refer. If any section or provision herein is held invalid by a court of competent jurisdiction, all other sections or severable provisions of this Lease shall not be affected thereby, but shall remain in full force and effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**51. <u>Cumulative Rights</u>.** All rights, powers and privileges conferred hereunder upon the parties hereto shall be cumulative but not restrictive to those given by law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**52. <u>Waiver of Jury Trial</u>. LANDLORD AND TENANT SHALL AND DO HEREBY WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE OTHER ON ANY MATTERS WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT, TENANT'S USE OR OCCUPANCY OF THE PREMISES, OR ANY STATUTORY REMEDY.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**53. <u>Entire Agreement</u>.** This Lease contains the entire agreement of the parties and no representations, inducements, promises or agreements, oral or otherwise, between the parties not embodied herein shall be of any force or effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**54. <u>Submission of Agreement</u>.** Submission of this Lease to Tenant for signature does not constitute a reservation of space or an option to acquire a right of entry. This Lease is not binding or effective until execution by and delivery to both Landlord and Tenant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**55. <u>Authority</u>.** If Tenant executes this Lease as a corporation, limited partnership, limited liability company or any other type of entity, each of the persons executing this Lease on behalf of Tenant does hereby personally represent and warrant that Tenant is a duly organized and validly existing corporation, limited partnership, limited liability company or other type of entity, that Tenant is qualified to do business in the state where the Property is located, that Tenant has full right, power and authority to enter into this Lease, and that each person signing on behalf of Tenant is authorized to do so. In the event any such representation and warranty is false, all persons who execute this Lease shall be individually, jointly and severally, liable as Tenant. Upon Landlord's request, Tenant shall provide Landlord with evidence reasonably satisfactory to Landlord confirming the foregoing representations and warranties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**56. <u>Consequential Damages</u>.** Except to the extent expressly provided for hereunder, in no event shall Landlord be liable to Tenant or any other party on account of any claims for any consequential damages or any punitive damages.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**57. <u>Counterparts; Electronic Signatures</u>.** This Lease may be executed in any number of counterparts, each of which when taken together shall be deemed to be one and the same instrument. For purposes of facilitating the execution of this Agreement, an electronic signature and/or an electronic copy (e.g. fax, pdf format or email) of a handwritten signature of either party hereto shall be deemed an original.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**58. <u>Survival</u>.** All representations, warranties and indemnifications of the parties shall survive expiration or termination of this Lease.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**59. <u>Building Certification</u>.** Landlord may, from time to time, decide to develop, maintain and/or operate the Building in accordance with third-party accreditations, ratings or certifications that relate to sustainability issues, energy efficiency or other comparable goals. Tenant shall cooperate with Landlord's efforts in that regard and provide any such information required to attain these accreditations, ratings or certification. The foregoing provisions shall apply whether Landlord affirmatively seeks an accreditation, rating or certification and to thereafter maintain the accreditation, rating or certification, or to operate voluntarily in accordance with such accreditation, rating or certification

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**60. <u>Guaranty</u>.** Tenant shall cause the Guarantor identified in the Basic Lease Provisions to execute a Guaranty of the obligations of Tenant under this Lease in the form of <u>Exhibit "E"</u> attached hereto and made a part hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**61. <u>Tenant Improvement Allowance</u>.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Landlord will provide to Tenant an allowance (the "<u>Tenant Improvement</u> <u>Allowance</u>") in an amount equal to Three Hundred Sixty-Six Thousand One Hundred Sixty-Eight and 00/100 Dollars ($366,168) to be applied to the cost incurred by Tenant in the construction of improvements to the Premises (the "<u>Tenant Improvement Work</u>") or the installation of racking in the Premises ("<u>Racking</u>"), of which $213,598 will be available for Tenant's use as of September 1, 2025 (the "<u>Initial Allowance</u>") and $152,570 will be available for Tenant's use as of September 1, 2026 (the "<u>Remaining Allowance</u>"), subject to the terms of this Section 61.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Tenant and Landlord agree that all costs of the Tenant Improvement Work in excess of such Tenant Improvement Allowance shall be paid solely by Tenant and if the Tenant Improvement Work costs less than the Tenant Improvement Allowance, Tenant shall have no right to the savings. Tenant shall perform the Tenant Improvement Work in accordance with Sections 20 and 21 of this Lease. Provided Tenant is not in default of the terms of this Lease and no event has occurred, which, with the passing of time or the giving of notice, or both, would constitute a default by Tenant under this Lease, Landlord shall pay to Tenant the Tenant Improvement Allowance upon (i) the completion of the Tenant Improvement Work, (ii) receipt by Landlord of the first installment of Base Rent which is payable by Tenant and (iii) receipt from Tenant in form and substance acceptable to Landlord, the TI Documentation (as hereinafter defined), provided in no event shall Landlord be obligated pay to Tenant the Tenant Improvement Allowance constituting the Remaining Allowance until on or after September 1, 2026.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) "<u>TI Documentation</u>" shall mean the following documentation required to be delivered by Tenant to Landlord for the disbursement of the Tenant Improvement Allowance:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) A certification by tenant's architect that the Tenant Improvement Work has been completed in accordance with Tenant's plans therefor and in compliance with all applicable laws, which plans shall have been approved by Landlord prior to commencement of the Tenant Improvement Work in accordance with Section 20, and which certification shall be subject to verification by Landlord;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Copies of all invoices for labor and materials for the Tenant Improvement Work in an aggregate amount not less than the amount of the disbursement which Tenant is requesting from the Tenant Improvement Allowance;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Evidence of the satisfactory completion of all required inspections and issuance of any required approvals and signoffs of public authorities with respect thereto, if any; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) An executed and acknowledged release of mechanic's liens with respect to the Premises executed by Tenant's general contractor and by every subcontractor and supplier of labor and/or materials engaged in or supplying materials for the Tenant Improvement Work.

Notwithstanding anything set forth above, when the conditions set forth above for payment of the Tenant Improvement Allowance have been satisfied, Landlord shall have the right, at Landlord's sole option, to either (A) pay the Tenant Improvement Allowance to Tenant or (B) apply the Tenant Improvement Allowance to the next due installment of Base Rent. Notwithstanding anything set forth above, any portion of the Tenant Improvement Allowance for which Tenant has not submitted the TI Documentation on or before December 31, 2026 shall be deemed forfeited by Tenant and Tenant shall have no further right thereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Any Racking paid for by Tenant with Tenant Improvement Allowance (or via reimbursement from the Tenant Improvement Allowance) shall be deemed the Landlord's property and may not be removed or sold by Tenant prior to the expiration of the Initial Term without Landlord's prior written consent, which consent may be granted or withheld in Landlord's sole discretion. Landlord shall be entitled to any and all proceeds from the sale of the Racking prior to the expiration of the Initial Term, whether or not such sale was made with Landlord's consent. Upon expiration of the Initial Term of this Lease, then provided no default by Tenant then exists, the Racking shall be deemed Tenant's Property. In no event shall Tenant have the right to place any liens on the Racking during the Initial Term.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**62. <u>NJ Flood Risk Notification</u>.** Pursuant to N.J.S.A. 46:8-50, et seq., Landlord hereby provides to Tenant the notice set forth on <u>Exhibit E</u> attached hereto (the "**<u>Flood Risk</u> <u>Notice</u>**"). Tenant acknowledges receipt of the Flood Risk Notice.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**63. <u>Patriot Act</u>.** Tenant represents, warrants and covenants that neither Tenant nor any of its partners, officers, directors, members or shareholders (i) is listed on the Specially Designated Nationals and Blocked Persons List maintained by the Office of Foreign Asset Control, Department of the Treasury ("<u>OFAC</u>") pursuant to Executive Order No. 13224, 66 Fed. Reg. 49079 (Sept. 23, 2001) ("<u>Order</u>") and all applicable provisions of Title III of the USA Patriot Act (Public Law No. 107-56 (October 26, 2001)); (ii) is listed on the Denied Persons List and Entity List maintained by the United States Department of Commerce; (iii) is listed on the List of Terrorists and List of Disbarred Parties maintained by the United States Department of State, (iv) is listed on any list or qualification of "Designated Nationals" as defined in the Cuban Assets Control Regulations 31 C.F.R. Part 515; (v) is listed on any other publicly available list of terrorists, terrorist organizations or narcotics traffickers maintained by the United States Department of State, the United States Department of Commerce or any other governmental authority or pursuant to the Order, the rules and regulations of OFAC (including without limitation the Trading with the Enemy Act, 50 U.S.C. App. 1-44; the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701-06; the unrepealed provision of the Iraq Sanctions Act, Publ. L. No. 101-513; the United Nations Participation Act, 22 U.S.C. § 2349 aa-9; The Cuban Democracy Act, 22 U.S.C. §§ 6001-10; The Cuban Liberty and Democratic Solidarity Act, 22 U.S.C. §§ 6021-6091; and The Foreign Narcotic Kingpin Designation Act, 22 U.S.C. §§ 1901-1908, 8 U.S.C. § 1182, all as may be amended from time to time); or any other applicable requirements contained in any enabling legislation or other Executive Orders in respect of the Order (the Order and such other rules, regulations, legislation or orders are collectively called the "<u>Orders</u>"); (vi) is engaged in activities prohibited in the Orders; or (vii) has been convicted, pleaded nolo contendere, indicted, arraigned or custodially detained on charges involving money laundering or predicate crimes to money laundering, drug trafficking, terrorist-related activities or other money laundering predicate crimes or in connection with the Bank Secrecy Act (31 U.S.C. §§ 5311 <u>et seq</u>.).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**64. <u>Lease Contingency</u>.** This Lease is expressly contingent upon Tenant's delivery of both (i) the first month's Rent as provided in Section 6(b) and (ii) the Security Deposit, as required by Section 16 both before 5:00 P.M. local time at the Premises on August 6, 2025 (the "<u>**Outside Contingency Deadline**</u>" and such contingency being referred to herein as the "**<u>Lease</u> <u>Contingency</u>**"). If Tenant has not satisfied the Lease Contingency by the Outside Contingency Deadline, Landlord shall have the right at any time thereafter prior to Tenant's satisfaction of the Lease Contingency to terminate this Lease by written notice to Tenant, in which event this Lease shall terminate and be of no further force and effect and neither party shall have any further right or obligation hereunder.

**[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK. SIGNATURES APPEAR ON NEXT PAGE.]**

**IN WITNESS WHEREOF,** intending to be legally bound, Landlord and Tenant have executed this Lease as of the Effective Date.

**Tenant:**

---

| | |
|:---|:---|
| Farmmi USA, Inc., a California corporation | Farmmi USA, Inc., a California corporation |
| Bv: | /s/ Yefang Zhang |
| Name: | Yefang Zhang |
| Title: | CEO |

---

**Landlord:**

PPF INDUSTRIAL THREE MONTGOMERY WAY, LLC, a

New Jersey limited liability company

By: PPF industrial 7A Montgomery Way Holdings, LLC, a

Delaware limited liability company, its sole member

By: PPF Industrial 1 and 3 Montgomery Way, LLC, a

Delaware limited liability company, its member

By: PPF Industrial, LLC, a Delaware limited liability

company, its member

By: PPF OP, LP, a Delaware limited partnership,

its member

By: PPF OPGP, LLC, a Delaware limited

liability company, its general partner

By: Prime Property Fund, LLC, a

Delaware limited liability company, its

member

By: Morgan Stanley Real Estate

Advisor, Inc., a Delaware

corporation, its Investment Adviser

---

| | |
|:---|:---|
| By: | /s/ Neha Shetty |
| Name: | Neha Shetty |
| Title: | Vice President |

---

## Exhibit 8.1

**EXHIBIT 8.1**

**<u>List of Subsidiaries</u>**

---

| | |
|:---|:---|
| **Subsidiary / Consolidated Entities** | **Jurisdiction of incorporation or organization** |
| Farmmi International Limited | Hong Kong |
| Farmmi USA Inc | California |
| Farmmi (Hangzhou) Enterprise Management Co., Ltd | People's Republic of China |
| Lishui Farmmi E-Commerce Co., Ltd | People's Republic of China |
| Zhejiang Yitang Medical Service Co., Ltd | People's Republic of China |
| Zhejiang Yiting Medical Technology Co., Ltd | People's Republic of China |
| Farmmi (Hangzhou) Health Development Co., Ltd | People's Republic of China |
| Zhejiang Farmmi Healthcare Technology Co., Ltd | People's Republic of China |
| Jiangxi Xiangbo Agriculture and Forestry Development Co. Ltd | People's Republic of China |
| Yudu County Yada Forestry Co., Ltd | People's Republic of China |
| Zhejiang Farmmi Ecological Agricultural Technology Co., Ltd | People's Republic of China |
| Zhejiang Suyuan Agricultural Technology Co., Ltd | People's Republic of China |
| SuppChains Group Inc | California |
| SuppChains Transport Inc | California |
| SuppChains Oak Inc | New Jersey |
| Bluesage Marketing Inc | California |

---

## Exhibit 12.1

**EXHIBIT 12.1**

**<u>CERTIFICATION</u>**

I, Yefang Zhang, certify that:

1. I have reviewed this annual report on Form 20-F of Farmmi, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4. The company's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the company's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company's internal control over financial reporting; and

5. The company's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company's auditors and the audit committee of the company's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company's internal control over financial reporting.

---

| | | |
|:---|:---|:---|
| Date: February 10, 2026 | By:  | */s/ Yefang Zhang* |
|  | Name:  | Yefang Zhang |
|  | Title:  | Chief Executive Officer |

---

## Exhibit 12.2

**EXHIBIT 12.2**

**<u>CERTIFICATION</u>**

I, Zhimin Lu, certify that:

1. I have reviewed this annual report on Form 20-F of Farmmi, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4. The company's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the company's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company's internal control over financial reporting; and

5. The company's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company's auditors and the audit committee of the company's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company's internal control over financial reporting.

---

| | | |
|:---|:---|:---|
| Date: February 10, 2026 | By:  | */s/ Zhimin Lu* |
|  | Name:  | Zhimin Lu |
|  | Title:  | Chief Financial Officer |

---

## Exhibit 13.1

**EXHIBIT 13.1**

**<u>CERTIFICATION</u>**

In connection with the Annual Report of Farmmi, Inc. (the "Company") on Form 20-F for the fiscal year ended September 30, 2025 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Yefang Zhang, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

---

| | | |
|:---|:---|:---|
| Date: February 10, 2026 | By:  | */s/ Yefang Zhang* |
|  | Name:  | Yefang Zhang |
|  | Title:  | Chief Executive Officer |

---

## Exhibit 13.2

**EXHIBIT 13.2**

**<u>CERTIFICATION</u>**

In connection with the Annual Report of Farmmi, Inc. (the "Company") on Form 20-F for the fiscal year ended September 30, 2025 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Zhimin Lu, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

---

| | | |
|:---|:---|:---|
| Date: February 10, 2026 | By:  | */s/ Zhimin Lu* |
|  | Name:  | Zhimin Lu |
|  | Title:  | Chief Financial Officer |

---

## Exhibit 15.1

**EXHIBIT 15.1**

![](fami_ex151img2.jpg)

**CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

We hereby consent to the incorporation by reference in the registration statements on Form S-8 (File No. 333-224463; File No. 333-262696) and Form F-3 (File No. 333-280348; File No. 333-290193) of our report dated February 10, 2026 relating to the consolidated financial statements of Farmmi, Inc. included in its annual report on Form 20-F for the years ended September 30, 2025, 2024 and 2023. We also consent to the reference to us under the heading "Experts" in such registration statements.

/s/ YCM CPA INC.

PCAOB ID 6781

Irvine, California

February 10, 2026