Filed Pursuant to Rule 424(b)(5)
Registration No. 333-254036
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PROSPECTUS SUPPLEMENT
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(To Prospectus dated March 16, 2021)
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6,469,467
Ordinary Shares
Farmmi, Inc.
We are offering 6,469,467
ordinary shares, at a public offering price of $1.15 per ordinary share, pursuant to this prospectus supplement and the accompanying
prospectus. See “Description of Ordinary Shares” in the accompanying prospectus for more information.
The ordinary shares
trade on The Nasdaq Capital Market, or Nasdaq, under the symbol “FAMI”. On March 18, 2021, the last reported price
of the ordinary shares on Nasdaq was $1.38 per ordinary share.
On March 19, 2021,
the aggregate market value of our ordinary shares held by non-affiliates was approximately $16,260,024, based on 21,114,303 ordinary
shares outstanding, 11,614,303 of which are held by non-affiliates, and a per ordinary share price of $1.40 based on the closing
sale price of our ordinary shares on Nasdaq on March 19, 2021. We have not sold any of our ordinary shares pursuant to General
Instruction I.B.5 on Form F-3 during the prior 12 calendar month period that ends on and includes the date hereof (but excluding
this offering).
You should carefully
read this prospectus supplement and the accompanying prospectus (including all of the information incorporated by reference therein)
before you invest. Investing in our securities involves a high degree of risk, including that the trading price of ordinary shares
has been subject to volatility and investors in this offering may not be able to sell their ordinary shares above the actual offering
price or at all. See “Risk Factors” beginning on page S-4 of this prospectus supplement and on page 5 of the
accompanying prospectus for a discussion of certain factors you should consider before investing in our securities.
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Per ordinary share
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Total
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Public offering price
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$
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1.15
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$
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7,439,887.05
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Underwriting discounts and commissions(1)
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$
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0.0805
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$
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520,792.09
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Proceeds, before expenses, to us
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$
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1.0695
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$
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6,919,094.96
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(1)
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The underwriter will also
be reimbursed for certain expenses incurred in this offering. See “Underwriting” on page S-11 of this prospectus
supplement for more information regarding the underwriting compensation.
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We have granted the
underwriter an option for a period ending 25 days after the closing of this offering to purchase up to an additional 970,419 ordinary
shares at the public offering price, less the underwriting discount, solely to cover over-allotments, if any. If the underwriter
exercises the option in full, the total underwriting discount will be $598,910.82, and the total proceeds to us, before expenses,
will be $7,956,958.08.
We expect to deliver
the ordinary shares being offered pursuant to this prospectus supplement on or about March 24, 2021.
None
of the United States Securities and Exchange Commission, any state securities commission or any other regulatory body, has approved
or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus supplement or the accompanying prospectus.
Any representation to the contrary is a criminal offense.
Aegis Capital Corp.
The date of this prospectus supplement is
March 22, 2021.
TABLE
OF CONTENTS
Prospectus Supplement
Prospectus
ABOUT THIS PROSPECTUS SUPPLEMENT
This prospectus supplement
and the accompanying prospectus are part of a “shelf” registration statement on Form F-3 (File No. 333-254036) utilizing
a shelf registration process relating to the securities described in this prospectus supplement that was initially filed with the
Securities and Exchange Commission, or the SEC, on March 9, 2021, and that was declared effective by the SEC on March 16, 2021.
Other than ordinary shares being sold pursuant to this offering, we have not sold any securities under that shelf registration
statement. This document comprises two parts. The first part is this prospectus supplement, which describes the specific terms
of this offering and also adds to and updates information contained in the accompanying prospectus and the documents incorporated
by reference herein. The second part, the accompanying prospectus, provides more general information, some of which may not apply
to this offering. Generally, when we refer to this prospectus, we are referring to both parts of this document combined. To the
extent there is a conflict between the information contained in this prospectus supplement and the accompanying prospectus, you
should rely on the information in this supplement.
This prospectus supplement
and the accompanying prospectus relate to the offering of our ordinary shares. Before buying any of the ordinary shares offered
hereby, we urge you to read carefully this prospectus supplement and the accompanying prospectus, together with the information
incorporated herein by reference as described below under the heading “Incorporation by Reference.” This prospectus
supplement contains information about the ordinary shares offered hereby and may add to, update or change information in the accompanying
prospectus.
In this prospectus
supplement, as permitted by law, we “incorporate by reference” information from other documents that we file with the
SEC. This means that we can disclose important information to you by referring to those documents. The information incorporated
by reference is considered to be a part of this prospectus supplement and the accompanying prospectus, and should be read with
the same care. When we make future filings with the SEC to update the information contained in documents that have been incorporated
by reference, the information included or incorporated by reference in this prospectus supplement is considered to be automatically
updated and superseded. If the description of the offering varies between this prospectus supplement and the accompanying prospectus,
you should rely on the information contained in this prospectus supplement. However, if any statement in this prospectus supplement
or the accompanying prospectus is inconsistent with a statement in another document having a later date (including a document incorporated
by reference in the accompanying prospectus), the statement in the document having the later date modifies or supersedes the earlier
statement.
You should rely only on the information contained or incorporated by reference in this prospectus supplement,
the accompanying base prospectus and in any free writing prospectus that we have authorized for use in connection with this offering.
Neither we nor the underwriter has authorized anyone to provide you with different information. We are not making an offer of these
securities in any state or jurisdiction where the offer is not permitted.
Neither we nor the
underwriter have authorized anyone to provide you with information different from that contained in this prospectus supplement,
the accompanying prospectus or any free writing prospectus we have authorized for use in connection with this offering. We and
the underwriter take no responsibility for, and can provide no assurance as to the reliability of, any other information that others
may give you. The information contained in, or incorporated by reference into, this prospectus supplement, the accompanying prospectus,
and any free writing prospectus we have authorized for use in connection with this offering is accurate only as of the date of
each such document. Our business, financial condition, results of operations and prospects may have changed since those dates.
You should read this prospectus supplement, the accompanying prospectus, the documents incorporated by reference in this prospectus
supplement, the accompanying prospectus and any free writing prospectus that we have authorized for use in connection with this
offering in their entirety before making an investment decision. You should also read and consider the information in the documents
to which we have referred you in the sections of the accompanying prospectus entitled “Where You Can Find More Information”
and “Incorporation of Certain Documents by Reference.” These documents contain important information that you should
consider when making your investment decision.
We are not making offers
to sell or solicitations to buy our ordinary shares in any jurisdiction in which an offer or solicitation is not authorized or
in which the person making that offer or solicitation is not qualified to do so or to anyone to whom it is unlawful to make an
offer or solicitation. You should assume that the information in this prospectus supplement and the accompanying prospectus is
accurate only as of the date on the front of the respective document and that any information that we have incorporated by reference
is accurate only as of the date of the document incorporated by reference, regardless of the time of delivery of this prospectus
supplement or the accompanying prospectus or the time of any sale of a security.
No action is being taken in any jurisdiction outside the United States to permit a public offering of
the securities or possession or distribution of this prospectus supplement or the accompanying base prospectus in that jurisdiction.
Persons who come into possession of this prospectus supplement or the accompanying base prospectus in jurisdictions outside the
United States are required to inform themselves about and to observe any restrictions as to this offering and the distribution
of this prospectus supplement or the accompanying base prospectus applicable to that jurisdiction.
Throughout this prospectus,
unless otherwise designated, the terms “we”, “us”, “our”, “Farmmi”, “the
Company” and “our Company” refer to Farmmi, Inc. and its consolidated subsidiaries. References to “ordinary
shares” and “share capital” refer to the ordinary shares and share capital, respectively, of Farmmi.
This prospectus supplement
and the accompanying prospectus contain summaries of certain provisions contained in some of the documents described herein, but
reference is made to the actual documents for complete information. All of the summaries are qualified in their entirety by the
actual documents. Copies of some of the documents referred to herein have been filed, will be filed or will be incorporated herein
by reference as exhibits to the registration statement, and you may obtain copies of those documents as described below under the
section entitled “Where You Can Find More Information.”
Certain figures included
in this prospectus have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be
an arithmetic aggregation of the figures that precede them.
PROSPECTUS SUPPLEMENT SUMMARY
This summary highlights
selected information about us, this offering and information contained in greater detail elsewhere in this prospectus supplement,
the accompanying prospectus, and in the documents incorporated by reference. This summary is not complete and does not contain
all of the information that you should consider before investing in our securities. You should carefully read and consider this
entire prospectus supplement, the accompanying prospectus and the documents, including financial statements and related notes,
and information incorporated by reference into this prospectus supplement, including the financial statements and “Risk
Factors” starting on pages S-4 of this prospectus supplement, before making an investment decision. If you invest in
our securities, you are assuming a high degree of risk.
Business Overview
In the fiscal year ended September 30,
2020, we mainly processed and/or sold four categories of agricultural products: Shiitake mushrooms, Mu Er mushrooms, other edible
fungi, and other agricultural 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 the 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 facilities 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 sizes and quality from our suppliers, we may further dehydrate them again, as deemed necessary,
to ensure uniform moisture level 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 Liangpin
Market. 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.
Currently, we estimate that approximately
94% of our products are sold in China to domestic distributors and the remaining 6% are sold internationally, including USA, Japan,
Canada and other countries, through distributors. In addition, in order to enhance our e-commerce marketing presence, we developed
our own e-commerce website Farmmi Jicai (www.farmmi88.com) and online shopping mall Farmmi Liangpin Market (initially
www.farmmi88.com; later switched to mobile application and mini program on WeChat; closed in December 2020).
We conduct our business through the
following structures:
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Structure
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Company
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Business
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Related PRC Legal
Restrictions on
Foreign-owned
Entity
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Parent-subsidiary Structure
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All of our foreign-owned entity subsidiaries
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Process and/or sell agricultural products
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None
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Variable interest entity (“VIE”)
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Hangzhou Nongyuan Network Technology Co., Ltd., a domestic company
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Operate online business
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Restrictions on operation of independent online stores (deemed as value-added telecommunication service business) by foreign-owned entities
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We conduct the vast majority of our business
through a traditional equity ownership structure, which is a parent-subsidiary structure. The vast majority of our business is
processing and/or selling agricultural products. Based on the advice of our PRC legal counsel, PRC laws and regulations allow foreign-owned
entities to conduct such business directly, rather than through contractual VIE agreements. Our VIE had revenue of $4,558,854,
$6,184,460 and $3,369,258 in the year ended September 30, 2020, 2019 and 2018, respectively. As the chart above shows, our
VIE operates only where we are not permitted to own the operating company by PRC laws and regulations.
Recent Developments
Appointment of New Chief Operating Officer
On March 1, 2021, Ms.
Liang Han submitted her letter of resignation from her position as our Chief Operating Officer (“COO”), effective immediately.
Ms. Han confirmed that her resignation is purely personal and is not involved any disagreement with us. On March 4, 2021, our board
of directors approved and ratified the appointment of Mr. Dehong Zhang as our COO, effective March 1, 2021.
Corporate Information
We were incorporated
in the Cayman Islands in July 2015. In February 2018, we completed our initial public offering and our ordinary shares commenced
trading on Nasdaq under the symbol “FAMI.”
Our registered office
is located at Tricor Services (Cayman Islands) Limited, Second Floor, Century Yard, Cricket Square, P.O. Box 902, Grand Cayman,
KY1-1103, Cayman Islands. Our registered office’s telephone number is +1 (345) 743 1700. Our agent in the U.S. is Shangzhi
Zhang, with the address of 33202 Havers Drive, Cary, NC 27518.
THE OFFERING
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Ordinary shares offered by us
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6,469,467 ordinary shares (7,439,886 ordinary shares if the underwriter exercise
its option to purchase additional ordinary shares from us in full).
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Public offering price
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$1.15 per ordinary share
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Ordinary shares to be outstanding after this offering
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27,583,770 ordinary shares (28,554,189 ordinary shares if the underwriter exercise its option to purchase additional
ordinary shares from us in full).
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Over-allotment option
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We have granted the underwriter an option, exercisable until 25
days after the closing of this offering, to acquire purchase up to 970,419 additional ordinary shares solely to cover
over-allotments, if any.
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Use of proceeds
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We estimate the net proceeds from this offering will be approximately
$6.7 million (approximately $7.7 million if the underwriter exercises its over-allotment
option in full), after deducting underwriting discounts and commissions and estimated offering expenses payable by us. We currently
intend to use the net proceeds from this offering for working capital and general corporate purposes. See “Use of Proceeds”
on page S-9 of this prospectus supplement.
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Risk factors
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Investing in our shares involves a high degree of risk. See
“Risk Factors” beginning on page S-4 of this prospectus supplement, on page 5 of the accompanying prospectus and in
our Annual Report on Form 20-F filed with the SEC, on January 29, 2021, for a discussion of certain factors you should consider
before investing in our shares.
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Listing
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The ordinary shares are traded on Nasdaq under the symbol “FAMI”.
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Unless otherwise
indicated, the number of ordinary shares outstanding prior to and after this offering is based on 21,114,303 ordinary shares issued
and outstanding as of March 19, 2021, and excludes:
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800,000 ordinary shares underlying warrants we
issued to an investor in a private placement, at an exercise price of $2.00 (reset to
$1.15 upon a dilutive issuance) per share, with an expiration date of November 1, 2022;
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812,694 ordinary shares underlying warrants we issued to the
placement agent in the same private placement, at an exercise price of $2.00 (reset to
$1.15 upon a dilutive issuance) per share, with an expiration date of November 1, 2022;
and.
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571,400 ordinary shares reserved under our 2018 share incentive
plan.
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Unless otherwise indicated,
all information in this prospectus supplement assumes no exercise of the outstanding warrants described above, and assumes no exercise
of the underwriter’s over-allotment option.
RISK FACTORS
An investment in
our shares involves significant risks. Before making an investment in our shares, you should carefully read all of the information
contained in this prospectus supplement, the accompanying prospectus and in the documents incorporated by reference herein, including
the risk factors contained in our Annual Report on Form 20-F for the year ended September 30, 2020 filed with the SEC on January
29, 2021. For a discussion of risk factors that you should carefully consider before deciding to purchase any of our shares, please
review the additional risk factors disclosed below and the information under the heading “Risk Factors” in the accompanying
prospectus. In addition, please read “About this Prospectus Supplement” and “Cautionary Note Regarding Forward-Looking
Statements” in this prospectus supplement, where we describe additional uncertainties associated with our business and the
forward-looking statements included or incorporated by reference in this prospectus supplement and the accompanying prospectus.
The risks and uncertainties described below are not the only risks facing us. Please note that additional risks not currently known
to us or that we currently deem immaterial also may adversely affect our business, results of operations, financial condition and
prospects. Our business, financial condition, results of operations and prospects could be materially and adversely affected by
these risks, and you may lose all or part of your original investment.
Risks
Related to an Investment in Our Shares and this Offering
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.
The stock market in
general and the market prices of the ordinary shares on Nasdaq, in particular, are or will be subject to fluctuation, and changes
in these prices may be unrelated to our operating performance. During the last quarter of 2020, the market price of our ordinary
shares fluctuated from a high of $1.45 per ordinary share to a low of $0.69 per ordinary share, and the price of our ordinary shares
continues to fluctuate. We anticipate that the market prices of our shares will continue to be subject to wide fluctuations.
The market price of our shares is, and will be, subject to a number of factors, including:
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actual or anticipated fluctuations in our revenue and other operating results;
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the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections;
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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;
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announcements by us or our competitors of significant products or features, technical innovations, acquisitions, strategic partnerships, joint ventures, or capital commitments;
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price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole;
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lawsuits threatened or filed against us; and
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other events or factors, including those resulting from war or incidents of terrorism, or responses to these events.
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These factors
may materially and adversely affect the market price of our shares s and result in substantial losses by our investors.
We will have broad discretion in
the use of the net proceeds of this offering and may not use them effectively.
We intend to use the
net proceeds from this offering for general corporate purposes and working capital. As a result, our management will retain broad
discretion in the allocation and use of the net proceeds of this offering, and investors will be relying on the judgment of our
management with regard to the use of these net proceed, and could spend the proceeds in ways that do not improve our results of
operations or enhance the value of our ordinary shares. The failure by management to apply these funds effectively could result
in financial losses that could have a material adverse effect on our business, cause the price of our ordinary share to decline
and delay the development of our Company.
We will
need additional capital in the future. If additional capital is not available, we may not be able to continue to operate our business
pursuant to our business plan or we may have to discontinue our operations entirely.
Regardless of the success
of this offering, we will require additional capital in the future. We have incurred losses in each year since our inception. If
we continue to use cash at our historical rates of use we will need significant additional financing, which we may seek through
a combination of private and public equity offerings, debt financings and collaborations and strategic and licensing arrangements.
To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest
will be diluted, and the terms of any such offerings may include liquidation or other preferences that may adversely affect the
then existing shareholders rights. Debt financing, if available, would result in increased fixed payment obligations and may involve
agreements that include covenants limiting or restricting our ability to take specific actions such as incurring debt or making
capital expenditures. If we raise additional funds through collaboration, strategic alliance or licensing arrangements with third
parties, we may have to relinquish valuable rights to our technologies, future revenue streams or product candidates, or grant
licenses on terms that are not favorable to us.
Ordinary shares representing a substantial
percentage of our outstanding shares may be sold in this offering, which could cause the price of our ordinary shares to decline.
Pursuant to this offering,
we may sell up to 7,439,886 ordinary shares representing approximately 35.2%, of our outstanding ordinary shares as of March 22,
2021. This sale and any future sales of a substantial number of ordinary shares in the public market, or the perception that such
sales may occur, could materially adversely affect the price of our ordinary shares. We cannot predict the effect, if any, that
market sales of those ordinary shares or the availability of those ordinary shares for sale will have on the market price of our
ordinary shares.
Raising additional capital by issuing
shares may cause dilution to existing shareholders.
We are currently authorized
to issue 200,000,000 ordinary shares. As of March 22, 2021, we had 21,114,303 ordinary shares issued and outstanding, and
2,184,094 ordinary shares reserved for future issuance under outstanding warrants and under our 2018 share incentive plan.
We may seek additional
capital through a combination of private and public equity offerings, debt financings and collaborations and strategic and licensing
arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership
interest will be diluted, and the terms of any such offerings may include liquidation or other preferences that may adversely affect
the then existing shareholders rights. Debt financing, if available, would result in increased fixed payment obligations and may
involve agreements that include covenants limiting or restricting our ability to take specific actions such as incurring debt or
making capital expenditures. If we raise additional funds through collaboration, strategic alliance or licensing arrangements with
third parties, we may have to relinquish valuable rights to our technologies, future revenue streams or product candidates, or
grant licenses on terms that are not favorable to us.
Future sales of our ordinary shares could reduce the market
price of the ordinary shares.
Substantial
sales of our ordinary shares may cause the market price of our ordinary shares to decline. Sales by us or our security holders
of substantial amounts of our ordinary shares, or the perception that these sales may occur in the future, could cause a reduction
in the market price of our ordinary shares.
The
issuance of any additional ordinary shares or any securities that are exercisable for or convertible into our ordinary shares,
may have an adverse effect on the market price of the ordinary shares and will have a dilutive effect on our existing shareholders
and holders of ordinary shares.
We do not know whether a market for
the ordinary shares will be sustained or what the trading price of the ordinary shares will be and as a result it may be difficult
for you to sell your ordinary shares.
Although
our ordinary shares trade on Nasdaq, an active trading market for the ordinary shares may not be sustained. It may be difficult
for you to sell your ordinary shares without depressing the market price for the ordinary shares. As a result of these and other
factors, you may not be able to sell your ordinary shares. Further, an inactive market may also impair our ability to raise capital
by selling ordinary shares, or may impair our ability to enter into strategic partnerships or acquire companies or products by
using our ordinary shares as consideration.
We have no plans to pay dividends
on our ordinary shares, and you may not receive funds without selling the ordinary shares.
We have not declared
or paid any cash dividends on our ordinary shares, nor do we expect to pay any cash dividends on our ordinary shares for the foreseeable
future. We currently intend to retain any additional future earnings to finance our operations and growth and, therefore, we have
no plans to pay cash dividends on our ordinary shares at this time. Any future determination to pay cash dividends on our ordinary
shares will be at the discretion of our board of directors and will be dependent on our earnings, financial condition, operating
results, capital requirements, any contractual restrictions, and other factors that our board of directors deems relevant. Accordingly,
you may have to sell some or all of the ordinary shares in order to generate cash from your investment. You may not receive a gain
on your investment when you sell the ordinary shares and may lose the entire amount of your investment.
As a foreign private issuer, we are
permitted to follow certain home country corporate governance practices instead of applicable SEC and Nasdaq requirements, which
may result in less protection than is accorded to investors under rules applicable to domestic issuers.
As a foreign private
issuer, we are permitted to follow certain home country corporate governance practices instead of those otherwise required under
the rules of the Nasdaq Stock Market for domestic issuers. Following our home country governance practices as opposed to the requirements
that would otherwise apply to a U.S. company listed on the Nasdaq Stock Market, may provide less protection than is accorded to
investors under the rules of the Nasdaq Stock Market applicable to domestic issuers. For more information, see “Item 16G.
Corporate Governance” in our Annual Report on Form 20-F for the year ended September 30, 2020.
In addition, as a foreign
private issuer, we are exempt from the rules and regulations under the Securities Exchange Act of 1934, as amended, or the Exchange
Act, related to the furnishing and content of proxy statements, and our officers, directors and principal shareholders
are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition,
we are not required under the Exchange Act to file annual, quarterly and current reports and financial statements with the SEC
as frequently or as promptly as domestic companies whose shares are registered under the Exchange Act.
Risks Related to the Current Pandemic
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 the outbreak of respiratory illness caused by a novel
coronavirus (“COVID-19”) first identified in Wuhan, Hubei Province, China and declared as a pandemic by the World Health
Organization in March 2020. Any outbreak of contagious diseases, 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 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 COVID-19 has had a significant impact on our operations
for the year ended September 30, 2020 and could materially adversely affect our business and financial results for the remaining
months of the 2021 fiscal year.
Our ability to manufacture and/or sell our
products may be impaired by damages or disruption to our manufacturing, warehousing or distribution capabilities, or to the capabilities
of our suppliers, logistics service providers or distributors as a result of the impact from COVID-19. This damage or disruption
could result from events or factors that are impossible to predict or are beyond our control, such as raw material scarcity, pandemics,
government shutdowns, disruptions in logistics, supplier capacity constraints, adverse weather conditions, natural disasters, fire,
terrorism or other events. In December 2019, COVID-19 emerged in Wuhan, China. Because of the shelter-in-place orders and
travel restrictions mandated by the Chinese government, the production and sales activities of the Company stopped during the end
of January and February 2020, which adversely impacted the Company’s production and sales during that period. Although
the production and sales resumed at the end of March 2020, the COVID-19 outbreak has had a significant adverse impact on our
business and operations during the fiscal year ended September 30, 2020. The Company’s operations may be affected by
the ongoing outbreak of COVID-19. The continued uncertainties associated with COVID-19 may cause the Company’s revenue and
cash flows to underperform in the next 12 months. A resurgence could negatively affect the sales, the collection of the payments
from account receivables and the utilization of advances to suppliers. The extent of the future impact of COVID-19 is still highly
uncertain and cannot be predicted as of the financial statement reporting date. If COVID-19 further impacts its production and
sales, the Company’s financial condition, results of operations, and cash flows could continue to be adversely affected.
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus supplement includes and
incorporates forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities
Act”), and Section 21E of the Exchange Act. We intend such forward-looking statements to be covered by the safe harbor provisions
for forward-looking statements contained in the United States Private Securities Litigation Reform Act of 1995. All statements,
other than statements of historical facts, included or incorporated by reference in this prospectus supplement and the accompanying
prospectus regarding our strategy, future operations, financial position, future revenues, projected costs, prospects, plans and
objectives of management, including, without limitation, the discussion of whether and when potential acquisition transactions
will close, expectations concerning our ability to increase our revenue, expectations with respect to operational efficiency, expectations
regarding financing, and expectations concerning our business strategy, under “Prospectus Supplement Summary - Recent Developments,”
are forward-looking statements. The words “anticipates,” “believes,” “estimates,” “expects,”
“intends,” “may,” “plans,” “projects,” “will,” “would”
and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain
these identifying words. We cannot guarantee that we actually will achieve the plans, intentions or expectations disclosed in our
forward-looking statements and you should not place undue reliance on our forward-looking statements. There are a number of important
factors that could cause our actual results to differ materially from those indicated by these forward-looking statements. These
important factors include the factors that we identify in the documents we incorporate by reference in this prospectus supplement
and the accompanying prospectus, as well as other information we include or incorporate by reference in this prospectus supplement
and the accompanying prospectus. See “Risk Factors.” You should read these factors and other cautionary statements
made in this prospectus supplement and the accompanying prospectus, and in the documents we incorporate by reference as being applicable
to all related forward-looking statements wherever they appear in this prospectus supplement and the accompanying prospectus, and
in the documents incorporated by reference herein and therein. We do not assume any obligation to update any forward-looking statements
made by us except to the extent required by law.
USE OF PROCEEDS
We estimate the net
proceeds from this offering will be approximately $6.7 million, after deducting underwriter
commissions and discounts, and estimated offering expenses payable by us.
We currently intend
to use the net proceeds from this offering for working capital and general corporate purposes. As a result, our management will
retain broad discretion in the allocation and use of the net proceeds of this offering, and investors will be relying on the judgment
of our management with regard to the use of these net proceeds. Pending application of the net proceeds for the purposes as described
above, we expect to invest the net proceeds in short-term, interest-bearing securities, investment grade securities, certificates
of deposit or direct or guaranteed obligations of the U.S. government.
CAPITALIZATION
The following
table sets forth our capitalization:
|
|
●
|
on an actual basis as of September 30, 2020;
|
|
|
●
|
on a pro forma basis to give effect to the issuance of 596,600 ordinary shares to our employees in March 2021 under our 2018 share incentive plan; and
|
|
|
|
|
|
|
●
|
on a pro forma as adjusted basis to give further effect to this
offering based on a public offering price of $1.15 per ordinary share, after deducting the underwriting discounts and
commissions and estimated offering expenses payable by us.
|
The information set
forth in the following table should be read in conjunction with, and is qualified in its entirety by, reference to our audited
and unaudited financial statements and the notes thereto incorporated by reference into this prospectus supplement and the accompanying
prospectus.
|
|
|
As of September 30, 2020
|
|
|
|
|
Actual
|
|
|
Pro Forma
|
|
|
Pro Forma As Adjusted
|
|
|
|
|
(in U.S. dollars)
|
|
|
Cash
|
|
$
|
548,151
|
|
|
$
|
548,151
|
|
|
$
|
7,247,190
|
|
|
Total Current Assets
|
|
|
37,022,171
|
|
|
|
37,022,171
|
|
|
|
43,721,210
|
|
|
Total Assets
|
|
|
38,191,746
|
|
|
|
38,191,746
|
|
|
|
44,890,785
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
8,367,387
|
|
|
|
8,367,387
|
|
|
|
8,367,387
|
|
|
Total Liabilities
|
|
|
9,036,589
|
|
|
|
9,036,589
|
|
|
|
9,036,589
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary
Shares, par value $0.001, 200,000,000 shares authorized and 20,517,703, 21,114,303 and 27,583,770 shares issued and outstanding
- actual, pro forma and pro forma as adjusted
|
|
|
20,518
|
|
|
|
21,115
|
|
|
|
27,584
|
|
|
Additional paid-in capital
|
|
|
20,335,228
|
|
|
|
21,140,041
|
|
|
|
27,832,611
|
|
|
Statutory reserves
|
|
|
972,092
|
|
|
|
972,092
|
|
|
|
972,092
|
|
|
Retained earnings
|
|
|
6,770,426
|
|
|
|
5,965,016
|
|
|
|
5,965,016
|
|
|
Accumulated other comprehensive loss
|
|
|
186,912
|
|
|
|
186,912
|
|
|
|
186,912
|
|
|
Total Shareholder Equity attributable to the Company
|
|
|
28,285,176
|
|
|
|
28,285,176
|
|
|
|
34,984,215
|
|
|
Noncontrolling Interest
|
|
|
869,981
|
|
|
|
869,981
|
|
|
|
869,981
|
|
|
Total Equity
|
|
|
29,155,157
|
|
|
|
29,155,157
|
|
|
|
35,854,196
|
|
|
Total Liabilities and Equity
|
|
$
|
38,191,746
|
|
|
$
|
38,191,746
|
|
|
$
|
44,890,785
|
|
The preceding
table excludes as of September 30, 2020: (a) 800,000 ordinary shares underlying warrants we issued to an investor in a
private placement, at an exercise price of $2.00 (reset to $1.15 upon a dilutive issuance) per share, with an
expiration date of November 1, 2022, (b) 812,694 ordinary shares underlying warrants we issued to the placement agent in the
same private placement, at an exercise price of $2.00 (reset to $1.15 upon
a dilutive issuance) per share, with an expiration date of November 1, 2022, and (c) 571,400 ordinary shares reserved under
our 2018 share incentive plan.
UNDERWRITING
Subject to the terms and conditions set forth in the underwriting
agreement, dated March 22, 2021, between us and Aegis Capital Corp. (the “underwriter” or “Aegis”) as the
exclusive underwriter of this offering, we have agreed to sell to the underwriter, and the underwriter has agreed to purchase from
us the number of ordinary shares shown opposite its name below:
|
Underwriter
|
|
|
Number
of ordinary shares
|
|
|
Aegis Capital Corp.
|
|
|
6,469,467
|
|
|
Total
|
|
|
6,469,467
|
|
The underwriting agreement provides that the obligations of
the underwriter are subject to certain conditions precedent such as the receipt by the underwriter of officers’ certificates
and legal opinions and approval of certain legal matters by their counsel. The underwriting agreement provides that the underwriter
will purchase all of the shares if any of them are purchased. We have agreed to indemnify the underwriter against specified liabilities,
including liabilities under the Securities Act, and to contribute to payments the underwriter may be required to make in respect
thereof.
The underwriter is
offering the ordinary shares subject to prior sale, when, as and if issued to and accepted by them, subject to approval of legal
matters by its counsel and other conditions specified in the underwriting agreement. The underwriter reserves the right to withdraw,
cancel or modify offers to the public and to reject orders in whole or in part.
We have granted the
underwriter an over-allotment option. This option, which is exercisable for 25 days after the closing of this offering, permits
the underwriter to purchase up to an aggregate of 970,419 additional ordinary shares (equal
to 15% of the number of shares offered hereby) at the public offering price per share, less underwriting discounts and commissions,
solely to cover over-allotments, if any. If the underwriter exercises this option in whole or in part, then the underwriter will
be severally committed, subject to the conditions described in the underwriting agreement, to purchase the additional ordinary
shares in proportion to their respective commitments set forth in the prior table.
Discounts, Commissions and Reimbursement
The underwriter has
advised us that it proposes to offer the ordinary shares to the public at the public offering price per share set forth on the
cover page of this prospectus supplement. The underwriter may offer ordinary shares to securities dealers at that price less a
concession of not more than $0.04 per ordinary share. After the offering, the public offering price, concession and
reallowance to dealers may be reduced by the underwriter. No such reduction will change the amount of proceeds to be received
by us as set forth on the cover page of this prospectus supplement.
The following table summarizes the underwriting discounts and
commissions and proceeds, before expenses, to us assuming no exercise and full exercise by the underwriter of its over-allotment
option, respectively:
|
|
|
|
|
|
Total
|
|
|
|
|
Per
ordinary share
|
|
|
Without
Option
|
|
|
With
Option
|
|
|
Public
offering price
|
|
$
|
1.15
|
|
|
$
|
7,439,887.05
|
|
|
$
|
8,555,868.90
|
|
|
Underwriting
discounts and commissions (7%)
|
|
$
|
0.0805
|
|
|
$
|
520,792.09
|
|
|
$
|
598,910.82
|
|
|
Proceeds, before
expenses, to us
|
|
$
|
1.0695
|
|
|
$
|
6,919,094.96
|
|
|
$
|
7,956,958.08
|
|
In addition, we have also agreed to pay all expenses in connection
with the offering, including the following expenses: (a) all filing fees and expenses relating to the registration of the shares
with SEC; (b) all FINRA public offering filing fees; (c) all fees and expenses relating to the listing of the Company’s equity
or equity-linked securities on an Exchange; (d) all fees, expenses and disbursements relating to the registration or qualification
of the shares under the “blue sky” securities laws of such states and other jurisdictions as Aegis may reasonably designate
(including, without limitation, all filing and registration fees, and the reasonable fees and disbursements of the Company’s
“blue sky” counsel, which will be Aegis’s counsel) unless such filings are not required in connection with the
Company’s proposed Exchange listing; (e) all fees, expenses and disbursements relating to the registration, qualification
or exemption of the shares under the securities laws of such foreign jurisdictions as Aegis may reasonably designate; (f) the costs
of all mailing and printing of the offering documents; (g) transfer and/or stamp taxes, if any, payable upon the transfer of shares
from the Company to Aegis; and (h) the fees and expenses of the Company’s accountants; and (i) a maximum of $75,000 for fees
and expenses including “road show”, diligence, and reasonable legal fees and disbursements for the underwriter’s
legal counsel.
We estimate the expenses
of this offering payable by us, not including underwriting discounts and commissions and non-accountable expense allowance, including
amounts for which we agreed to reimburse the underwriter for certain of its expenses, will be approximately $220,056.
Lock-Up Agreements
The Company, and each
of its directors and executive officers, have agreed for a period of 90 days and 60 days, respectively, after the date of this
offering, subject to certain exceptions, without the prior written consent of the underwriter, not to directly or indirectly:
|
|
●
|
issue (in the case of us), pledge, sell, contract to sell, sell
any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend,
or otherwise transfer or dispose of, directly or indirectly, any shares or any securities convertible into or exercisable or exchangeable
for the shares of the Company; and
|
|
|
●
|
in the case of us, file or caused to be filed any registration statement with the SEC relating to the offering of any shares of capital stock of the Company or any securities convertible into or exercisable or exchangeable for shares of capital stock of the Company except for (i) the adoption of an equity incentive plan and the grant of awards or equity pursuant to any equity incentive plan, and the filing of a registration statement on Form S-8; provided, however, that any sales by parties to the lock-ups shall be subject to the lock-up agreements and (ii) this issuance of shares in connection with an acquisition or a strategic relationship which may include the sale of equity securities; provided, that none of such shares shall be saleable in the public market until the expiration of the 90 day period described above.
|
Right of First Refusal
Pursuant to the terms of the underwriting agreement, if, for
the period ending six (6) months from the closing of this offering, subject to certain exceptions set forth in the underwriting
agreement, we or any of our subsidiaries (a) decide to finance or refinance any indebtedness, Aegis (or any affiliate designated
by Aegis) shall have the right to act as the sole book-runner, sole manager, sole placement agent or sole agent with respect to
such financing or refinancing; or (b) decide to raise funds by means of a public offering (including an at-the-market facility)
or a private placement or any other capital raising financing of equity, equity-linked or debt securities, Aegis (or any affiliate
designated by Aegis) shall have the right to act as the sole book-running manager, sole underwriter or sole placement agent for
such financing.
Electronic Offer, Sale and Distribution
of Shares
A prospectus in electronic
format may be made available on the websites maintained by the underwriter or one or more of selling group members. The underwriter
may agree to allocate a number of shares to selling group members for sale to its online brokerage account holders. Internet distributions
will be allocated by the underwriter and selling group members that will make internet distributions on the same basis as other
allocations. Other than the prospectus in electronic format, the information on these websites is not part of, nor incorporated
by reference into, this prospectus or the registration statement of which this prospectus forms a part, has not been approved or
endorsed by us, and should not be relied upon by investors.
Stabilization
The underwriter has
advised us that it, pursuant to Regulation M under the Exchange Act, and certain persons participating in the offering may engage
in short sale transactions, stabilizing transactions, syndicate covering transactions or the imposition of penalty bids in connection
with this offering. These activities may have the effect of stabilizing or maintaining the market price of the shares at a level
above that which might otherwise prevail in the open market. Establishing short sales positions may involve either “covered”
short sales or “naked” short sales.
“Covered”
short sales are sales made in an amount not greater than the underwriters’ option to purchase additional shares in this offering.
The underwriters may close out any covered short position by either exercising their option to purchase additional shares or purchasing
shares in the open market. In determining the source of shares to close out the covered short position, the underwriter will consider,
among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase
shares through the option to purchase additional shares.
“Naked”
short sales are sales in excess of the option to purchase additional shares. The underwriter must close out any naked short position
by purchasing shares in the open market. A naked short position is more likely to be created if the underwriter is concerned that
there may be downward pressure on the price of our shares in the open market after pricing that could adversely affect investors
who purchase in this offering.
A stabilizing bid is
a bid for the purchase of shares on behalf of the underwriter for the purpose of fixing or maintaining the price of the shares.
A syndicate covering transaction is the bid for or the purchase of shares on behalf of the underwriter to reduce a short position
incurred by the underwriter in connection with the offering. Similar to other purchase transactions, the underwriter’s purchases
to cover the syndicate short sales may have the effect of raising or maintaining the market price of our shares or preventing or
retarding a decline in the market price of our shares. As a result, the price of our shares may be higher than the price that might
otherwise exist in the open market. A penalty bid is an arrangement permitting the underwriter to reclaim the selling concession
otherwise accruing to a syndicate member in connection with the offering if the shares originally sold by such syndicate member
are purchased in a syndicate covering transaction and therefore have not been effectively placed by such syndicate member.
Neither we nor the
underwriter makes any representation or prediction as to the direction or magnitude of any effect that the transactions described
above may have on the price of our shares. The underwriter is not obligated to engage in these activities and, if commenced, any
of the activities may be discontinued at any time.
The underwriter may also engage in passive market making transactions in our shares on Nasdaq in accordance
with Rule 103 of Regulation M during a period before the commencement of offers or sales of our shares in this offering and extending
through the completion of distribution. A passive market maker must display its bid at a price not in excess of the highest independent
bid of that security. However, if all independent bids are lowered below the passive market maker’s bid, that bid must then
be lowered when specified purchase limits are exceeded.
Other Relationships
The underwriter and
certain of its affiliates are full service financial institutions engaged in various activities, which may include securities trading,
commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging,
financing and brokerage activities. The underwriter and certain of its affiliates have, from time to time, performed, and may in
the future perform, various commercial and investment banking and financial advisory services for us and our affiliates, for which
they received or will receive customary fees and expenses.
In the ordinary course of their various business activities,
the underwriter and certain of its affiliates may make or hold a broad array of investments and actively trade debt and equity
securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the
accounts of their customers, and such investment and securities activities may involve securities and/or instruments issued by
us and our affiliates. The underwriter and certain of its respective affiliates may also communicate independent investment recommendations,
market color or trading ideas and/or publish or express independent research views in respect of such securities or instruments
and may at any time hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.
Offer restrictions outside the United
States
Other than in the United
States, no action has been taken by us or the underwriter that would permit a public offering of the shares offered by this prospectus
supplement in any jurisdiction where action for that purpose is required. The shares offered by this prospectus supplement and
the accompanying prospectus may not be offered or sold, directly or indirectly, nor may this prospectus supplement or any other
offering material or advertisements in connection with the offer and sale of any such shares be distributed or published in any
jurisdiction, except under circumstances that will result in compliance with the applicable rules and regulations of that jurisdiction.
Persons into whose possession this prospectus supplement comes are advised to inform themselves about and to observe any restrictions
relating to the offering and the distribution of this prospectus supplement. This prospectus supplement does not constitute an
offer to sell or a solicitation of an offer to buy any shares offered by this prospectus supplement in any jurisdiction in which
such an offer or a solicitation is unlawful.
EXPERTS
The financial statements
incorporated by reference in this prospectus for the year ended September 30, 2020 have been audited by Friedman LLP, an independent
registered public accounting firm, as set forth in their report thereon included therein, and incorporated herein by reference,
and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.
LEGAL
MATTERS
Certain legal matters
relating to the offering of our shares under this prospectus supplement will be passed upon for us by Campbells LLP, Cayman Islands
with respect to matters of Cayman Islands law and by Kaufman & Canoles, P.C., Richmond, Virginia with respect to matters
of U.S. law. Certain legal matters in connection with this offering will be passed upon for the underwriter by Sichenzia Ross
Ference LLP, New York, New York with respect to the U.S. laws.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with
the SEC a registration statement on Form F-3 and relevant exhibits and schedules, under the Securities Act, covering the ordinary
shares represented by ordinary shares to be sold in this offering. This prospectus supplement, which constitutes a part of the
registration statement, summarizes material provisions of contracts and other documents that we refer to in the prospectus supplement.
Since this prospectus supplement does not contain all of the information contained in the registration statement, you should read
the registration statement and its exhibits and schedules for further information with respect to us and our ordinary shares. The
registration statement is available at the SEC’s website at www.sec.gov.
We are subject to the
information reporting requirements of the Exchange Act that are applicable to foreign private issuers, and under those requirements
we file reports with the SEC. Those other reports or other information are available at the SEC’s website noted above. As
a foreign private issuer, we are exempt from the rules under the Exchange Act related to the furnishing and content of proxy statements,
and our officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions
contained in Section 16 of the Exchange Act. In addition, we are not required under the Exchange Act to file annual, quarterly
and current reports and financial statements with the SEC as frequently or as promptly as United States companies whose shares
are registered under the Exchange Act. However, we file with the SEC, within four months after the end of each fiscal year, or
such applicable time as required by the SEC, an annual report on Form 20-F containing financial statements audited by an independent
registered public accounting firm, and submit to the SEC, on Form 6-K, unaudited financial information for the first 6 months of
each fiscal year within such applicable time as required by the SEC.
INCORPORATION BY REFERENCE
We are allowed to incorporate
by reference the information we file with the SEC, which means that we can disclose important information to you by referring to
those documents. The information incorporated by reference is considered to be part of this prospectus supplement. We incorporate
by reference in this prospectus the documents listed below, and any future Annual Reports on Form 20-F or Reports on Form 6-K (to
that extent that such Form 6-K indicates that it is intended to be incorporated by reference herein) filed with the SEC pursuant
to the Exchange Act prior to the termination of the offering. The documents we incorporate by reference are:
|
|
·
|
Our Annual Report on Form 20-F for the year ended September 30, 2020, filed on January 29, 2021; and
|
|
|
·
|
Our Current Report on Form 6-K furnished on March 5, 2021; and
|
|
|
|
|
|
|
·
|
The description of our ordinary shares contained in our registration statement on Form 8-A filed on February 12, 2018 and as it may be further amended from time to time.
|
As you read the above
documents, you may find inconsistencies in information from one document to another. If you find inconsistencies between the documents
and this prospectus supplement, you should rely on the statements made in the most recent document. All information appearing in
this prospectus supplement is qualified in its entirety by the information and financial statements, including the notes thereto,
contained in the documents incorporated by reference herein.
We will provide to
each person, free of charge, including any beneficial owner, to whom this prospectus supplement is delivered, a copy of these filings,
at no cost, upon written or oral request to us at the following address:
Farmmi, Inc.
Fl 1, Building No. 1, 888 Tianning Street,
Liandu District
Lishui, Zhejiang Province
People’s Republic of China 323000
+86-057-82612876 — telephone
Attn: Investor Relations
You should rely only
on the information contained or incorporated by reference in this prospectus supplement, the accompanying prospectus and any free
writing prospectus we have authorized for use in connection with this offering. We have not authorized any other person to provide
you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We
are not making an offer to sell these shares in any jurisdiction where the offer or sale is not permitted. You should assume that
the information appearing in this prospectus supplement is accurate only as of the date on the front cover of this prospectus supplement,
or such earlier date, that is indicated in this prospectus supplement. Our business, financial condition, results of operations
and prospects may have changed since that date.
EXPENSES
The following table
sets forth costs and expenses, other than any underwriter commissions and discounts, non-accountable expense allowance and reasonable
out-of-pocket expenses, we expect to incur in connection with the offering:
|
Legal fees and expenses
|
|
$
|
110,056
|
|
|
Accounting fees
|
|
$
|
25,000
|
|
|
Printing expenses
|
|
$
|
5,000
|
*
|
|
Miscellaneous
|
|
$
|
5,000
|
*
|
|
|
|
|
|
|
|
Total
|
|
$
|
145,056
|
*
|
* Estimated
PROSPECTUS
$100,000,000
FARMMI, INC.
Ordinary Shares, Share Purchase Contracts,
Share Purchase Units, Debt Securities, Warrants, Rights and Units
We
may offer to sell, from time to time, in one or more offerings, any combination of ordinary shares, share purchase contracts,
share purchase units, debt securities, warrants, rights, or units having an aggregate initial offering price not exceeding $100,000,000
(or its equivalent in foreign or composite currencies) on terms to be determined at the time of offering. We may also offer any
of these securities that may be issuable upon the conversion, exercise or exchange of debt securities, rights or warrants.
The aggregate offering price of the securities issued under
this prospectus may not exceed $100,000,000. The prices and other terms of the securities that we will offer will be determined
at the time of their offering and will be described in a supplement to this prospectus.
This prospectus provides a general description of the securities
we may offer. We will provide the specific terms of the securities offered in one or more supplements to this prospectus. We may
also authorize one or more free writing prospectuses to be provided to you in connection with these offerings. You should read
carefully this prospectus, the applicable prospectus supplement and any related free writing prospectus, as well as any documents
incorporated by reference before you invest in any of our securities. This prospectus may not be used to offer or sell any securities
unless accompanied by the applicable prospectus supplement.
The securities issued under this prospectus may be offered directly
or through underwriters, agents or dealers. The names of any underwriters, agents or dealers will be included in a supplement to
this prospectus.
The aggregate market value of our outstanding ordinary shares
held by non-affiliates was approximately $13 million based on 20,517,703 shares of outstanding ordinary shares, of which 11,017,703
shares are held by non-affiliates, and a per share price of $1.17 based on the closing sale price of our ordinary shares as reported
by the Nasdaq Capital Market on March 8, 2021. We have not offered any securities pursuant to General Instruction I.B.5 of Form
F-3 during the prior 12 calendar month period that ends on and includes the date of this prospectus.
Investing
in our securities being offered pursuant to this prospectus involves a high degree of risk. You should carefully read and consider
the risk factors beginning on page 5 of this prospectus, as well as those included in the periodic and other reports
we file with the Securities and Exchange Commission before you make your investment decision.
Neither the Securities and Exchange Commission, any United
States state securities commission, the Cayman Islands Monetary Authority, nor any state securities commission has approved or
disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
The date of this
prospectus is March 16, 2021
TABLE OF CONTENTS
You
should rely only on the information contained or incorporated by reference in this prospectus or any prospectus supplement. We
have not authorized any person to provide you with different or additional information. If anyone provides you with different or
inconsistent information, you should not rely on it. This prospectus is not an offer to sell securities, and it is not soliciting
an offer to buy securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information
appearing in this prospectus or any prospectus supplement, as well as information we have previously filed with the SEC and incorporated
by reference, is accurate as of the date on the front of those documents only. Our business, financial condition, results of operations
and prospects may have changed since those dates.
PROSPECTUS SUMMARY
This prospectus is part of a registration statement that we
filed with the Securities and Exchange Commission (SEC) using a “shelf” registration process. Under this shelf registration
process, we may offer from time to time, in one or more offerings, securities having an aggregate initial offering price of up
to $100,000,000 (or its equivalent in foreign or composite currencies). This prospectus provides you with a general description
of the securities that may be offered. Each time we offer securities under this shelf registration statement, we will provide you
with a prospectus supplement that describes the specific amounts, prices and terms of the securities being offered. The prospectus
supplement also may add, update or change information contained in this prospectus. You should read carefully both this prospectus
and any prospectus supplement together with additional information described below under the caption “Where You Can Find
More Information,” before making an investment decision. We have incorporated exhibits into this registration statement.
You should read the exhibits carefully for provisions that may be important to you.
Industry data and other statistical information used in this
prospectus, any applicable prospectus supplement, any related free writing prospectus and any document incorporated by reference
into this prospectus are based on independent publications, reports by market research firms or other published independent sources.
Some data are also based on our good faith estimates, derived from our review of internal surveys and the independent sources listed
above. Although we believe these sources are reliable, we have not independently verified the information.
You should rely only on the information contained or incorporated
by reference in this prospectus or any prospectus supplement. We have not authorized any person to provide you with different or
additional information. If anyone provides you with different or inconsistent information, you should not rely on it. This prospectus
is not an offer to sell securities, and it is not soliciting an offer to buy securities in any jurisdiction where the offer or
sale is not permitted. You should assume that the information appearing in this prospectus or any prospectus supplement, as well
as information we have previously filed with the SEC and incorporated by reference, is accurate as of the date on the front of
those documents only. Our business, financial condition, results of operations and prospects may have changed since those dates.
We may sell securities through underwriters or dealers, through
agents, directly to purchasers or through a combination of these methods. We and our agents reserve the sole right to accept or
reject, in whole or in part, any proposed purchase of securities. The prospectus supplement, which we will provide to you each
time we offer securities, will set forth the names of any underwriters, agents or others involved in the sale of securities and
any applicable fee, commission or discount arrangements with them. See the information described below under the heading “Plan
of Distribution.”
THIS PROSPECTUS MAY NOT BE USED TO SELL ANY SECURITIES UNLESS
ACCOMPANIED BY THE APPLICABLE PROSPECTUS SUPPLEMENT.
This prospectus is not an offer to sell these securities
and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. You should
not assume that the information in this prospectus or a prospectus supplement is accurate as of any date other than the date on
the front of the document.
Except as otherwise indicated by the context, references in
this prospectus to:
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“we,” “us,” “our company,” “our” and “Farmmi” refer to
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Farmmi, Inc., a Cayman Islands company limited by shares (“FMI”
when individually referenced);
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Farmmi International Limited, a Hong Kong limited company (“Farmmi
International” when individually referenced), which is a wholly owned subsidiary of FMI;
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Farmmi
(Hangzhou) Enterprise Management Co., Ltd., a PRC company (“Farmmi Enterprise”) (also referred to as 农米（杭州）企业管理有限公司
in Chinese), which is a wholly owned subsidiary of Farmmi International;
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Lishui Farmmi Technology Co., Ltd., a PRC company (“Farmmi Technology”) (also referred to as 丽水农米科技有限公司 in Chinese), which is a wholly owned subsidiary of Farmmi International;
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Hangzhou
Suyuan Agriculture Technology Co., Ltd., a PRC company (“Suyuan Agriculture”) (also referred to as 杭州素源农业科技有限公司
in Chinese), 50% of which is owned by Farmmi Enterprise and 50% of which is owned by Farmmi Technology;
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Hangzhou
Nongyuan Network Technology Co., Ltd., a PRC company (“Nongyuan Network”) (also referred to as 杭州农源网络科技有限公司
in Chinese), which is wholly owned by Ms. Xinyang Wang, a PRC citizen and wholly controlled by Suyuan Agriculture through VIE;
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Zhejiang
FLS Mushroom Co., Ltd., a PRC company (“FLS Mushroom”) (also referred to as 浙江富来森食用菌有限公司
in Chinese), which is a wholly owned subsidiary of Suyuan Agriculture;
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Zhejiang
Forest Food Co., Ltd., a PRC company (“Forest Food”) (also referred to as 浙江富来森食品有限公司
in Chinese), which is a 96.1528%-owned subsidiary of Suyuan Agriculture, the remaining 3.8472% of Forest Food being held by Hangzhou
Dawo Software Ltd. Co. (“Dawo”), a PRC company and a non-affiliated third party;
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Zhejiang
Farmmi Food Co., Ltd., a PRC company (“Farmmi Food”) (also referred to as浙江农米食品有限公司
in Chinese), which is a wholly owned subsidiary of Suyuan Agriculture; and
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Lishui Farmmi E-Commerce Co., Ltd., a PRC company (“Farmmi E-Commerce”) (also referred to as 丽水农米电子商务有限公司 in Chinese), which is 98% owned by Nongyuan Network and 2% owned by Suyuan Agriculture.
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all references to “RMB,” “Renminbi” and “¥” are to the legal currency of China and all references to “USD,” “U.S. dollars,” “dollars,” and “$” are to the legal currency of the United States; and
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“China” and “PRC” refer to the People’s Republic of China, and for the purpose of this prospectus only, excluding Taiwan, Hong Kong and Macau.
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INFORMATION REGARDING FORWARD-LOOKING
STATEMENTS; CAUTIONARY LANGUAGE
This prospectus, any applicable prospectus supplement, any related
free writing prospectus and any document incorporated by reference into this prospectus contain, or will contain, forward-looking
statements within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform
Act of 1995, or the PSLRA. In addition, we, or our executive officers on our behalf, may from time to time make forward-looking
statements in reports and other documents we file with the SEC or in connection with oral statements made to the press, potential
investors or others. Forward-looking statements include all statements that are not statements of historical facts and may relate
to, but are not limited to, expectations or estimates of future operating results or financial performance, capital expenditures,
regulatory compliance, plans for growth and future operations, as well as assumptions relating to the foregoing. In some cases,
you can identify forward-looking statements by terminology such as “may,” “will,” “should,”
“could,” “expect,” “plan,” “anticipate,” “believe,” “estimate,”
“predict,” “intend,” “potential,” “continue” or the negative of these terms or
other similar terminology. Although we do not make forward-looking statements unless we believe we have a reasonable basis for
doing so, we cannot guarantee their accuracy, and actual results may differ materially from those we anticipated due to a number
of uncertainties, many of which cannot be foreseen. Our actual results could differ materially from those anticipated in these
forward-looking statements for many reasons, including, but not limited to, the risks and uncertainties described in the section
entitled “Risk Factors” in this prospectus, in any applicable prospectus supplement, any related free writing prospectus
and in any document incorporated by reference into this prospectus.
We believe that it is important to communicate our future expectations
to potential investors. However, there may be events in the future that we are not able to accurately predict or control and that
may cause actual events or results to differ materially from the expectations expressed in or implied by our forward-looking statements.
The risks and uncertainties described in the section entitled “Risk Factors” in this prospectus, in any applicable
prospectus supplement, any related free writing prospectus and in any document incorporated by reference into this prospectus provide
examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe
in our forward-looking statements. Before you invest in our securities, you should be aware that the occurrence of these risks
and uncertainties could negatively impact, among other things, our business, cash flows, results of operations, financial condition
and share price. Potential investors should not place undue reliance on our forward-looking statements.
Forward-looking statements regarding our present plans or expectations
for sales, supply contracts, purchases, sources and availability of financing, and growth involve risks and uncertainties relative
to return expectations and related allocation of resources, and changing economic or competitive conditions, as well as the negotiation
of agreements with suppliers and customers, which could cause actual results to differ from present plans or expectations, and
such differences could be material. Similarly, forward-looking statements regarding our present expectations for operating results
and cash flow involve risks and uncertainties related to factors such as utilization rates, material prices, demand for products
by our customers, supply and other factors described in the section entitled “Risk Factors” in this prospectus, in
any applicable prospectus supplement, any related free writing prospectus and in any document incorporated by reference into this
prospectus, which would also cause actual results to differ from present plans. Such differences could be material.
All future written and oral forward-looking statements attributable
to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred
to in this section. Forward-looking statements speak only as of the date the statements are made. New risks and uncertainties arise
from time to time, and we cannot predict those events or how they may affect us. We assume no obligation to, and do not plan to,
update any forward-looking statements as a result of new information, future events or developments, except as required by U.S.
federal securities laws. You should read this prospectus, any applicable prospectus supplement, any related free writing prospectus
and any document incorporated by reference into this prospectus with the understanding that we cannot guarantee future results,
levels of activity, performance or achievements and that actual results may differ materially from what we expect. The forward-looking
statements contained in this prospectus, any applicable prospectus supplement, any related free writing prospectus and any document
incorporated by reference into this prospectus are excluded from the safe harbor protection provided by the PSLRA.
ABOUT OUR COMPANY
In
the fiscal year ended September 30, 2020, we mainly process and/or sell four categories of agricultural products: Shiitake mushrooms,
Mu Er mushrooms, other edible fungi, and other agricultural 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 the 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 facilities 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 quality from our suppliers, we may further dehydrate them again,
as deemed necessary, to ensure uniform moisture 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 Liangpin Market. 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.
Currently,
we estimate that approximately 94% of our products are sold in China to domestic distributors and the remaining 6% are sold internationally,
including USA, Japan, Canada and other countries, through distributors. In addition, in order to enhance our e-commerce marketing
presence, we developed our own e-commerce website Farmmi Jicai (www.farmmi88.com) and online shopping mall Farmmi
Liangpin Market (initially www.farmmi88.com; later switched to mobile application and mini program on WeChat; closed in December
2020). We are also testing a few offline stores in Hangzhou to expand our brand presence and grow revenue.
We conduct our business through following structures:
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Structure
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Company
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Business
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Related PRC Legal
Restrictions on
Foreign-owned
Entity
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Parent-subsidiary Structure
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All of our foreign-owned entity subsidiaries
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Process and/or sell agricultural products
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None
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Variable interest entity (“VIE”)
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Hangzhou Nongyuan Network Technology Co., Ltd., a domestic company
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Operate online business
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Restrictions on operation of independent online stores (deemed as value-added telecommunication service business) by foreign-owned entities
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We
conduct the vast majority of our business through a traditional equity ownership structure, which is a parent-subsidiary structure.
The vast majority of our business is processing and/or selling agricultural products. Based on the advice of our PRC legal counsel,
Zhejiang Zhengbiao Law Firm, PRC laws and regulations allow foreign-owned entities to conduct such business directly, rather than
through contractual VIE agreements. Our VIE had revenue of $4,558,854, $6,184,460 and $3,369,258 in the year ended
September 30, 2020, 2019 and 2018, respectively. As the chart above shows, our VIE operates only where we are not permitted
to own the operating company by PRC laws and regulations.
RISK FACTORS
Before making an investment decision, you should carefully consider
the risks described under “Risk Factors” in the applicable prospectus supplement and in our then most recent Annual
Report on Form 20-F, or included in any Annual Report on Form 20-F filed with the SEC after the date of this prospectus or Reports
on Form 6-K furnished to the SEC after the date of this prospectus, together with all of the other information appearing in this
prospectus or incorporated by reference into this prospectus and any applicable prospectus supplement, in light of your particular
investment objectives and financial circumstances. Please see “Where You Can Find More Information” on how you can
view our SEC reports and other filings. Our business, financial condition or results of operations could be materially adversely
affected by any of these risks. The trading price of our securities could decline due to any of these risks, and you may lose all
or part of your investment. When we offer and sell any securities pursuant to a prospectus supplement, we may include additional
risk factors that you should carefully consider.
The risks and uncertainties described in this prospectus, any
applicable prospectus supplement, any related free writing prospectus and any document incorporated by reference into this prospectus
are not the only ones that we face. Additional risks and uncertainties that we do not presently know about or that we currently
believe are not material may also adversely affect our business. If any of the risks and uncertainties described in this prospectus,
any applicable prospectus supplement, any related free writing prospectus and any document incorporated by reference into this
prospectus actually occur, our business, financial condition and results of operations could be materially and adversely affected.
The value of our securities could decline and you may lose some or all of your investment if one or more of these risks and uncertainties
develop into actual events. Keep these risk factors in mind when you read forward-looking statements contained in this prospectus,
any applicable prospectus supplement, any related free writing prospectus and any document incorporated by reference into this
prospectus.
Risks Related to this Offering
Future sales of our ordinary shares
may cause the prevailing market price of our shares to decrease.
The issuance and sale of additional ordinary
shares or securities convertible into or exercisable for ordinary shares could reduce the prevailing market price for our ordinary
shares as well as make future sales of equity securities by us less attractive or not feasible. The sale of ordinary shares issued
upon the exercise of our outstanding options could further dilute the holdings of our then existing shareholders.
There has been and may continue to be
significant volatility in the volume and price of our ordinary shares on the Nasdaq Capital Market.
The market price of our ordinary shares
has been and may continue to be highly volatile. Factors, including changes in the Chinese food industry, changes in the Chinese
economy, potential infringement of our intellectual property, competition, concerns about our financial position, operations results,
litigation, government regulation, developments or disputes relating to agreements, patents or proprietary rights, may have a significant
impact on the market volume and price of our stock. Unusual trading volume in our shares occurs from time to time.
We have not paid and do not intend to
pay dividends on our ordinary shares. Investors in this offering may never obtain a return on their investment.
We have not paid dividends on our ordinary
since inception, and do not intend to pay any dividends on our ordinary shares in the foreseeable future. We intend to reinvest
earnings, if any, in the development and expansion of our business. Accordingly, you will need to rely on sales of your ordinary
shares after price appreciation, which may never occur, in order to realize a return on your investment.
Risks Related to the Current Pandemic
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 the outbreak of respiratory illness caused by a novel coronavirus (“COVID-19”)
first identified in Wuhan, Hubei Province, China and declared as a pandemic by the World Health Organization in March 2020.
Any outbreak of contagious diseases, 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 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 coronavirus disease 2019 (COVID-19) has had a significant
impact on our operations for the year ended September 30, 2020 and could materially adversely affect our business and financial
results for the remaining months of the 2021 fiscal year.
Our ability to manufacture and/or sell our products may be impaired
by damage or disruption to our manufacturing, warehousing or distribution capabilities, or to the capabilities of our suppliers,
logistics service providers or distributors as a result of the impact from COVID-19. This damage or disruption could result from
events or factors that are impossible to predict or are beyond our control, such as raw material scarcity, pandemics, government
shutdowns, disruptions in logistics, supplier capacity constraints, adverse weather conditions, natural disasters, fire, terrorism
or other events. In December 2019, COVID-19 emerged in Wuhan, China. Because of the shelter-in-place orders and travel restrictions
mandated by the Chinese government, the production and sales activities of the Company stopped during the end of January and
February 2020, which adversely impacted the Company’s production and sales during that period. Although the production
and sales resumed at the end of March 2020, the COVID-19 outbreak has had a significant adverse impact on our business and
operations during the fiscal year ended September 30, 2020. The Company’s operations may be affected by the ongoing
outbreak of COVID-19. The continued uncertainties associated with COVID-19 may cause the Company’s revenue and cash flows
to underperform in the next 12 months. A resurgence could negatively affect the sales, the collection of the payments from account
receivables and the utilization of advances to suppliers. The extent of the future impact of COVID-19 is still highly uncertain
and cannot be predicted as of the financial statement reporting date. If COVID-19 further impacts its production and sales, the
Company’s financial condition, results of operations, and cash flows could continue to be adversely affected.
OFFER STATISTICS AND EXPECTED TIMETABLE
We may sell from time to time pursuant
to this prospectus (as may be detailed in prospectus supplements) an indeterminate number of securities as shall have a maximum
aggregate offering price of $100,000,000. The actual per share price of the securities that we will offer pursuant hereto will
depend on a number of factors that may be relevant as of the time of offer (see “Plan of Distribution” below).
CAPITALIZATION AND INDEBTEDNESS
Our capitalization will be set forth
in the applicable prospectus supplement or in a report on Form 6-K subsequently furnished to the SEC and specifically incorporated
by reference into this prospectus.
RATIO OF EARNINGS TO FIXED CHARGES
Our ratio of earnings to fixed charges for each of the five
(5) most recently completed fiscal years and any required interim periods will each be specified in a prospectus supplement or
in a document we file with the SEC and incorporate by reference pertaining to the issuance, if any, by us of debt securities in
the future.
USE OF PROCEEDS
Unless otherwise set forth in the applicable prospectus supplement,
we intend to use the net proceeds of any offering of securities for working capital and other general corporate purposes, which
may include the repayment or refinancing of outstanding indebtedness and the financing of future acquisitions. We may have significant
discretion in the use of any net proceeds. The net proceeds may be invested temporarily in interest-bearing accounts and short-term
interest-bearing securities until they are used for their stated purpose. We may provide additional information on the use of the
net proceeds from the sale of the offered securities in an applicable prospectus supplement relating to the offered securities.
GENERAL DESCRIPTION OF THE SECURITIES
WE MAY OFFER
We may offer our ordinary shares, share
purchase contracts, share purchase units, warrants, debt securities, rights or units, with a total value of up to $100,000,000
from time to time under this prospectus at prices and on terms to be determined by our board of directors and based on market conditions
at the time of any offering. This prospectus provides you with a general description of the securities we may offer. Each time
we offer a type or series of securities under this prospectus, we will provide a prospectus supplement that will describe the specific
amounts, prices and other important terms of the securities, including, to the extent applicable:
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Rates and times of payment of dividends, if any;
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Redemption, conversion, exercise and exchange terms, if any;
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Restrictive covenants, if any;
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Voting or other rights, if any;
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Conversion prices, if any; and
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Material U.S. federal income tax considerations.
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The prospectus supplement and any related
free writing prospectus that we may authorize to be provided to you may also add, update or change information contained in this
prospectus or in documents we have incorporated by reference. However, no prospectus supplement or free writing prospectus will
offer a security that is not registered and described in this prospectus at the time of the effectiveness of the registration statement
of which this prospectus is a part.
DESCRIPTION OF SHARE CAPITAL
We (Farmmi, Inc.) are a Cayman Islands exempted company with
limited liability duly registered with the Cayman Islands Registrar of Companies. Our affairs are governed by our First Amended
and Restated Memorandum and Articles of Association, as amended by a shareholders’ resolutions dated 12 September 2020 (together,
the “Amended and Restated Memorandum and Articles of Association”), the Companies Act (as revised) of the Cayman
Islands (the “Companies Act”), which is referred to as the Companies Act below, and the ordinary law of the
Cayman Islands. Our corporate purposes are unrestricted and we have the authority to carry out any object not prohibited by any
law as provided by Section 7(4) of the Companies Act.
As
of the date of this prospectus, we have authorized 200,000,000 ordinary shares, of $0.001 par value per share each, of
which 20,517,703 are issued and outstanding, excluding the shares underlying (a) warrants we issued to an investor in a
private placement to purchase an aggregate of 800,000 ordinary shares, at an exercise price of $2 per share, with an expiration
date of November 1, 2022, and (b) warrants we issued to the placement agent in the same private placement to purchase an aggregate
of 812,694 ordinary shares, at an exercise price of $2 per share, with an expiration date of November 1, 2022.
Ordinary Shares
General
All of our issued and outstanding ordinary shares are fully
paid and non-assessable. Our ordinary shares are issued in registered form and are issued when registered in our register of members.
Our shareholders who are non-residents of the Cayman Islands may freely hold and vote their ordinary shares. Our First Amended
and Restated Memorandum and Articles of Association do not permit us to issue bearer shares.
Listing
Our ordinary shares list on the Nasdaq Capital Market under
the symbol “FAMI.”
Transfer Agent and Registrar
The transfer agent and registrar for our ordinary shares is
TranShare Corporation.
Our board of directors has general and unconditional authority
to grant options over, offer or otherwise deal with or dispose of any unissued shares in our capital without further action by
our shareholders (whether forming part of the original or any increased share capital), either at a premium or at par, with or
without preferred, deferred or other special rights or restrictions, whether in regard to dividend, voting, return of capital or
otherwise and to such persons, on such terms and conditions, and at such times as the directors may decide, but so that no share
shall be issued at a discount, except in accordance with the provisions of the Companies Act. We will not issue bearer shares.
Our board of directors, without shareholder approval, may issue
preferred shares with voting, conversion or other rights that could adversely affect the voting power and other rights of holders
of our ordinary shares. Subject to the directors’ duty of acting in our best interest, preferred shares can be issued quickly
with terms calculated to delay or prevent a change in control of us or make removal of management more difficult. Additionally,
the issuance of preferred shares may have the effect of decreasing the market price of the ordinary shares, and may adversely affect
the voting and other rights of the holders of ordinary shares. Issuance of these preferred shares may dilute the voting power of
holders of our ordinary shares.
Fiscal Year
Our fiscal year begins on October 1 of each year and ends
on September 30 of the next calendar year.
Record Dates
For the purpose of determining shareholders entitled to notice
of, or to vote at any general meeting of shareholders or any adjournment thereof, or shareholders entitled to receive dividend
or other distribution payments, or in order to make a determination of shareholders for any other purpose, our board of directors
may determine a record date which shall not exceed forty (40) clear days prior to the date where the determination will be made.
General Meetings of Shareholders
As a condition of admission to a shareholders’ meeting,
a shareholder must be duly registered as our shareholder at the applicable record date for that meeting and all calls or installments
then payable by such shareholder to us in respect of our ordinary shares must have been paid.
Subject to any special rights or restrictions as to voting then
attached to any shares, at any general meeting every shareholder who is present in person or by proxy (or, in the case of a shareholder
being a corporation, by its duly authorized representative not being himself or herself a shareholder entitled to vote) shall have
one vote per ordinary share.
As a Cayman Islands exempted company, we are not obliged by
the Companies Act to call annual general meetings; however, our First Amended and Restated Articles of Association provide that
in each year we will hold an annual general meeting of shareholders at a time determined by our board of directors. For the annual
general meeting of shareholders the agenda will include, among other things, the adoption of our annual accounts and the appropriation
of our profits. In addition, the agenda for a general meeting of shareholders will only include such items as have been included
therein by the board of directors.
Also, we may, but are not required to (unless required by the
Act), in each year hold any other extraordinary general meeting.
The Companies Act of the Cayman Islands provides shareholders
with only limited rights to requisition a general meeting, and does not provide shareholders with any right to put any proposal
before a general meeting. However, these rights may be provided in a company’s articles of association. Our First Amended
and Restated Articles of Association provide that upon the requisition of shareholders representing not less than two-thirds of
the voting rights entitled to vote at general meetings, our board will convene an extraordinary general meeting and put the resolutions
so requisitioned to a vote at such meeting. However, shareholders may propose only ordinary resolutions to be put to a vote at
such meeting and shall have no right to propose resolutions with respect to the election, appointment or removal of directors or
with respect to the size of the board. Our First Amended and Restated Articles of Association provide no other right to put any
proposals before annual general meetings or extraordinary general meetings.
Subject to regulatory requirements, our annual general meeting
and any extraordinary general meetings must be called by not less than ten (10) clear days’ notice prior to the relevant
shareholders meeting and convened by a notice discussed below. Alternatively, upon the prior consent of all holders entitled to
receive notice, with regards to the annual general meeting, and the holders of 95% in par value of the shares entitled to receive
notice of some particular meeting, that meeting may be convened by a shorter notice and in a manner deemed appropriate by those
holders.
We will give notice of each general meeting of shareholders
by publication on our website and in any other manner that we may be required to follow in order to comply with Cayman Islands
law, Nasdaq Capital Market and SEC requirements. The holders of registered shares may be convened for a shareholders’ meeting
by means of letters sent to the addresses of those shareholders as registered in our shareholders’ register, or, subject
to certain statutory requirements, by electronic means. We will observe the statutory minimum convening notice period for a general
meeting of shareholders, which is currently seven (7) clear days.
A quorum for a general meeting consists of any one or more persons
holding or representing by proxy not less than one-third of our issued voting shares entitled to vote upon the business to be transacted.
A resolution put to the vote of the meeting shall be decided
on a poll. An ordinary resolution to be passed by the shareholders requires the affirmative vote of a simple majority of the votes
cast by, or on behalf of, the shareholders entitled to vote present in person or by proxy and voting at the meeting. A special
resolution requires the affirmative vote of no less than two-thirds of the votes cast by the shareholders entitled to vote who
are present in person or by proxy at a general meeting (except for certain matters described below which require an affirmative
vote of two-thirds). Both ordinary resolutions and special resolutions may also be passed by a unanimous written resolution signed
by all the shareholders of our company, as permitted by the Companies Act and our First Amended and Restated Articles of Association.
Our First Amended and Restated Articles of Association provide
that the affirmative vote of no less than two-thirds of votes cast by the shareholders entitled to vote who are present in person
or by proxy at a general meeting shall be required to approve any amendments to any provisions of our First Amended and Restated
Articles of Association that relate to or have an impact upon the procedures regarding the election, appointment, removal of directors
and size of the board.
Pursuant to our First Amended and Restated Articles of Association,
the general meeting of shareholders is chaired by the chairman of our board of directors. If the chairman of our board of directors
is absent, the directors present at the meeting shall appoint one of them to be chairman of the general meeting. If neither the
chairman nor another director is present at the general meeting of shareholders within fifteen minutes after the time appointed
for holding the meeting, the directors present may elect any one of them to be chairman. The order of business at each meeting
shall be determined by the chairman of the meeting, and he or she shall have the right and authority to prescribe such rules, regulations
and procedures and to do all such acts and things as are necessary or desirable for the proper conduct of the meeting, including,
without limitation, the establishment of procedures for the maintenance of order and safety, limitations on the time allotted to
questions or comments on the affairs of the Company, restrictions on entry to such meeting after the time prescribed for the commencement
thereof, and the opening and closing of the polls.
Liquidation Rights
Subject to any special rights, privileges or restrictions as
to the distribution of available surplus assets on liquidation applicable to any class or classes of shares (1) if we are
wound up and the assets available for distribution among our shareholders are more than sufficient to repay the whole of the capital
paid up at the commencement of the winding up, the excess shall be distributed pari passu among our shareholders in
proportion to the amount paid up at the commencement of the winding up on the shares held by them, respectively, and (2) if
we are wound up and the assets available for distribution among our shareholders as such are insufficient to repay the whole of
the paid-up capital, those assets shall be distributed so that, as nearly as may be, the losses shall be borne by our shareholders
in proportion to the capital paid up at the commencement of the winding up on the shares held by them, respectively.
If we are wound up, the liquidator may with the sanction
of a special resolution and any other sanction required by the Companies Act, divide among our shareholders in specie the whole
or any part of our assets and may, for such purpose, value any assets and may determine how such division shall be carried out
as between the shareholders or different classes of shareholders. The liquidator may also, with the sanction of a special resolution,
vest any part of these assets in trustees upon such trusts for the benefit of our shareholders as the liquidator shall think fit,
but so that no shareholder will be compelled to accept any assets, shares or other securities upon which there is a liability.
Changes to Capital
Pursuant to our First Amended and Restated Articles of Association,
we may from time to time by shareholders resolution passed by a simple majority of the voting rights entitled to vote at a general
meeting:
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increase our capital by such sum, to be divided into shares of such amounts, as the relevant
resolution shall prescribe;
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consolidate and divide all or any of our share capital into shares of larger amount than our
existing shares;
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convert all or any of its paid up shares into stock and reconvert that stock into paid up shares
of any denomination;
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sub-divide our existing shares, or any of them, into shares of smaller amounts than is fixed
pursuant to our First Amended and Restated Articles of Association; and
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cancel any shares which 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 our share capital by the amount of the shares so cancelled, subject to the
provisions of the Companies Act.
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In addition, subject to the provisions of the Companies Act
and our First Amended and Restated Articles of Association, we may:
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issue shares on terms that they are to be redeemed or are liable to be redeemed;
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purchase our own shares (including any redeemable shares); and
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make a payment in respect of the redemption or purchase of our own shares in any manner authorized
by the Companies Act, including out of our capital.
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Transfer of Shares
Subject to any applicable restrictions set forth in our First
Amended and Restated Articles of Association, any of our shareholders may transfer all or a portion of their ordinary shares by
an instrument of transfer in the usual or ordinary form or in the form prescribed by the Nasdaq Capital Market or in any other
form which our board of directors may approve.
We have received approval to have our ordinary shares listed
on the Nasdaq Capital Market. Our ordinary shares will be traded in book-entry form and may be transferred in accordance with our
First Amended and Restated Articles of Association and the rules and regulations of such exchange.
Our board of directors may, in its absolute discretion, refuse
to register a transfer of any ordinary share that is not a fully paid up share to a person of whom it does not approve, or any
ordinary share issued under any share incentive scheme for employees upon which a restriction on transfer imposed thereby still
subsists, and it may also, without prejudice to the foregoing generality, refuse to register a transfer of any ordinary share to
more than four joint holders or a transfer of any share that is not a fully paid up share on which we have a lien. Our board of
directors may also decline to register any transfer of any registered ordinary share unless:
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a fee of such maximum sum as the Nasdaq Capital Market may determine to be payable or such lesser
sum as the board of directors may from time to time require is paid to us in respect thereof;
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instrument of transfer is in respect of only one class of shares;
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the ordinary shares transferred are fully paid and free of any lien;
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the instrument of transfer is lodged at the registered office or such other place (i.e., our
transfer agent) at which the register of shareholders is kept in accordance with the accompanied by any relevant share certificate(s)
and/or such other evidence as the board of directors may reasonably require to show the right of the transferor to make the transfer;
and
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if applicable, the instrument of transfer is duly and properly stamped.
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If our board of directors refuse to register a transfer, they
are required, within one month 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.
Share Repurchase
We are empowered by the Companies Act and our First Amended
and Restated Articles of Association to purchase our own shares, subject to certain restrictions. Our board of directors may only
exercise this power on our behalf, subject to the Companies Act, our First Amended and Restated Articles of Association and to
any applicable requirements imposed from time to time by the SEC, the Nasdaq Capital Market, or by any recognized stock exchange
on which our securities are listed.
Dividends and Capitalization of Profits
Subject to the Companies Act, our shareholders may, by resolution
passed by a simple majority of the voting rights entitled to vote at the general meeting, declare dividends (including interim
dividends) to be paid to our shareholders but no dividend shall be declared in excess of the amount recommended by our board of
directors. Dividends may be declared and paid out of funds lawfully available to us. Except as otherwise provided by the rights
attached to shares, all dividends shall be declared and paid according to the amounts paid up on the shares on which the dividend
is paid. All dividends shall be paid in proportion to the number of ordinary shares a shareholder holds during any portion or portions
of the period in respect of which the dividend is paid; but, if any share is issued on terms providing that it shall rank for dividend
as from a particular date, that share shall rank for dividend accordingly. Our board of directors may also declare and pay dividends
out of the share premium account or any other fund or account which can be authorized for this purpose in accordance with the Companies
Act.
In addition, our board of directors may:
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resolve to capitalize any undivided profits not required for paying any preferential dividend
(whether or not they are available for distribution) or any sum standing to the credit of the our share premium account or capital
redemption reserve;
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appropriate the sum resolved to be capitalized to the shareholders who would have been entitled
to it if it were distributed by way of dividend and in the same proportions and apply such sum on their behalf either in or towards
paying up the amounts, if any, for the time being unpaid on any shares held by them respectively, or in paying up in full unissued
shares or debentures of a nominal amount equal to such sum, and allot the shares or debentures credited as fully paid to those
shareholders, or as they may direct, in those proportions, or partly in one way and partly in the other;
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resolve that any shares so allotted to any shareholder in respect of a holding by him/her of
any partly-paid shares rank for dividend, so long as such shares remain partly paid, only to the extent that such partly paid shares
rank for dividend;
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make such provision by the issue of fractional certificates or by payment in cash or otherwise
as they determine in the case of shares or debentures becoming distributable under our First Amended and Restated Articles of Association
in fractions; and
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authorize any person to enter on behalf of all our shareholders concerned in an agreement with
us providing for the allotment of them respectively, credited as fully paid, of any shares or debentures to which they may be entitled
upon such capitalization, any agreement made under such authority being binding on all such shareholders.
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Appointment, Disqualification and Removal of Directors
We are managed by our board of directors, which consists of
a specified number of directors determined, from time to time, by a majority of the directors then in office. Our First Amended
and Restated Articles of Association provide that, unless otherwise determined a special resolution of shareholders in a general
meeting, the minimum number of directors will be four. There are no provisions relating to retirement of directors upon reaching
any age limit. Our First Amended and Restated Articles of Association also provide that our board of directors must always comply
with the residency and citizenship requirements of the U.S. securities laws applicable to foreign private issuers.
Our First Amended and Restated Articles of Association provide
that persons standing for election as directors at a duly constituted annual general meeting with requisite quorum shall be elected
by an ordinary resolution of our shareholders, which requires the affirmative vote of a simple majority of the votes cast on the
resolution by the shareholders entitled to vote who are present in person or by proxy at the meeting. Each director shall be appointed
and elected to a term expiring at the applicable annual shareholders meeting as set forth below or at such time as such director’
successor is appointed and elected.
Any vacancies on our board of directors arising other than upon
the expiry of a Director’s term at an annual general meeting or additions to the existing board of directors can be filled
only by the affirmative vote of a simple majority of the remaining directors holding office, although these directors constitute
less than a quorum. Shareholders do not have the right to nominate, elect or remove directors, or to fill vacancies on our board
of directors, other than upon the expiry of a director’s term at the relevant annual general meeting.
Grounds for Removing a Director
A director will be removed from office if the director:
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becomes prohibited by law from being a director;
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becomes bankrupt or makes any arrangement or composition with his creditors generally;
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dies, or is, in the opinion of all his co-directors, incapable by reason of mental disorder of
discharging his duties as director;
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resigns his office by notice to us; and
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he has for more than six months been absent without permission of the directors from meetings
of the board of directors held during that period, and the directors resolve that his/her office be vacated.
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Replacement directors must be nominated by our board of directors.
Shareholders do not have the right to remove directors.
Proceedings of the Board of Directors
Our First Amended and Restated Articles of Association provide
that our business is managed and conducted by our board of directors. The quorum necessary for the board meeting may be fixed by
the board and, unless so fixed at another number, will be a majority of the board of directors then holding office and business
at any meeting shall be decided by a majority of votes. In the case of an equality of votes, the chairman shall have a casting
vote.
Subject to the provisions of our First Amended and Restated
Articles of Association, our board of directors may regulate their proceedings as they determine is appropriate.
Subject to the provisions of our First Amended and Restated
Articles of Association, to any directions given by the affirmative vote of a simple majority of the votes cast on the resolution
by the shareholders entitled to vote who are present in the meeting and the listing rules of the Nasdaq Capital Market, our board
of directors may from time to time at its discretion exercise all powers of our company, including to raise capital or borrow money,
to mortgage or charge all or any part of the undertaking, property and assets (present and future) and uncalled capital of our
company and, subject to the Companies Act, issue debentures, bonds and other securities of our company, whether outright or as
collateral security for any debt, liability or obligation of our company or of any third party.
Inspection of Books and Records
Holders of ordinary shares have no general right under Cayman
Islands law to inspect or obtain copies of our list of shareholders or our corporate records. However, our board of directors may
determine from time to time whether our accounting records and books shall be open to the inspection of our shareholders not members
of our board of directors. Notwithstanding the above, our First Amended and Restated Articles of Association provide our shareholders
with the right to receive annual audited financial statements. Such right to receive annual audited financial statements may be
satisfied by filing such annual reports as we are required to file with the SEC.
Register of Shareholders
Under Cayman Islands law, we must keep a register of shareholders
that includes:
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the names and addresses of the shareholders, a statement of the shares held by each member, and
of the amount paid or agreed to be considered as paid, on the shares of each member;
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the date on which the name of any person was entered on the register as a member; and
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the date on which any person ceased to be a member.
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Exempted Company
We are an exempted company with limited liability under the
Companies Act of the Cayman Islands. The Companies Act in the Cayman Islands distinguishes between ordinary resident companies
and exempted companies. Any company that is registered in the Cayman Islands but conducts business mainly outside of the Cayman
Islands may apply to be registered as an exempted company. The requirements for an exempted company are essentially the same as
for an ordinary company except for the exemptions and privileges listed below:
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an exempted company does not have to file an annual return of its shareholders with the Registrar
of Companies;
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an exempted company’s register of shareholders is not open to inspection;
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an exempted company does not have to hold an annual general meeting;
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an exempted company need not issue par value, negotiable or bearer shares;
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an exempted company may obtain an undertaking against the imposition of any future taxation (such
undertakings are usually given for 20 years in the first instance);
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an exempted company may register by way of continuation in another jurisdiction and be deregistered
in the Cayman Islands;
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an exempted company may register as a limited duration company; and
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an exempted company may register as a segregated portfolio company.
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“Limited liability” means that the liability of
each shareholder is limited to the amount unpaid by the shareholder on the shares of the company (except in exceptional circumstances,
such as involving fraud, the establishment of an agency relationship or an illegal or improper purpose or other circumstances in
which a court may be prepared to pierce or lift the corporate veil). We are subject to reporting and other informational requirements
of the Exchange Act, as applicable to foreign private issuers.
Anti-Takeover Provisions in our First Amended and Restated
Articles of Association
Some provisions of our First Amended and Restated Articles of
Association may discourage, delay or prevent a change in control of our company or management that shareholders may consider favorable,
including provisions that:
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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;
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limit the ability of shareholders to requisition and convene general meetings of shareholders;
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limit the ability of our shareholders to elect and remove our directors, and to fill any vacancy
on our board of directors; and
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limit the ability of our shareholders to amend our First Amended and Restated Articles of Association.
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However, under Cayman Islands law, our board of directors may
only exercise the rights and powers granted to them under our First Amended and Restated Articles of Association, for what they
believe in good faith to be in the best interests of our company.
Protection of Minority Shareholders
The Grand Court of the Cayman Islands may, on the application
of shareholders holding not less than one fifth of our shares in issue, appoint an inspector to examine our affairs and report
thereon in a manner as the Grand Court shall direct.
Subject to the provisions of the Companies Act, any shareholder
may petition the Grand Court of the Cayman Islands which may make a winding up order, if the court is of the opinion that it is
just and equitable that we should be wound up.
Notwithstanding U.S. securities laws and regulations applicable
to us, general corporate claims against us by our shareholders must, as a general rule, be based on the general laws of contract
or tort applicable in the Cayman Islands or their individual rights as shareholders as established by our First Amended and Restated
Articles of Association.
The Cayman Islands courts ordinarily would be expected to follow
English case law precedents, which permit a minority shareholder to commence a representative action against us, or derivative
actions in our name, to challenge (1) an act which is ultra vires or illegal, (2) an act which constitutes a fraud
against the minority and the wrongdoers themselves control us, and (3) an irregularity in the passing of a resolution that
requires a qualified (or special) majority.
Differences in Corporate Law
The Companies Act is modelled after similar laws in England
and Wales but does not follow recent statutory enactments in England and Wales. In addition, the Companies Act differs from laws
applicable to U.S. 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 United States and their
shareholders.
Mergers and Similar Arrangements
The Companies Act permits mergers and consolidations between
Cayman Islands companies and between Cayman Islands companies and non-Cayman Islands companies.
For these purposes, (a) “merger” means the merging
of two or more constituent companies and the vesting of their undertaking, property and liabilities in one of such companies as
the surviving company and (b) a “consolidation” means the combination of two or more constituent companies into
a consolidated company and the vesting of the undertaking, property and liabilities of such companies in the consolidated company.
In order to effect such a merger or consolidation, the directors of each constituent company must approve a written plan of merger
or consolidation, which must then be authorized by either (a) a special resolution of the shareholders of each constituent
company; and (b) such other authorization, if any, as may be specified in such constituent company’s articles of association.
The plan must be filed with the Registrar of Companies together with a declaration as to: (1) the solvency of the consolidated
or surviving company, (2) the merger or consolidation is bona fide and not intended to defraud unsecured creditors of the
constituent companies; (3) no petition or other similar proceeding has been filed and remains outstanding and no order or
resolution to wind up the company in any jurisdiction, (4) no receiver, trustee, administrator or similar person has been
appointed in any jurisdiction and is acting in respect of the constituent company, its affairs or property, (5) no scheme,
order, compromise or similar arrangement has been entered into or made in any jurisdiction with creditors; (6) a list of the
assets and liabilities of each constituent company; (7) the non-surviving constituent company has retired from any fiduciary
office held or will do so; (8) that the constituent company has complied with any requirements under the regulatory laws,
where relevant; and (9) an undertaking that a copy of the certificate of merger or consolidation will be given to the members
and creditors of each constituent company and published in the Cayman Islands Gazette.
Dissenting shareholders have the right to be paid the fair value
of their shares (which, if not agreed between the parties, may be determined by the Cayman Islands’ court) if they follow
the required procedures, subject to certain exceptions. Court approval is not required for a merger or consolidation which is effected
in compliance with these statutory procedures.
In addition, there are statutory provisions that facilitate
the reconstruction and amalgamation of companies, provided that the arrangement in question 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 would have the right to express to the court
the view that the transaction should not be approved, the court can be expected to approve the arrangement if it satisfies itself
that:
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we are not proposing to act illegally or ultra vires and the statutory provisions as to majority
vote have been complied with;
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the shareholders have been fairly represented at the meeting in question;
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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
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the arrangement is not one that would more properly be sanctioned under some other provision
of the Companies Act or that would amount to a “fraud on the minority.”
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When a takeover offer is made and accepted by holders of 90.0%
of the shares within four months, the offeror may, within a two-month period, require the holders of the remaining shares
to transfer such shares on the terms of the offer. An objection may be made to the Grand Court of the Cayman Islands but is unlikely
to succeed unless there is evidence of fraud, bad faith or collusion.
If the arrangement and reconstruction are thus approved, any
dissenting shareholders would have no rights comparable to appraisal rights, which might otherwise ordinarily be available to dissenting
shareholders of U.S. corporations and allow such dissenting shareholders to receive payment in cash for the judicially determined
value of their shares.
Shareholders’ Suits
Class actions are not recognized in the Cayman Islands, but
groups of shareholders with identical interests may bring representative proceedings, which are similar. However, a class action
suit could nonetheless be brought in a U.S. court pursuant to an alleged violation of U.S. securities laws and regulations.
In principle, we will normally be the proper plaintiff and as
a general rule, whilst a derivative action may be initiated by a minority shareholder on our behalf in a Cayman Islands court,
such shareholder will not be able to continue those proceedings without the permission of a Grand Court judge, who will only allow
the action to continue if the shareholder can demonstrate that the Company has a good case against the Defendant, and that it is
proper for the shareholder to continue the action rather than our board of directors. Examples of circumstances in which derivative
actions would be permitted to continue are where:
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a company is acting or proposing to act illegally or beyond the scope of its authority;
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the act complained of, although not beyond the scope of its authority, could be effected duly
if authorized by more than a simple majority vote that has not been obtained; and
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those who control the company are perpetrating a “fraud on the minority.”
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Corporate Governance
Cayman Islands law restricts transactions with directors unless
there are provisions in the Articles of Association which provide a mechanism to alleviate possible conflicts of interest. Additionally,
Cayman Islands law imposes on directors duties of care and skill and fiduciary duties to the companies which they serve. Under
our First Amended and Restated Articles of Association, a director must disclose the nature and extent of his material interest
in any contract or arrangement, and the interested director may not vote at any meeting on any resolution concerning the interested
matter. The interested director shall be counted in the quorum at such meeting and the resolution may be passed by a majority of
the disinterested directors present at the meeting, even if the disinterested directors constitute less than a quorum.
Indemnification of Directors and Executive Officers and
Limitation of Liability
The Companies Act does not limit the extent to which a company’s
articles of association may provide for indemnification of directors and officers, except to the extent that it 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 First Amended and Restated Articles of Association provides that we shall indemnify and hold harmless
our directors and officers against all actions, proceedings, costs, charges, expenses, losses, damages, liabilities, judgments,
fines, settlements and other amounts incurred or sustained by such directors or officers, other than by reason of such person’s
dishonesty, willful default or fraud, in or about the conduct of our company’s business or affairs (including as a result
of any mistake of judgment) or in the execution or discharge of his duties, powers, authorities or discretions, including without
prejudice to the generality of the foregoing, any costs, expenses, losses or liabilities incurred by such director or officer in
defending (whether successfully or otherwise) any civil proceedings concerning our company or its affairs in any court whether
in the Cayman Islands or elsewhere. This standard of conduct is generally the same as permitted under the Delaware General Corporation
Law for a Delaware corporation. In addition, we entered into indemnification agreements with our directors and executive officers
that will provide such persons with additional indemnification beyond that provided in our First Amended and Restated Articles
of Association.
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, this indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable.
Directors’ Fiduciary Duties
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. Accordingly, directors owe fiduciary duties to their companies
to act bona fide in what they consider to be 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 interest or his or her duty to a third party. In addition, directors of a Cayman
Islands company must not therefore place themselves in a position in which there is a conflict between their duty to the company
and their personal interests. However, this obligation may be varied by the company’s articles of association, which may
permit a director to vote on a matter in which he has a personal interest provided that he has disclosed that nature of his interest
to the board of directors. Our First Amended and Restated Articles of Association provides that a director must disclose the nature
and extent of his material interest in any contract or arrangement, and such director may not vote at any meeting on any resolution
concerning such 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 which
he actually possesses.
A general notice may be given at a meeting of the board of directors
to the effect that (1) the director is a member or officer of a specified company or firm and is to be regarded as interested
in any contract or arrangement which may after the date of the notice in writing be made with that company or firm; or (2) he
is to be regarded as interested in any contract or arrangement which may after the date of the notice in writing to the board of
directors be made with a specified person who is connected with him or her, will be deemed sufficient declaration of interest.
This notice shall specify the nature of the interest in question. Following the disclosure being made pursuant to our First Amended
and Restated Articles of Association and subject to any separate requirement under applicable law or the listing rules of the Nasdaq
Capital Market, a director may not vote in respect of any contract or arrangement in which he or she is interested but may be counted
in the quorum at the meeting. However, even if a director discloses his interest and is therefore permitted to vote, he must still
comply with his duty to act bona fide in the best interest of our company.
In comparison, 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 or herself 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.
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. The Delaware General Corporation Law does not provide shareholders an express right to put any proposal before
the annual meeting of shareholders, but Delaware corporations generally afford shareholders an opportunity to make proposals and
nominations provided that they comply with the notice provisions in the certificate of incorporation or bylaws. 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.
The Companies Act of the Cayman Islands provides shareholders
with only limited rights to requisition a general meeting, and does not provide shareholders with any right to put any proposal
before a general meeting. However, these rights may be provided in a company’s articles of association. Our First Amended
and Restated Articles of Association provide that upon the requisition of shareholders representing not less than one-third of
the voting rights entitled to vote at general meetings, our board will convene an extraordinary general meeting and put the resolutions
so requisitioned to a vote at such meeting. However, shareholders may propose only ordinary resolutions to be put to a vote at
such meeting and shall have no right to propose resolutions with respect to the election, appointment or removal of directors or
with respect to the size of the board. Our First Amended and Restated Articles of Association provide no other right to put any
proposals before annual general meetings or extraordinary general 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 First Amended and Restated Articles
of Association 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 our First Amended and Restated Articles of Association,
our shareholders generally do not have the right to remove directors. A director will be removed from office automatically if,
among other things, he or she (1) becomes prohibited by law from being a director, (2) becomes bankrupt or makes an arrangement
or composition with his creditors, (3) dies or is in the opinion of all his co-directors, incapable by reason of mental disorder
of discharging his duties as director (4) resigns his office by notice to us or (5) has for more than six months
been absent without permission of the directors from meetings of the board of directors held during that period, and the directors
resolve that his/her office be vacated.
Transactions with Interested Shareholders
The Delaware General Corporation Law provides that; unless the
corporation has specifically elected not to be governed by this statute, it is prohibited from engaging in certain business combinations
with an “interested shareholder” for three years following the date that this person becomes an interested shareholder.
An interested shareholder generally is a person or a group who or which owns or owned 15% or more of the target’s outstanding
voting shares or who or which is an affiliate or associate of the corporation and owned 15% or more of the corporation’s
outstanding voting shares 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 the 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 these 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. If the dissolution is initiated by the board of directors it may 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 of the Cayman Islands and our First
Amended and Restated Articles of Association, our company may be dissolved, liquidated or wound up by a shareholder resolution
passed by a majority of at least two-thirds of the voting rights entitled to vote at a general meeting of our shareholders.
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 that class, unless the certificate
of incorporation provides otherwise. Under Cayman Islands law and our First Amended and Restated Articles of Association, if 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 separate meeting of the holders of the shares of that class.
Also, except with respect to share capital (as described above),
alterations to our First Amended and Restated Articles of Association may only be made by special resolution of no less than two-thirds
of voting rights entitled to vote at a meeting of our shareholders.
Amendment of Governing Documents
Under the Delaware General Corporation Law, a corporation’s
certificate of incorporation may be amended only if adopted and declared advisable by the board of directors and approved by a
majority of the outstanding shares entitled to vote, and the bylaws may be amended with the approval of a majority of the outstanding
shares entitled to vote and may, if so provided in the certificate of incorporation, also be amended by the board of directors.
Under Cayman Islands law, our First Amended and Restated Articles of Association generally may only be amended by special resolution
of no less than two-thirds of voting rights entitled to vote at a meeting of our shareholders and provisions related to the election,
appointment and removal or the size of the board may only be amended by a special resolution of at least two-thirds of voting rights
entitled to vote at a meeting of our shareholders.
Rights of Non-Resident or Foreign Shareholders
There are no limitations imposed by our First Amended and Restated
Articles of Association 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 First Amended and Restated Articles of Association governing the ownership threshold
above which shareholder ownership must be disclosed.
Incentive Securities Pool
We have established a pool for shares and share options for
our officers, directors, employees and consultants. This pool initially contained shares and options to purchase 1,168,000 of 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 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 our ordinary shares on the date of grant.
DESCRIPTION OF SHARE PURCHASE CONTRACTS
AND SHARE PURCHASE UNITS
We may issue share purchase contracts, including contracts obligating
holders to purchase from us, and obligating us to sell to the holders, a specified number of shares of ordinary shares or other
securities registered hereunder at a future date or dates, which we refer to in this prospectus as “share purchase contracts.”
The price per share of the securities and the number of shares of the securities may be fixed at the time the share purchase contracts
are issued or may be determined by reference to a specific formula set forth in the share purchase contracts.
The share purchase contracts may be issued separately or as
part of units consisting of a share purchase contract and debt securities, warrants, other securities registered hereunder or debt
obligations of third parties, including U.S. treasury securities, securing the holders’ obligations to purchase the securities
under the share purchase contracts, which we refer to herein as “share purchase units.” The share purchase contracts
may require holders to secure their obligations under the share purchase contracts in a specified manner. The share purchase contracts
also may require us to make periodic payments to the holders of the share purchase units or vice versa, and those payments may
be unsecured or refunded on some basis.
The share purchase contracts, and, if applicable, collateral
or depositary arrangements, relating to the share purchase contracts or share purchase units, will be filed with the SEC in connection
with the offering of share purchase contracts or share purchase units. The prospectus supplement relating to a particular issue
of share purchase contracts or share purchase units will describe the terms of those share purchase contracts or share purchase
units, including the following:
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if applicable, a discussion of material tax considerations; and
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any other information we think is important about the share purchase
contracts or the share purchase units.
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DESCRIPTION OF DEBT SECURITIES
As used in this prospectus, debt securities means the debentures,
notes, bonds and other evidences of indebtedness that we may issue from time to time. The debt securities may be either secured
or unsecured and will either be senior debt securities or subordinated debt securities. The debt securities will be issued under
one or more separate indentures between us and a trustee to be specified in an accompanying prospectus supplement. Senior debt
securities will be issued under a new senior indenture. Subordinated debt securities will be issued under a subordinated indenture.
Together, the senior indentures and the subordinated indentures are sometimes referred to in this prospectus as the indentures.
This prospectus, together with the applicable prospectus supplement, will describe the terms of a particular series of debt securities.
The statements and descriptions in this prospectus or in any
prospectus supplement regarding provisions of the indentures and debt securities are summaries thereof, do not purport to be complete
and are subject to, and are qualified in their entirety by reference to, all of the provisions of the indentures (and any amendments
or supplements we may enter into from time to time which are permitted under each indenture) and the debt securities, including
the definitions therein of certain terms.
General
Unless otherwise specified in a prospectus supplement, the debt
securities will be direct unsecured obligations of the Farmmi, Inc. The senior debt securities will rank equally with any of our
other senior and unsubordinated debt. The subordinated debt securities will be subordinate and junior in right of payment to any
senior indebtedness.
Unless otherwise specified in a prospectus supplement, the indentures
do not limit the aggregate principal amount of debt securities that we may issue and provide that we may issue debt securities
from time to time at par or at a discount, and in the case of the new indentures, if any, in one or more series, with the same
or various maturities. Unless indicated in a prospectus supplement, we may issue additional debt securities of a particular series
without the consent of the holders of the debt securities of such series outstanding at the time of the issuance. Any such additional
debt securities, together with all other outstanding debt securities of that series, will constitute a single series of debt securities
under the applicable indenture.
Each prospectus supplement will describe the terms relating
to the specific series of debt securities being offered. These terms will include some or all of the following:
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the title of the debt securities and whether they are subordinated debt securities or senior
debt securities;
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any limit on the aggregate principal amount of the debt securities;
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the ability to issue additional debt securities of the same series;
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the price or prices at which we will sell the debt securities;
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the maturity date or dates of the debt securities on which principal will be payable;
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the rate or rates of interest, if any, which may be fixed or variable, at which the debt securities
will bear interest, or the method of determining such rate or rates, if any;
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the date or dates from which any interest will accrue or the method by which such date or dates
will be determined;
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the right, if any, to extend the interest payment periods and the duration of any such deferral
period, including the maximum consecutive period during which interest payment periods may be extended;
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whether the amount of payments of principal of (and premium, if any) or interest on the debt
securities may be determined with reference to any index, formula or other method, such as one or more
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currencies, commodities, equity indices or other indices, and the manner of determining the amount
of such payments;
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the dates on which we will pay interest on the debt securities and the regular record date for
determining who is entitled to the interest payable on any interest payment date;
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the place or places where the principal of (and premium, if any) and interest on the debt securities
will be payable, where any securities may be surrendered for registration of transfer, exchange or conversion, as applicable, and
notices and demands may be delivered to or upon us pursuant to the indenture;
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if we possess the option to do so, the periods within which and the prices at which we may redeem
the debt securities, in whole or in part, pursuant to optional redemption provisions, and the other terms and conditions of any
such provisions;
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our obligation, if any, to redeem, repay or purchase debt securities by making periodic payments
to a sinking fund or through an analogous provision or at the option of holders of the debt securities, and the period or periods
within which and the price or prices at which we will redeem, repay or purchase the debt securities, in whole or in part, pursuant
to such obligation, and the other terms and conditions of such obligation;
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the denominations in which the debt securities will be issued, if other than denominations of
$1,000 and integral multiples of $1,000;
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the portion, or methods of determining the portion, of the principal amount of the debt securities
which we must pay upon the acceleration of the maturity of the debt securities in connection with an event of default (as described
below), if other than the full principal amount;
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the currency, currencies or currency unit in which we will pay the principal of (and premium,
if any) or interest, if any, on the debt securities, if not United States dollars;
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provisions, if any, granting special rights to holders of the debt securities upon the occurrence
of specified events;
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any deletions from, modifications of or additions to the events of default or our covenants with
respect to the applicable series of debt securities, and whether or not such events of default or covenants are consistent with
those contained in the applicable indenture;
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any limitation on our ability to incur debt, redeem shares, sell our assets or other restrictions;
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the application, if any, of the terms of the indenture relating to defeasance and covenant defeasance
(which terms are described below) to the debt securities;
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whether the subordination provisions summarized below or different subordination provisions will
apply to the debt securities;
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the terms, if any, upon which the holders may convert or exchange the debt securities into or
for our ordinary shares or other securities or property;
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whether any of the debt securities will be issued in global form and, if so, the terms and conditions
upon which global debt securities may be exchanged for certificated debt securities;
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any change in the right of the trustee or the requisite holders of debt securities to declare
the principal amount thereof due and payable because of an event of default;
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the depository for global or certificated debt securities;
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any special tax implications of the debt securities;
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any Cayman Islands tax consequences applicable to the debt securities, including any debt securities
denominated and made payable, as described in the prospectus supplements, in foreign currencies, or units based on or related to
foreign currencies;
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any trustees, authenticating or paying agents, transfer agents or registrars, or other agents
with respect to the debt securities;
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any other terms of the debt securities not inconsistent with the provisions of the indentures,
as amended or supplemented;
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to whom any interest on any debt security shall be payable, if other than the person in whose
name the security is registered, on the record date for such interest, the extent to which, or the manner in which, any interest
payable on a temporary global debt security will be paid if other than in the manner provided in the applicable indenture;
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if the principal of or any premium or interest on any debt securities of the series is to be
payable in one or more currencies or currency units other than as stated, the currency, currencies or currency units in which it
shall be paid and the periods within and terms and conditions upon which such election is to be made and the amounts payable (or
the manner in which such amount shall be determined);
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the portion of the principal amount of any securities of the series which shall be payable upon
declaration of acceleration of the maturity of the debt securities pursuant to the applicable indenture if other than the entire
principal amount; and
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if the principal amount payable at the stated maturity of any debt security of the series will
not be determinable as of any one or more dates prior to the stated maturity, the amount which shall be deemed to be the principal
amount of such securities as of any such date for any purpose, including the principal amount thereof which shall be due and payable
upon any maturity other than the stated maturity or which shall be deemed to be outstanding as of any date prior to the stated
maturity (or, in any such case, the manner in which such amount deemed to be the principal amount shall be determined).
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Unless otherwise specified in the applicable prospectus supplement,
the debt securities will not be listed on any securities exchange.
Unless otherwise specified in the applicable prospectus supplement,
debt securities will be issued in fully-registered form without coupons.
Debt securities may be sold at a substantial discount below
their stated principal amount, bearing no interest or interest at a rate which at the time of issuance is below market rates. The
applicable prospectus supplement will describe the federal income tax consequences and special considerations applicable to any
such debt securities. The debt securities may also be issued as indexed securities or securities denominated in foreign currencies,
currency units or composite currencies, as described in more detail in the prospectus supplement relating to any of the particular
debt securities. The prospectus supplement relating to specific debt securities will also describe any special considerations and
certain additional tax considerations applicable to such debt securities.
Subordination
The prospectus supplement relating to any offering of subordinated
debt securities will describe the specific subordination provisions. However, unless otherwise noted in the prospectus supplement,
subordinated debt securities will be subordinate and junior in right of payment to any existing senior indebtedness.
Unless otherwise specified in the applicable prospectus supplement,
under the subordinated indenture, “senior indebtedness” means all amounts due on obligations in connection with any
of the following, whether outstanding at the date of execution of the subordinated indenture, or thereafter incurred or created:
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the principal of (and premium, if any) and interest due on our indebtedness for borrowed money
and indebtedness evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements
in respect thereof);
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all of our capital lease obligations or attributable debt (as defined in the indentures) in respect
of sale and leaseback transactions;
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all obligations representing the balance deferred and unpaid of the purchase price of any property
or services, which purchase price is due more than six months after the date of placing such property in service or taking delivery
and title thereto, except any such balance that constitutes an accrued expense or trade payable or any similar obligation to trade
creditors;
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all of our obligations in respect of interest rate swap agreements (whether from fixed to floating
or from floating to fixed), interest rate cap agreements and interest rate collar agreements; other agreements or arrangements
designed to manage interest rates or interest rate risk; and other agreements or arrangements designed to protect against fluctuations
in currency exchange rates or commodity prices;
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all obligations of the types referred to above of other persons for the payment of which we are
responsible or liable as obligor, guarantor or otherwise; and
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all obligations of the types referred to above of other persons secured by any lien on any property
or asset of ours (whether or not such obligation is assumed by us).
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However, senior indebtedness does not include:
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any indebtedness which expressly provides that such indebtedness shall not be senior in right
of payment to the subordinated debt securities, or that such indebtedness shall be subordinated to any other of our indebtedness,
unless such indebtedness expressly provides that such indebtedness shall be senior in right of payment to the subordinated debt
securities;
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any of our obligations to our subsidiaries or of a subsidiary guarantor to us or any other of
our other subsidiaries;
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any liability for federal, state, local or other taxes owed or owing by us or any subsidiary
guarantor,
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any accounts payable or other liability to trade creditors arising in the ordinary course of
business (including guarantees thereof or instruments evidencing such liabilities);
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any obligations with respect to any capital stock;
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any indebtedness incurred in violation of the indenture, provided that indebtedness under our
credit facilities will not cease to be senior indebtedness under this bullet point if the lenders of such indebtedness obtained
an officer’s certificate as of the date of incurrence of such indebtedness to the effect that such indebtedness was permitted
to be incurred by the indenture; and
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any of our indebtedness in respect of the subordinated debt securities.
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Senior indebtedness shall continue to be senior indebtedness
and be entitled to the benefits of the subordination provisions irrespective of any amendment, modification or waiver of any term
of such senior indebtedness.
Unless otherwise noted in an accompanying prospectus supplement,
if we default in the payment of any principal of (or premium, if any) or interest on any senior indebtedness when it becomes due
and payable, whether at maturity or at a date fixed for prepayment or by declaration or otherwise, then, unless and until such
default is cured or waived or ceases to exist, we will make no direct or indirect payment (in cash, property, securities, by set-off
or otherwise) in respect of the principal of or interest on the subordinated debt securities or in respect of any redemption, retirement,
purchase or other requisition of any of the subordinated debt securities.
In the event of the acceleration of the maturity of any subordinated
debt securities, the holders of all senior debt securities outstanding at the time of such acceleration, subject to any security
interest, will first be entitled to receive payment in full of all amounts due on the senior debt securities before the holders
of the subordinated debt securities will be entitled to receive any payment of principal (and premium, if any) or interest on the
subordinated debt securities.
If any of the following events occurs, we will pay in full all
senior indebtedness before we make any payment or distribution under the subordinated debt securities, whether in cash, securities
or other property, to any holder of subordinated debt securities:
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any dissolution or winding-up or liquidation or reorganization of Farmmi, Inc., whether voluntary
or involuntary or in bankruptcy,
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insolvency or receivership;
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any general assignment by us for the benefit of creditors; or
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any other marshaling of our assets or liabilities.
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In such event, any payment or distribution under the subordinated
debt securities, whether in cash, securities or other property, which would otherwise (but for the subordination provisions) be
payable or deliverable in respect of the subordinated debt securities, will be paid or delivered directly to the holders of senior
indebtedness in accordance with the priorities then existing among such holders until all senior indebtedness has been paid in
full. If any payment or distribution under the subordinated debt securities is received by the trustee of any subordinated debt
securities in contravention of any of the terms of the subordinated indenture and before all the senior indebtedness has been paid
in full, such payment or distribution will be received in trust for the benefit of, and paid over or delivered and transferred
to, the holders of the senior indebtedness at the time outstanding in accordance with the priorities then existing among such holders
for application to the payment of all senior indebtedness remaining unpaid to the extent necessary to pay all such senior indebtedness
in full.
The subordinated indenture does not limit the issuance of additional
senior indebtedness.
Events of Default, Notice and Waiver
Unless an accompanying prospectus supplement states otherwise,
the following shall constitute “events of default” under the indentures with respect to each series of debt securities:
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we default for 30 consecutive days in the payment when due of interest on the debt securities;
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we default in the payment when due (at maturity, upon redemption or otherwise) of the principal
of, or premium, if any, on the debt securities;
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our failure to observe or perform any other of our covenants or agreements with respect to such
debt securities for 60 days after we receive notice of such failure;
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certain events of bankruptcy, insolvency or reorganization of the Farmmi, Inc.; or
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any other event of default provided with respect to securities of that series.
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Unless an accompanying prospectus supplement states otherwise,
if an event of default with respect to any debt securities of any series outstanding under either of the indentures shall occur
and be continuing, the trustee under such indenture or the holders of at least 25% (or at least 10%, in respect of a remedy (other
than acceleration) for certain events of default relating to the payment of dividends) in aggregate principal amount of the debt
securities of that series outstanding may declare, by notice as provided in the applicable indenture, the principal amount (or
such lesser amount as may be provided for in the debt securities of that series) of all the debt securities of that series outstanding
to be due and payable immediately; provided that, in the case of an event of default involving certain events in bankruptcy, insolvency
or reorganization, acceleration is automatic; and, provided further, that after such acceleration, but before a judgment or decree
based on acceleration, the holders of a majority in aggregate principal amount of the outstanding debt securities of that series
may, under certain circumstances, rescind and annul such acceleration if all events of default, other than the nonpayment of accelerated
principal, have been cured or waived. Upon the acceleration of the maturity of original issue discount securities, an amount less
than the principal amount thereof will become due and payable. Reference is made to the prospectus supplement relating to any original
issue discount securities for the particular provisions relating to acceleration of maturity thereof.
Any past default under either indenture with respect to debt
securities of any series, and any event of default arising therefrom, may be waived by the holders of a majority in principal amount
of all debt securities of such series outstanding under such indenture, except in the case of (1) default in the payment of
the principal of (or premium, if any) or interest on any debt securities of such series or (2) certain events of default relating
to the payment of dividends.
The trustee is required within 90 days after the occurrence
of a default (which is known to the trustee and is continuing), with respect to the debt securities of any series (without regard
to any grace period or notice requirements), to give to the holders of the debt securities of such series notice of such default.
The trustee, subject to its duties during default to act with
the required standard of care, may require indemnification by the holders of the debt securities of any series with respect to
which a default has occurred before proceeding to exercise any right or power under the indentures at the request of the holders
of the debt securities of such series. Subject to such right of indemnification and to certain other limitations, the holders of
a majority in principal amount of the outstanding debt securities of any series under either indenture may direct the time, method
and place of conducting any proceeding for any remedy available to the trustee, or exercising any trust or power conferred on the
trustee with respect to the debt securities of such series, provided that such direction shall not be in conflict with any rule
of law or with the applicable indenture and the trustee may take any other action deemed proper by the trustee which is not inconsistent
with such direction.
No holder of a debt security of any series may institute any
action against us under either of the indentures (except actions for payment of overdue principal of (and premium, if any) or interest
on such debt security or for the conversion or exchange of such debt security in accordance with its terms) unless (1) the
holder has given to the trustee written notice of an event of default and of the continuance thereof with respect to the debt securities
of such series specifying an event of default, as required under the applicable indenture, (2) the holders of at least 25%
in aggregate principal amount of the debt securities of that series then outstanding under such indenture shall have requested
the trustee to institute such action and offered to the trustee indemnity reasonably satisfactory to it against the costs, expenses
and liabilities to be incurred in compliance with such request; (3) the trustee shall not have instituted such action within
60 days of such request and (4) no direction inconsistent with such written request has been given to the trustee during such
60-day period by the holders of a majority in principal amount of the debt securities of that series. We are required to furnish
annually to the trustee statements as to our compliance with all conditions and covenants under each indenture.
Discharge, Defeasance and Covenant Defeasance
We may discharge or defease our obligations under the indenture
as set forth below, unless otherwise indicated in the applicable prospectus supplement.
We may discharge certain obligations to holders of any series
of debt securities issued under either the senior indenture or the subordinated indenture which have not already been delivered
to the trustee for cancellation by irrevocably depositing with the trustee money in an amount sufficient to pay and discharge the
entire indebtedness on such debt securities not previously delivered to the trustee for cancellation, for principal and any premium
and interest to the date of such deposit (in the case of debt securities which have become due and payable) or to the stated maturity
or redemption date, as the case may be, and we or, if applicable, any guarantor, have paid all other sums payable under the applicable
indenture.
If indicated in the applicable prospectus supplement, we may
elect either (1) to defease and be discharged from any and all obligations with respect to the debt securities of or within
any series (except in all cases as otherwise provided in the relevant indenture) (“legal defeasance”) or (2) to
be released from our obligations with respect to certain covenants applicable to the debt securities of or within any series (“covenant
defeasance”), upon the deposit with the relevant indenture trustee, in trust for such purpose, of money and/or government
obligations which through the payment of principal and interest in accordance with their terms will provide money in an amount
sufficient to pay the principal of (and premium, if any) or interest on such debt securities to maturity or redemption, as the
case may be, and any mandatory sinking fund or analogous payments thereon. As a condition to legal defeasance or covenant defeasance,
we must deliver to the trustee an opinion of counsel to the effect that the holders of such debt securities will not recognize
income, gain or loss for federal income tax purposes as a result of such legal defeasance or covenant defeasance and will be subject
to federal income tax on the same amounts and in the same manner and at the same times as would have been the case if such legal
defeasance or covenant defeasance had not occurred. Such opinion of counsel, in the case of legal defeasance under clause (i) above,
must refer to and be based upon a ruling of the Internal Revenue Service or a change in applicable federal income tax law occurring
after the date of the relevant indenture. In addition, in the case of either legal defeasance or covenant defeasance, we shall
have delivered to the trustee (1) if applicable, an officer’s certificate to the effect that the relevant debt securities
exchange(s) have informed us that neither such debt securities nor any other debt securities of the same series, if then listed
on any securities exchange, will be delisted as a result of such deposit and (2) an officer’s certificate and an opinion
of counsel, each stating that all conditions precedent with respect to such legal defeasance or covenant defeasance have been complied
with.
We may exercise our defeasance option with respect to such debt
securities notwithstanding our prior exercise of our covenant defeasance option.
Modification and Waiver
Under the indentures, unless an accompanying prospectus supplement
states otherwise, we and the applicable trustee may supplement the indentures for certain purposes which would not materially adversely
affect the interests or rights of the holders of debt securities of a series without the consent of those holders. We and the applicable
trustee may also modify the indentures or any supplemental indenture in a manner that affects the interests or rights of the holders
of debt securities with the consent of the holders of at least a majority in aggregate principal amount of the outstanding debt
securities of each affected series issued under the indenture. However, the indentures require the consent of each holder of debt
securities that would be affected by any modification which would:
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reduce the principal amount of debt securities whose holders must consent to an amendment, supplement
or waiver;
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reduce the principal of or change the fixed maturity of any debt security or, except as provided
in any prospectus supplement, alter or waive any of the provisions with respect to the redemption of the debt securities;
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reduce the rate of or change the time for payment of interest, including default interest, on
any debt security;
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waive a default or event of default in the payment of principal of or interest or premium, if
any, on, the debt securities (except a rescission of acceleration of the debt securities by the holders of at least a majority
in aggregate principal amount of the then outstanding debt securities and a waiver of the payment default that resulted from such
acceleration);
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make any debt security payable in money other than that stated in the debt securities;
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make any change in the provisions of the applicable indenture relating to waivers of past defaults
or the rights of holders of the debt securities to receive payments of principal of, or interest or premium, if any, on, the debt
securities;
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waive a redemption payment with respect to any debt security (except as otherwise provided in
the applicable prospectus supplement);
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except in connection with an offer by us to purchase all debt securities, (1) waive certain events
of default relating to the payment of dividends or (2) amend certain covenants relating to the payment of dividends and the purchase
or redemption of certain equity interests;
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make any change to the subordination or ranking provisions of the indenture or the related definitions
that adversely affect the rights of any holder; or
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make any change in the preceding amendment and waiver provisions.
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The indentures permit the holders of at least a majority in
aggregate principal amount of the outstanding debt securities of any series issued under the indenture which is affected by the
modification or amendment to waive our compliance with certain covenants contained in the indentures.
Payment and Paying Agents
Unless otherwise indicated in the applicable prospectus supplement,
payment of interest on a debt security on any interest payment date will be made to the person in whose name a debt security is
registered at the close of business on the record date for the interest.
Unless otherwise indicated in the applicable prospectus supplement,
principal, interest and premium on the debt securities of a particular series will be payable at the office of such paying agent
or paying agents as we may designate for such purpose from time to time. Notwithstanding the foregoing, at our option, payment
of any interest may be made by check mailed to the address of the person entitled thereto as such address appears in the security
register.
Unless otherwise indicated in the applicable prospectus supplement,
a paying agent designated by us will act as paying agent for payments with respect to debt securities of each series. All paying
agents initially designated by us for the debt securities of a particular series will be named in the applicable prospectus supplement.
We may at any time designate additional paying agents or rescind the designation of any paying agent or approve a change in the
office through which any paying agent acts, except that we will be required to maintain a paying agent in each place of payment
for the debt securities of a particular series.
All moneys paid by us to a paying agent for the payment of the
principal, interest or premium on any debt security which remain unclaimed at the end of two years after such principal, interest
or premium has become due and payable will be repaid to us upon request, and the holder of such debt security thereafter may look
only to us for payment thereof.
Denominations, Registrations and Transfer
Unless an accompanying prospectus supplement states otherwise,
debt securities will be represented by one or more global certificates registered in the name of a nominee for The Depository Trust
Company, or DTC. In such case, each holder’s beneficial interest in the global securities will be shown on the records of
DTC and transfers of beneficial interests will only be effected through DTC’s records.
A holder of debt securities may only exchange a beneficial interest
in a global security for certificated securities registered in the holder’s name if:
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we deliver to the trustee notice from DTC that it is unwilling or unable to continue to act as
depository or that it is no longer a clearing agency registered under the Exchange Act and, in either case, a successor depositary
is not appointed by us within 120 days after the date of such notice from DTC;
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we in our sole discretion determine that the debt securities (in whole but not in part) should
be exchanged for definitive debt securities and deliver a written notice to such effect to the trustee; or
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there has occurred and is continuing a default or event of default with respect to the debt securities.
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If debt securities are issued in certificated form, they will
only be issued in the minimum denomination specified in the accompanying prospectus supplement and integral multiples of such denomination.
Transfers and exchanges of such debt securities will only be permitted in such minimum denomination. Transfers of debt securities
in certificated form may be registered at the trustee’s corporate office or at the offices of any paying agent or trustee
appointed by us under the indentures. Exchanges of debt securities for an equal aggregate principal amount of debt securities in
different denominations may also be made at such locations.
Governing Law
The
indentures and debt securities will be governed by, and construed in accordance with, the laws of the State of New York, without
regard to its principles of conflicts of laws, except to the extent the Trust Indenture Act is applicable or as otherwise
agreed to by the parties thereto.
Trustee
The trustee or trustees under the indentures will be named in
any applicable prospectus supplement.
Conversion or Exchange Rights
The prospectus supplement will describe the terms, if any, on
which a series of debt securities may be convertible into or exchangeable for our ordinary shares or other debt securities. These
terms will include provisions as to whether conversion or exchange is mandatory, at the option of the holder or at our option.
These provisions may allow or require the number of shares of our ordinary shares or other securities to be received by the holders
of such series of debt securities to be adjusted. Any such conversion or exchange will comply with applicable Cayman Islands law
and our First Amended and Restated Articles of Association.
DESCRIPTION OF WARRANTS
The following description, together with the additional information
we may include in any applicable prospectus supplements, summarizes the material terms and provisions of the warrants that we may
offer under this prospectus and the related warrant agreements and warrant certificates. While the terms summarized below will
apply generally to any warrants that we may offer under this prospectus, we will describe the particular terms of any series of
warrants that we may offer in more detail in the applicable prospectus supplement. If we indicate in the prospectus supplement,
the terms of any warrants offered under that prospectus supplement may differ from the terms described below. However, no prospectus
supplement shall fundamentally change the terms that are set forth in this prospectus or offer a security that is not registered
and described in this prospectus at the time of its effectiveness. Specific warrant agreements will contain additional important
terms and provisions and will be incorporated by reference as an exhibit to the registration statement that includes this prospectus
or as an exhibit to a report filed under the Exchange Act.
General
We may issue warrants that entitle the holder to purchase our
debt securities, ordinary shares, preferred shares, depositary shares or any combination thereof. We may issue warrants independently
or together with ordinary shares, preferred shares, debt securities, depositary shares or any combination thereof, and the warrants
may be attached to or separate from such securities.
We will describe in the applicable prospectus supplement the
terms of the series of warrants, including:
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the offering price and aggregate number of warrants offered;
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the currency for which the warrants may be purchased, if not United States dollars;
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if applicable, the designation and terms of the securities with which the warrants are issued
and the number of warrants issued with each such security or each principal amount of such security;
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if applicable, the date on and after which the warrants and the related securities will be separately
transferable;
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in the case of warrants to purchase debt securities, the principal amount of debt securities
purchasable upon exercise of one warrant and the price at, and currency, if not United States dollars, in which, this principal
amount of debt securities may be purchased upon such exercise;
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in the case of warrants to purchase ordinary shares, preferred shares, or depositary shares,
the number of shares of ordinary shares, preferred shares or depositary shares purchasable upon the exercise of one warrant and
the price at which these shares may be purchased upon such exercise;
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the effect of any merger, consolidation, sale or other disposition of our business on the warrant
agreement and the warrants;
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the terms of any rights to redeem or call the warrants;
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any provisions for changes to or adjustments in the exercise price or number of securities issuable
upon exercise of the warrants;
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the dates on which the right to exercise the warrants will commence and expire;
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the manner in which the warrant agreement and warrants may be modified;
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federal income tax consequences of holding or exercising the warrants;
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the terms of the securities issuable upon exercise of the warrants; and
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any other specific terms, preferences, rights or limitations of or restrictions on the warrants.
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Before exercising their warrants, holders of warrants will not
have any of the rights of holders of the securities purchasable upon such exercise, including:
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in the case of warrants to purchase debt securities, the right to receive payments of principal
of, or premium, if any, or interest on, the debt securities purchasable upon exercise or to enforce covenants in the applicable
indenture; or
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in the case of warrants to purchase ordinary shares, preferred shares or depositary shares, the
right to receive dividends, if any, or, payments upon our liquidation, dissolution or winding up or to exercise voting rights,
if any.
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Exercise of Warrants
Each warrant will entitle the holder to purchase the securities
that we specify in the applicable prospectus supplement at the exercise price that we describe in the applicable prospectus supplement.
Unless we otherwise specify in the applicable prospectus supplement, holders of the warrants may exercise the warrants at any time
up to the specified time on the expiration date that we set forth in the applicable prospectus supplement. After the close of business
on the expiration date, unexercised warrants will become void.
Holders of the warrants may exercise the warrants by delivering
the warrant certificate representing the warrants to be exercised together with specified information, and paying the required
amount to the warrant agent in immediately available funds, as provided in the applicable prospectus supplement. We will set forth
on the reverse side of the warrant certificate and in the applicable prospectus supplement the information that the holder of the
warrant will be required to deliver to the warrant agent.
Upon receipt of the required payment and the warrant certificate
properly completed and duly executed at the corporate trust office of the warrant agent or any other office indicated in the applicable
prospectus supplement, we will issue and deliver the securities purchasable upon such exercise. If fewer than all of the warrants
represented by the warrant certificate are exercised, then we will issue a new warrant certificate for the remaining amount of
warrants. If we so indicate in the applicable prospectus supplement, holders of the warrants may surrender securities as all or
part of the exercise price for warrants.
Enforceability of Rights by Holders of Warrants
Each warrant agent will act solely as our agent under the applicable
warrant agreement and will not assume any obligation or relationship of agency or trust with any holder of any warrant. A single
bank or trust company may act as warrant agent for more than one issue of warrants. A warrant agent will have no duty or responsibility
in case of any default by us under the applicable warrant agreement or warrant, including any duty or responsibility to initiate
any proceedings at law or otherwise, or to make any demand upon us. Any holder of a warrant may, without the consent of the related
warrant agent or the holder of any other warrant, enforce by appropriate legal action its right to exercise, and receive the securities
purchasable upon exercise of, its warrants.
Modification of the Warrant Agreement
The warrant agreements may permit us and the warrant agent,
if any, without the consent of the warrant holders, to supplement or amend the agreement in the following circumstances:
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to correct or supplement any provision which may be defective or inconsistent with any other
provisions; or
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to add new provisions regarding matters or questions that we and the warrant agent may deem necessary
or desirable and which do not adversely affect the interests of the warrant holders.
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DESCRIPTION OF RIGHTS
We may issue rights to purchase ordinary shares, preferred shares,
depositary shares or debt securities that we may offer to our securityholders. The rights may or may not be transferable by the
persons purchasing or receiving the rights. In connection with any rights offering, we may enter into a standby underwriting or
other arrangement with one or more underwriters or other persons pursuant to which such underwriters or other persons would purchase
any offered securities remaining unsubscribed for after such rights offering. Each series of rights will be issued under a separate
rights agent agreement to be entered into between us and a bank or trust company, as rights agent, that we will name in the applicable
prospectus supplement. The rights agent will act solely as our agent in connection with the rights and will not assume any obligation
or relationship of agency or trust for or with any holders of rights certificates or beneficial owners of rights.
The prospectus supplement relating to any rights that we offer
will include specific terms relating to the offering, including, among other matters:
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the date of determining the securityholders entitled to the rights distribution;
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the aggregate number of rights issued and the aggregate number of shares of ordinary shares,
preferred shares, or depositary shares or aggregate principal amount of debt securities purchasable upon exercise of the rights;
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the conditions to completion of the rights offering;
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the date on which the right to exercise the rights will commence and the date on which the rights
will expire; and
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applicable tax considerations.
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Each right would entitle the holder of the rights to purchase
for cash the principal amount of shares of ordinary shares, preferred shares, depositary shares or debt securities at the exercise
price set forth in the applicable prospectus supplement. Rights may be exercised at any time up to the close of business on the
expiration date for the rights provided in the applicable prospectus supplement. After the close of business on the expiration
date, all unexercised rights will become void.
If less than all of the rights issued in any rights offering
are exercised, we may offer any unsubscribed securities directly to persons other than our security holders, to or through agents,
underwriters or dealers or through a combination of such methods, including pursuant to standby arrangements, as described in the
applicable prospectus supplement.
DESCRIPTION OF UNITS
We may issue units comprised of one or more of the other securities
described in this prospectus in any combination. Each unit will be issued so that the holder of the unit is also the holder of
each security included in the unit. Thus, the holder of a unit will have the rights and obligations of a holder of each included
security. The unit agreement under which a unit is issued may provide that the securities included in the unit may not be held
or transferred separately, at any time or at any time before a specified date or occurrence.
The applicable prospectus supplement may describe:
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the designation and terms of the units and of the securities comprising the units, including
whether and under what circumstances those securities may be held or transferred separately;
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any provisions for the issuance, payment, settlement, transfer or exchange of the units or of
the securities comprising the units; and
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whether the units will be issued in fully registered or global form.
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The applicable prospectus supplement will describe the terms
of any units. The preceding description and any description of units in the applicable prospectus supplement does not purport to
be complete and is subject to and is qualified in its entirety by reference to the unit agreement and, if applicable, collateral
arrangements and depository arrangements relating to such units.
PLAN OF DISTRIBUTION
We may sell the securities through underwriters or dealers,
through agents, directly to one or more purchasers, through a rights offering, or otherwise. We will describe the terms of the
offering of the securities in a prospectus supplement, information incorporated by reference or free writing prospectus, including:
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the name or names of any underwriters, if any;
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the purchase price of the securities and the proceeds we will receive from the sale;
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any underwriting discounts and other items constituting underwriters’ compensation;
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any initial public offering price;
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any discounts or concessions allowed or reallowed or paid to dealers; and
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any securities exchange or market on which the securities may be listed.
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Only underwriters we name in the prospectus supplement, information
incorporated by reference or free writing prospectus are underwriters of the securities offered thereby. The distribution of securities
may be effected, from time to time, in one or more transactions, including:
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block transactions (which may involve crosses) and transactions on the Nasdaq Capital Market
or any other organized market where the securities may be traded;
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purchases by a broker-dealer as principal and resale by the broker-dealer for its own account
pursuant to a prospectus supplement;
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ordinary brokerage transactions and transactions in which a broker-dealer solicits purchasers;
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sales “at the market” to or through a market maker or into an existing trading market,
on an exchange or otherwise; and
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sales in other ways not involving market makers or established trading markets, including direct
sales to purchasers.
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The securities may be sold at a fixed price or prices, which
may be changed, or at market prices prevailing at the time of sale, at prices relating to the prevailing market prices or at negotiated
prices. The consideration may be cash or another form negotiated by the parties. Agents, underwriters or broker-dealers may be
paid compensation for offering and selling the securities. That compensation may be in the form of discounts, concessions or commissions
to be received from us or from the purchasers of the securities. Dealers and agents participating in the distribution of the securities
may be deemed to be underwriters, and compensation received by them on resale of the securities may be deemed to be underwriting
discounts and commissions under the U.S. Securities Act of 1933, as amended, or the Securities Act. If such dealers or agents were
deemed to be underwriters, they may be subject to statutory liabilities under the Securities Act.
We may also make direct sales through rights distributed to
our existing shareholders on a pro rata basis, which may or may not be transferable. In any distribution of rights to our shareholders,
if all of the underlying securities are not subscribed for, we may then sell the unsubscribed securities directly to third parties
or may engage the services of one or more underwriters, dealers or agents, including standby underwriters, to sell the unsubscribed
securities to third parties.
Some or all of the securities that we offer though this prospectus
may be new issues of securities with no established trading market. Any underwriters to whom we sell our securities for public
offering and sale may make a market in those securities, but they will not be obligated to do so and they may discontinue any market
making at any time without notice. Accordingly, we cannot assure you of the liquidity of, or continued trading markets for, any
securities that we offer.
Agents may, from time to time, solicit offers to purchase the
securities. If required, we will name in the applicable prospectus supplement, document incorporated by reference or free writing
prospectus, as applicable, any agent involved in the offer or sale of the securities and set forth any compensation payable to
the agent. Unless otherwise indicated, any agent will be acting on a best efforts basis for the period of its appointment. Any
agent selling the securities covered by this prospectus may be deemed to be an underwriter, as that term is defined in the Securities
Act, of the securities.
If underwriters are used in an offering, securities will be
acquired by the underwriters for their own account and may be resold, from time to time, in one or more transactions, including
negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale, or under delayed
delivery contracts or other contractual commitments. Securities may be offered to the public either through underwriting syndicates
represented by one or more managing underwriters or directly by one or more firms acting as underwriters. If an underwriter or
underwriters are used in the sale of securities, an underwriting agreement will be executed with the underwriter or underwriters
at the time an agreement for the sale is reached. The applicable prospectus supplement will set forth the managing underwriter
or underwriters, as well as any other underwriter or underwriters, with respect to a particular underwritten offering of securities,
and will set forth the terms of the transactions, including compensation of the underwriters and dealers and the public offering
price, if applicable. The prospectus, and the applicable prospectus supplement and any applicable free writing prospectus will
be used by the underwriters to resell the securities.
If a dealer is used in the sale of the securities, we or an
underwriter will sell the securities to the dealer, as principal. The dealer may then resell the securities to the public at varying
prices to be determined by the dealer at the time of resale. To the extent required, we will set forth in the prospectus supplement,
document incorporated by reference or free writing prospectus, as applicable, the name of the dealer and the terms of the transactions.
We may directly solicit offers to purchase the securities and
may make sales of securities directly to institutional investors or others. These persons may be deemed to be underwriters within
the meaning of the Securities Act with respect to any resale of the securities. To the extent required, the prospectus supplement,
document incorporated by reference or free writing prospectus, as applicable, will describe the terms of any such sales, including
the terms of any bidding or auction process, if used.
Agents, underwriters and dealers may be entitled under agreements
which may be entered into with us to indemnification by us against specified liabilities, including liabilities incurred under
the Securities Act, or to contribution by us to payments they may be required to make in respect of such liabilities. If required,
the prospectus supplement, document incorporated by reference or free writing prospectus, as applicable, will describe the terms
and conditions of such indemnification or contribution. Some of the agents, underwriters or dealers, or their affiliates may be
customers of, engage in transactions with or perform services for us, our subsidiaries or affiliates in the ordinary course of
business.
Under the securities laws of some states, the securities offered
by this prospectus may be sold in those states only through registered or licensed brokers or dealers.
Any person participating in the distribution of ordinary shares
registered under the registration statement that includes this prospectus will be subject to applicable provisions of the Exchange
Act, and the applicable SEC rules and regulations, including, among others, Regulation M, which may limit the timing of purchases
and sales of any of our ordinary shares by any such person. Furthermore, Regulation M may restrict the ability of any person engaged
in the distribution of our ordinary shares to engage in market-making activities with respect to our ordinary shares. These restrictions
may affect the marketability of our ordinary shares and the ability of any person or entity to engage in market-making activities
with respect to our ordinary shares.
Certain persons participating in an offering may engage in over-allotment,
stabilizing transactions, short-covering transactions and penalty bids in accordance with Regulation M under the Exchange Act that
stabilize, maintain or otherwise affect the price of the offered securities. If any such activities will occur, they will be described
in the applicable prospectus supplement.
To the extent required, this prospectus may be amended or supplemented
from time to time to describe a specific plan of distribution.
All securities we offer other than ordinary shares will be new
issues of securities with no established trading market. Any underwriters may make a market in these securities, but will not be
obligated to do so and may discontinue any market making at any time without notice. We cannot guarantee the liquidity of the trading
markets for any securities.
In compliance with the guidelines of the Financial Industry
Regulatory Authority (“FINRA”), the aggregate maximum discount, commission or agency fees or other items constituting
underwriting compensation to be received by any FINRA member or independent broker-dealer will not exceed 8% of any offering pursuant
to this prospectus and any applicable prospectus supplement, as the case may be.
EXPENSES
We estimate the fees and expenses to
be incurred by us in connection with the sale of the securities in this offering, other than underwriting discounts and commissions,
to be as follows:
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SEC registration fee
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$
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10,910
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Legal fees and expenses
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$
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*
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Accounting fees and expenses
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$
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*
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Miscellaneous expenses
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$
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*
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Total
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$
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*
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* Estimated expenses are not presently known.
The foregoing sets forth the general categories of expenses that we anticipate we will incur in connection with the offering of
securities under this registration statement.
LEGAL MATTERS
Campbells, Grand Cayman, Cayman Islands, and Kaufman & Canoles,
P.C., Richmond, Virginia, will pass upon the validity of the securities offered in this offering. The address of Campbells is Floor
4, Willow House, Cricket Square, Grand Cayman KY1-9010, Cayman Islands. The address of Kaufman & Canoles, P.C. is Two James
Center, 14th Floor, 1021 E. Cary St., Richmond, VA 23219.
EXPERTS
The financial statements incorporated by reference in this prospectus
for the year ended September 30, 2020 have been audited by Friedman LLP, an independent registered public accounting firm, as set
forth in their report thereon included therein, and incorporated herein by reference, and are included in reliance upon such report
given on the authority of such firm as experts in accounting and auditing.
ENFORCEABILITY OF CIVIL LIABILITIES
UNDER UNITED STATES FEDERAL SECURITIES LAWS AND OTHER MATTERS
We are registered under the laws of the Cayman Islands as an
exempted company with limited liability. We are registered in the Cayman Islands because of certain benefits associated with being
a Cayman Islands exempted company, such as political and economic stability, an effective judicial system, a favorable tax system,
the absence of exchange control or currency restrictions and the availability of professional and support services. However, the
Cayman Islands has a less developed body of securities laws as compared to the United States and provides protections for investors
to a lesser extent. In addition, Cayman Islands companies may not have standing to sue before the federal courts of the United
States.
Substantially all of our assets are located outside the United
States. In addition, a majority of our directors and officers are nationals and/or residents of countries other than the United
States, and all or a substantial portion of such persons’ assets are located outside the United States. As a result, it may
be difficult for investors to effect service of process within the United States upon us or such persons or to enforce against
them or against us, judgments obtained in United States courts, including judgments predicated upon the civil liability provisions
of the securities laws of the United States or any state thereof.
We have appointed CT Corporation System (28 Liberty St. New
York, NY 10005) as our agent to receive service of process with respect to any action brought against us in the United States District
Court for the Southern District of New York under the federal securities laws of the United States or under the securities laws
of the State of New York.
We have been advised by Zhejiang Zhengbiao Law Firm, our PRC
counsel, that there is uncertainty as to whether the courts of the PRC would enforce judgments of United States courts or Cayman
courts obtained against us or these persons predicated upon the civil liability provisions of the United States federal and state
securities laws. Zhejiang Zhengbiao Law Firm has further advised us that the recognition and enforcement of foreign judgments are
provided for under PRC Civil Procedures Law. PRC courts may recognize and enforce foreign judgments in accordance with the requirements
of PRC Civil Procedures Law based either on treaties between China and the country where the judgment is made or on reciprocity
between jurisdictions. China does not have any treaties or other form of reciprocity with the United States or the Cayman Islands
that provide for the reciprocal recognition and enforcement of foreign judgments. In addition, according to the PRC Civil Procedures
Law, courts in the PRC will not enforce a foreign judgment against us or our directors and officers if they decide that the judgment
violates the basic principles of PRC law or national sovereignty, security or public interest. As a result, it is uncertain whether
and on what basis a PRC court would enforce a judgment rendered by a court in the United States or in the Cayman Islands.
Our
Cayman Islands counsel has informed us that the uncertainty with regard to Cayman Islands law relates to whether a judgment obtained
from the United States courts under civil liability provisions of the securities laws will be determined by the courts of the Cayman
Islands as penal or punitive in nature. There is no treaty between the U.S. and the
Cayman Islands which provides for any enforceability. If such a determination is made, the courts of the Cayman Islands
will not recognize or enforce the judgment against a Cayman Islands’ company. Because the courts of the Cayman Islands have
yet to rule on whether such judgments are penal or punitive in nature, it is uncertain whether they would be enforceable in the
Cayman Islands. Our Cayman Islands counsel has further advised us that a final and conclusive judgment in the federal or state
courts of the United States under which a sum of money is payable, other than a sum payable in respect of taxes, fines, penalties
or similar charges, may be subject to enforcement proceedings as a debt in the courts of the Cayman Islands under the common law
doctrine of comity. Additionally, some causes of action available under the U.S. federal
securities laws may not be allowed in Cayman Islands courts if they are contrary to public policy in the Cayman Islands.
DISCLOSURE OF COMMISSION POSITION
ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or persons controlling us pursuant to 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.
WHERE YOU CAN FIND MORE INFORMATION
We
are a reporting company and file annual, quarterly and current reports, proxy statements and other information with the SEC. This
prospectus does not contain all of the information set forth in the registration statement or the exhibits that are a part of
the registration statement. You may read and copy the registration statement and any document we file with the SEC at the public
reference room maintained by the SEC 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. Our filings with the SEC are also available to the public through
the SEC’s Internet site at http://www.sec.gov.
INFORMATION INCORPORATED BY REFERENCE
The SEC allows us to “incorporate by reference”
into this prospectus the information we file with them. The information we incorporate by reference into this prospectus is an
important part of this prospectus. Any statement in a document we have filed with the SEC prior to the date of this prospectus
and which is incorporated by reference into this prospectus will be considered to be modified or superseded to the extent a statement
contained in this prospectus or any other subsequently filed document that is incorporated by reference into this prospectus modifies
or supersedes that statement. The modified or superseded statement will not be considered to be a part of this prospectus, except
as modified or superseded.
We incorporate by reference into this prospectus the information
contained in the following documents that we have filed with the SEC pursuant to the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), which is considered to be a part of this prospectus:
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Our Annual Report on Form 20-F for the year
ended September 30, 2020, filed on January 29, 2021; and
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The description of our ordinary shares contained
in our registration statement on Form 8-A filed on February 12, 2018 and as it may
be further amended from time to time; and
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all documents that we file with the SEC pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Registration Statement and prior to the filing of
a post-effective amendment to this Registration Statement (that indicates that all securities offered have been sold or that deregisters
all securities then remaining unsold) shall be deemed to be incorporated by reference in this Registration Statement and to be
part hereof from the date of filing of such documents.
We also incorporate by reference all additional documents that
we file with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act that are filed after the effective date
of the registration statement of which this prospectus is a part and prior to the termination of the offering of securities offered
pursuant to this prospectus. We also incorporate by reference all additional documents that we file with the SEC pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act that are filed after the filing date of the registration statement of which this
prospectus is a part and prior to effectiveness of that registration statement. We are not, however, incorporating, in each case,
any documents or information that we are deemed to “furnish” and not file in accordance with SEC rules.
You may obtain a copy of these filings,
without charge, by writing or calling us at:
Farmmi, Inc.
Fl 1, Building No. 1, 888 Tianning Street,
Liandu District
Lishui, Zhejiang Province
People’s Republic of China 323000
+86-0578-82612876 — telephone
Attn: Investor Relations
Farmmi, Inc.
$100,000,000
Ordinary Shares, Share Purchase Contracts,
Share Purchase Units, Debt Securities, Warrants, Rights, Units
PROSPECTUS
March
16, 2021
No dealer, salesperson, or other person has been authorized
to give any information or to make any representation not contained in this prospectus, and, if given or made, such information
and representation should not be relied upon as having been authorized by us. This prospectus does not constitute an offer to sell
or a solicitation of an offer to buy any of the securities offered by this prospectus in any jurisdiction or to any person to whom
it is unlawful to make such offer or solicitation. Neither the delivery of this prospectus nor any sale made hereunder shall under
any circumstances create an implication that there has been no change in the facts set forth in this prospectus or in our affairs
since the date hereof.
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