LISHUI, China - Farmmi, Inc. (NASDAQ: FAMI), a supplier of agricultural products, announced today a strategic cooperation agreement with Mazon Technology LLC, a logistics company based in California. This partnership aims to bolster Farmmi USA's operations in warehousing and logistics, potentially generating $10 million in annual orders.
The agreement between Farmmi USA, a subsidiary of Farmmi, Inc., and Mazon Technology focuses on "one-piece delivery" services for e-commerce products. Farmmi USA's California-based logistics base, which began trial operations in August 2024, offers a suite of services including shipping container warehousing and customs clearance agency services.
Yefang Zhang, Chairwoman and CEO of Farmmi, described the collaboration as a significant step in the company's expansion into the warehousing and logistics sector. She emphasized that this move not only secures a new customer but also demonstrates progress in their logistics business.
Farmmi, Inc., established in 1998, is known for supplying, processing, and retailing edible mushrooms such as Shiitake and Mu Er, along with other agricultural commodities. The company operates both online and offline sales channels.
The forward-looking statements in the press release indicate Farmmi's expectations for future growth but also acknowledge risks and uncertainties that could affect actual results. These include the effects of the Covid-19 pandemic on customer businesses and disposable income, market fluctuations, and economic conditions impacting the industry.
The strategic cooperation is based on an agreement in principle, with further details on the partnership's implementation yet to be disclosed. This news is based on a press release statement from Farmmi, Inc.
In other recent news, Farmmi, Inc., a supplier of agricultural products, has secured a 180-day extension from NASDAQ to meet the exchange's minimum bid price requirement. This extension allows Farmmi until April 21, 2025, to increase its ordinary share bid price to at least $1.00 for a minimum of ten consecutive business days. The NASDAQ extension is vital for Farmmi to maintain its presence on the exchange and access to investors.
On another front, Farmmi has also announced a registered direct offering and concurrent private placement to institutional investors. This strategic move is projected to raise approximately $1 million in gross proceeds before deductions. The transaction involves the sale of over 3.4 million ordinary shares and an equal number of Series A warrants, each with an exercise price of $0.75 per share. Maxim Group LLC is acting as the sole placement agent for this offering. These recent developments are part of the company's financial strategies.
InvestingPro Insights
Farmmi's strategic cooperation with Mazon Technology comes at a crucial time for the company, as reflected in recent financial data from InvestingPro. Despite the potential $10 million in annual orders from this new partnership, Farmmi faces significant challenges. The company's revenue of $86.26 million for the last twelve months as of Q2 2024 shows a concerning decline of 26.66% compared to the previous period.
InvestingPro Tips highlight that Farmmi is "quickly burning through cash" and "operates with a significant debt burden." These factors underscore the importance of the new logistics venture in potentially stabilizing the company's financial position. However, it's worth noting that Farmmi's gross profit margin stands at a low 4.95%, indicating slim profitability on its sales.
On a more positive note, InvestingPro data shows that Farmmi's stock has seen a significant return of 64.12% over the last month, possibly reflecting market optimism about moves like the Mazon Technology partnership. The company's price-to-book ratio of 0.02 suggests that the stock might be undervalued, which could present an opportunity for investors if the new strategic direction proves successful.
For readers interested in a deeper analysis, InvestingPro offers 18 additional tips for Farmmi, providing a comprehensive view of the company's financial health and market position.
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