20-F

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

(Mark One)

¨ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended September 30, 2018

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

¨ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 000-51576

Origin Agritech Limited

(Exact name of Registrant as specified in its charter)

Not Applicable

(Translation of Registrant’s name into English)

British Virgin Islands

(Jurisdiction of incorporation or organization)

No. 21 Sheng Ming Yuan Road, Changping District, Beijing 102206, China

(Address of principal executive offices)

Dr. Han Gengchen

No. 21 Sheng Ming Yuan Road, Changping District, Beijing 102206, China

Tel: (86-10) 5890-7588

Fax: (86-10) 5890-7577

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

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

Title of each Class	Trading Symbol	Name of each exchange on which registered
Ordinary Shares	SEED	NASDAQ

Securities registered or to be registered pursuant to Section 12(g) of the Act.

None

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None

(Title of Class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period (September 30, 2018) covered by the annual report: 3,196,244 ordinary shares.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

¨Yes    xNo

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

¨Yes    xNo

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

xYes    ¨No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). 

xYes    ¨No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or an emerging growth company.

¨Large accelerated filer ¨Accelerated filer xNon-accelerated filer ¨ Emerging growth company

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

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

U.S.  GAAP x	International Financial Reporting Standard as	Other ¨
	Issued by the International Accounting Standards
	Board ¨

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. 

¨Item 17               ¨Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

¨Yes    xNo

ORIGIN AGRITECH LIMITED

TABLE OF CONTENTS

INTRODUCTION		3
PART I
Item 1.	Identity of Directors, Senior Management and Advisors	5
Item 2.	Offer Statistics and Expected Timetable	5
Item 3.	Key Information	5
Item 4.	Information on the Company	23
Item 4A	Unresolved Staff Comments	39
Item 5.	Operating and Financial Review and Prospects	39
Item 6.	Directors, Senior Management, and Employees	52
Item 7.	Major Shareholders and Related Party Transactions	58
Item 8.	Financial Information	60
Item 9.	The Offer and Listing	61
Item 10.	Additional Information	61
Item 11.	Quantitative and Qualitative Disclosures About Market Risk	68
Item 12.	Description of Securities Other than Equity Securities	69
PART II
Item 13.	Defaults, Dividend Arrearages, and Delinquencies	69
Item 14.	Material Modifications to the Rights of Security Holders and Use of Proceeds	69
Item 15.	Controls and Procedures	69
Item16A.	Audit Committee Financial Expert	70
Item 16B.	Code of Ethics	70
Item 16C.	Principal Accountant Fees and Services	71
Item 16D.	Exemption from the Listing Standards for Audit Committees	72
Item 16E.	Purchases of Equity Securities by the Issuer and Affiliated Purchasers	72
Item 16F.	Change in registrant’s certifying accountant	72
Item 16G.	Corporate Governance	72
PART III
Item 17.	Financial Statements	72
Item 18.	Financial Statements	72
Item 19.	Exhibits	72

INTRODUCTION

Except where the context otherwise requires and for purposes of this Annual Report only:

“we,” “us,” “our company,” “our,” the “Company” and “Origin” refer to Origin Agritech Limited, State Harvest Holdings Limited and the following, which are collectively described in this Annual Report as “our PRC Operating Companies”: Beijing Origin State Harvest Biotechnology Limited, or Origin Biotechnology, Beijing Origin Seed Limited, or Beijing Origin, and its four subsidiaries, (i) Henan Origin Cotton Technology Development Limited, or Henan Origin, (ii) Xinjiang Originbo Seed Limited, or Xinjiang Origin, (iii) Origin Agritech USA, LLC or Origin USA and (iv) Beijing State Harvest Zhongying Network Technology Limited or Zhongying, and five newly established joint ventures: Hubei Aoyu Agricultural Technology Limited (“Hubei Aoyu”), Anhui Aoyu Zhongye Technology Ltd. (“Anhui Aoyu”) in Anhui province, Xuzhou Aoyu Agricultural Technology Ltd. (“Xuzhou Aoyu”) in Jiangsu province, Shandong Aoyu Zhongye Limited (Shandong Aoyu) in Shandong province and Henan Aoyu Zhongye Limited (Henan Aoyu) in Henan province.

· “last year,” “fiscal year 2018,” “the year ended September 30, 2018” and “the fiscal year ended “September 30, 2018” refer to the twelve months ended September 30, 2018, which is the period covered by this Annual Report;

· all references to “Renminbi,” “RMB” or “yuan” are to the legal currency of China; all references to “U.S. dollars,” “dollars,” “$” or “US$” are to the legal currency of the United States. Any discrepancies in any table between totals and sums of the amounts listed are due to rounding. The translation of Renminbi amounts into United States dollar amounts has been made for the convenience of the reader. Such translation amounts should not be construed as representations that the Renminbi amounts could be readily converted into United States dollar amounts at that rate or any other rate;

· “China” or “PRC” refers to the People’s Republic of China, excluding Taiwan, Hong Kong, and Macau;

· “Hong Kong” refers to the Hong Kong Special Administrative Region of the People’s Republic of China;

· “shares” and “ordinary shares” refer to our ordinary shares, “preferred shares” refers to our preferred shares; and

· references in this Annual Report to our ordinary shares are adjusted to reflect the consolidation of our ordinary shares through a one-for-ten reverse stock split, which became effective on July 10, 2018.

FORWARD-LOOKING INFORMATION

This Annual Report on Form 20-F contains forward-looking statements that are based on our current expectations, assumptions, estimates, and projections about our company and industry. All statements other than statements of historical fact in this Annual Report are forward-looking statements. These forward-looking statements can be identified by words or phrases such as “may,” “will,” “expect,” “anticipate,” “estimate,” “plan,” “believe,” “is/are likely to” or other similar expressions. The forward-looking statements included in this Annual Report relate to, among others:

· our expectations for our future business and product development, business prospects, results of business operations and current financial condition;

· future development of agricultural biotechnology as a whole, including our genetically modified seed research and development and our use of integrated saline-alkaline land reclamation technology for damaged farmland;

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· our ability to launch and develop alternative businesses, including our on-line marketing platform.

· address the scope and impact of the governing and regulatory policies and laws regarding the research and development of genetically modified seed products and operate our on-line marketing platform;

· our plans to license or co-develop seed products or technologies;

· likelihood of recurrence of accounting charges or impairments;

· expected changes in our sources of revenues and income base and our ability to generate income from our diversified business lines;

· competition in our business lines, including the crop seed industry, development of GM seeds, and on-line agricultural product selling;

· our plans for current staffing requirements and research and development and business expansion;

· our ability to successfully raise capital to accommodate company needs which are under acceptable terms and at an acceptable share price; and

· adequacy of our facilities for our operations.

We believe it is important to communicate our expectations to our shareholders. However, there may be certain events in the future that we are not able to predict with accuracy or over which we have no control. The risk factors and cautionary language discussed in this Annual Report provide examples of risks, uncertainties and events that may cause actual results to differ materially from the expectations in these forward-looking statements, including among other things:

· changing interpretations of Generally Accepted Accounting Principles and the adoption or use of International Accounting Standards in the future;

· outcomes of PRC and international government reviews, inquiries, investigations and related litigations;

· continued compliance with government regulations of PRC and other governments;

· legislative and regulatory environments, requirements or changes adversely affecting the businesses in which we and our PRC operating companies are engaged; and

· management of the growth of our business and introduction of genetically modified products.

The forward-looking statements in this Annual Report involve various risks, assumptions, and uncertainties. Although we believe that our expectations expressed in these forward-looking statements are reasonable, we cannot be certain that our expectations will materialize. Our actual results could be materially different from our expectations. Important risks and factors that could cause our actual results to be materially different from our expectations are generally set forth in the risk factors included in this Annual Report.

This Annual Report also contains information regarding the sale of certain assets of Origin. A portion of the assets of Origin were transferred to the purchaser of the assets in September 2017.

The forward-looking statements made in this Annual Report relate only to events or information as of the date of the statements. Readers should read these statements in conjunction with the risk factors disclosed in this Annual Report.

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All forward-looking statements included herein attributable to us or other parties or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Except to the extent required by applicable laws and regulations, we undertake no obligations to update these forward-looking statements to reflect events or circumstances after the date of this Annual Report or to reflect the occurrence of unanticipated events.

PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

Not Applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not Applicable.

ITEM 3. KEY INFORMATION

A. Selected financial data.

The following selected consolidated financial information was derived from our fiscal year end consolidated financial statements. The following information should be read in conjunction with those statements and Item 5, “Operating and Financial Review and Prospects.”

Our summary consolidated statements of operations and comprehensive income data for the fiscal years ended September 30, 2016, 2017 and 2018 and our summary consolidated balance sheet data as of September 30, 2017 and 2018, as set forth below, are derived from, and are qualified in their entirety by reference to, our audited consolidated financial statements, including the notes thereto, which are included in this Annual Report. Our summary unaudited consolidated balance sheet data as of September 30, 2016, as set forth below, are derived from the financial records of Origin.

We have omitted the selected financial data for the years ended September 30, 2014 and 2015, based on the fact that for us to provide the information reflecting our discontinued operations it would take a significant amount of time and cause us to incur an unreasonable expense. We do not believe that to provide the selected financial data for those years, as adjusted to reflect the discontinued operations would provide any meaningful disclosure for investors, given the extent to which the discontinued operations then represented the majority of the revenue and expenses in those years.

References in this annual report to our ordinary shares are adjusted to reflect the consolidation of our ordinary shares through a one-for-ten reverse stock split, which became effective on July 10, 2018.

Our consolidated financial statements are prepared and presented in accordance with accounting principles generally accepted in the United States, or U.S. GAAP.

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	Year ended September 30,
	2016			2017			2018			2018
	RMB'000			RMB'000			RMB'000			US$'000
Consolidated statement of income and comprehensive income data
Revenues		481			870			12,927			1,879
Cost of revenues		-			(678	)		(7,047	)		(1,024	)
Gross profit		481			192			5,880			855
Selling and marketing		-			-			(411	)		(60	)
General and administrative		(32,974	)		(36,094	)		(32,147	)		(4,673	)
Research and development		(41,272	)		(38,682	)		(27,132	)		(3,944	)
Other income, net		8,265			5,028			18,291			2,659
Total operating expenses, net		(65,981	)		(69,748	)		(41,399	)		(6,018	)
Loss from continuing operations		(65,500	)		(69,556	)		(35,519	)		(5,163	)
Interest expense		(7,607	)		(9,006	)		(22,787	)		(3,312	)
Interest income		69			1,427			6			1
Impairment loss		-			(44,706	)		(3,807	)		(553	)
Loss on termination of business disposal		-			-			(90,683	)		(13,182	)
Loss before income taxes from continuing operations		(73,038	)		(121,841	)		(152,790	)		(22,209	)
(Loss) income from discontinued operations, net of taxes		(3,795	)		18,862			-			-
Loss on disposal of commercial seed business, net of taxes		-			(3,282	)		-			-
Net (loss) income from discontinued operations		(3,795	)		15,580			-			-
Net loss		(76,833	)		(106,261	)		(152,790	)		(22,209	)
Net (loss) income attributable to non-controlling interests		(11,255	)		(30,587	)		873			127
Net loss attributable to Origin Agritech Limited		(65,578	)		(75,674	)		(153,663	)		(22,336	)
Net loss per share (1):
Basic		(23.76	)		(26.95	)		(50.18	)		(7.29	)
Diluted		(23.76	)		(26.95	)		(50.18	)		(7.29	)
Shares used in computation (a):
Basic		2,759,834			2,808,293			3,061,979			3,061,979
Diluted		2,759,834			2,808,293			3,061,979			3,061,979

(1) Share and per share data for the years ended September 30, 2016 and 2017 have been restated to reflect a 1-for-10 reverse stock split in July 2018.

	Sept 30			Sept 30			Sept 30
	2016			2017			2018
	RMB’000			RMB’000			RMB’000			US$’000(1)
Consolidated balance sheet data:
Cash and cash equivalents		3,575			3,245			1,990			289
Current working capital (2)		(136,398	)		(45,045	)		(217,293	)		(31,590	)
Total assets		744,228			324,140			430,101			62,520
Total current liabilities		614,501			134,104			432,171			62,823
Total liabilities		662,008			211,341			453,449			65,916
Non-controlling interests		38,329			490			1,363			198
Total Origin Agritech Limited shareholders’ equity		218,6178			112,799			(23,348	)		(3,396	)

(1) Translation of Renminbi amounts into United States dollar amounts has been made for the convenience of the reader for the year ended September 30, 2018, and has been made at the exchange rate quoted by the State Administration of Foreign Exchange in China on September 30, 2018, of RMB6.8792 to US$1.00. Such translation amounts should not be construed as a representation that the Renminbi amounts could be readily converted into United States dollar amounts at that rate or any other rate.

(2) Current working capital is the difference between total current assets and total current liabilities.

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Exchange Rate Information

The conversion of Renminbi into U.S. dollars in this Annual Report is based on the statistics of the State Administration of Foreign Exchange. The consolidated financial statements are presented in Renminbi, which is our reporting currency. The translation of Renminbi amounts into United States dollar amounts has been made for the convenience of the reader and has been made at the exchange rate quoted by the State Administration of Foreign Exchange in China on September 30, 2018, of RMB6.8792 to US$1.00. Unless otherwise noted, for the years ended September 30, 2016 and 2017 all translations from Renminbi to U.S. dollars in this Annual Report were made at RMB6.6778 and RMB6.6369 per US $1.00, respectively, which were the prevailing year or period end closing rates for those periods. We make no representation that any Renminbi or U.S. dollar amounts could have been, or could be, converted into U.S. dollars or Renminbi, as the case may be, at any particular rate, the rates stated below, or at all. The PRC government imposes controls over its foreign currency reserves in part through direct regulation of the conversion of Renminbi into foreign exchange and through restrictions on foreign trade.

The following table sets forth information concerning exchange rates between the Renminbi and the U.S. dollar for the periods indicated. These rates are not necessarily the exchange rates that we used in this Annual Report or will use in the preparation of our periodic reports or any other information to be provided to you. The source of the rates is the State Administration of Foreign Exchange in China. At September 30, 2018, the closing exchange rate was RMB6.8792 for one U.S. dollar. As of May 23, 2019, the closing exchange rate was RMB6.8994 for one U.S. dollar.

	Average (1)		High		Low		Period-end
2013		6.2318		6.3449		6.1475		6.1480
2014		6.1446		6.1710		6.0930		6.1525
2015		6.1644		6.4085		6.1079		6.3613
2016		6.5377		6.6971		6.3154		6.6778
2017		6.7423		6.8993		6.5342		6.5342
2018		6.6185		6.9670		6.2764		6.8632
May 2018		6.3757		6.4207		6.3345		6.4144
June 2018		6.4556		6.6166		6.3919		6.6166
July 2018		6.7034		6.8165		6.6157		6.8165
August 2018		6.8433		6.8946		6.7942		6.8246
September 2018		6.8463		6.8792		6.8183		6.8792
October 2018		6.9264		6.9646		6.8957		6.9646
November 2018		6.9351		6.9670		6.8976		6.9357
December 2018		6.8853		6.9431		6.8476		6.8632
January 2019		6.7897		6.8631		6.7025		6.7025
February 2019		6.7364		6.7765		6.6857		6.6901
March 2019		6.7095		6.7335		6.6850		6.7335
April 2019		6.7151		6.7310		6.6911		6.7286

(1) Annual averages are calculated from month-end rates. Monthly averages are calculated using the average of the daily rates during the month. 

B. Capitalization and indebtedness.

Not Applicable

C. Reasons for the offer and use of proceeds.

Not Applicable.

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D. Risk factors.

Risks relating to our business  

If we do not manage our ongoing operations successfully, our growth and chances for profitability will be hindered or impeded.

Our company engages in corn seed research and development, deploying our biotechnology assets, establishing a new agribusiness e-commerce platform, and exploring Integrated Saline-Alkaline Land Reclamation (“ISALR”) technologies. We plan to continue our seed research and development activities, with a view to licensing our seed traits and seed germplasm characteristics and performing contract research and development services. We also plan to focus on our new endeavors of an agribusiness e-commerce platform oriented towards the rural China market. We are partnering with Longhan Investment Management, Co., Ltd. (“Longhan”) to integrate comprehensive ISALR technology and collaborating with Elastos Foundation (“Elastos”) to develop blockchain technologies. All these many and varied activities will require substantial initial investment and are expected to require additional demands on our corporate administrative, operational, and financial personnel and other human resources and on our cash flow needs. Our current resources are not likely to be fully adequate to support our planned operations and expansion.

Our independent auditors have issued their report with a going concern statement.

The report on our financial statements for the fiscal years ended September 30, 2018 and 2017, included in this Annual Report on Form 20-F contains a going concern statement. Based on our financial resources and our planned operations we will need to obtain a substantial amount of capital to continue our business, for which we do not have any long term arrangements, and/or generate increased revenue from operations to cover our expenses, of which we cannot be certain. If we are unable to fund our operations, we may have to curtail substantial parts of our business operations or cease our business operations. Investors should evaluate their investment in the Company based on these financial uncertainties.

We may not be able to pay back our long term borrowings.

We have our bank debt during normal course of business. As of September 30, 2018, our outstanding bank debt was RMB78.2 million (US$11.4 million), of which some of the principle is now due. We are in the process to refinance the bank debt or entering an investment so that the bank loan, which is collateralized by the Company’s headquarters building in Beijing, will be paid back upon receiving the RMB204 million investment from Beijing Changping Technology Innodevelop Group (BC-TID). However, such investment and refinance plan may not be completed according to our plan, and we may not be able to pay back our bank loans as planned. If we cannot pay off the borrowings, the bank may foreclose our assets.

The successful development and commercialization of our biotech pipeline of products will be important for our growth.

With the sale of our seed production and distribution business, we are focusing our seed business on biotechnology development and an e-commerce platform in the seed industry. We conduct our own research and development efforts for genetically modified seeds, referred to as GM. We also collaborate with the Chinese Academy of Agricultural Science, China Agricultural University, Zhejiang University in the PRC under various agreements for seed genetic modifications and other seed biotechnologies that give us the right to market the seeds and technologies they develop. We also are seeking other development and marketing arrangements with other entities in China and elsewhere. The length of time and the risk associated with breeding and biotech pipelines are similar and interlinked because both are required as a package for commercial success in markets where biotech traits are approved for growers. Regulatory requirements affect the development of our biotech products, including the GM crop testing of seeds containing the biotech traits, which could harm our business and results of operations if regulations are not satisfied. The testing procedures can be lengthy and costly, with no guarantee of success. It could have an adverse effect on our operations if our genetically modified products are unable to pass the safety evaluation for genetically modified agricultural organisms.

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There has been a worldwide increase in the development and application of genetically modified agricultural products to enhance crop seed quality and increase crop yields.  The Biosafety certificate of genetically modified corn and rice seeds has been granted in China only recently.  As government policies change to allow more genetically modified seeds and demand develops for these products, we expect that we will produce more genetically modified products to the extent we are able. There is a risk that our current steps to respond to the potential competitive threat posed by genetically modified agricultural products, including our research and development activities with respect to genetically modified crop seeds, may not enable us to compete successfully.

The potential uncertainty in the government regulation in China of genetic technology and genetically modified, or GM, agricultural products and the acceptance of these products by the public could have an adverse effect on our business.

Genetically modified seed products are controversial; thus genetic modification has not yet been accepted in many countries throughout the world. The Chinese government has only recently begun to issue GM crop safety certificates for eventual commercial cultivation of GM seeds. Consumer reaction to GM products is also becoming a factor in the overall approval process and the ability of companies, such as ours, to sell or license our GM products. The relative novelty and the potential uncertainty in the government regulation of genetic technology and ultimate consumer acceptance will have an effect on our business development strategy and research activities and may cause us to re-evaluate our development programs for developing new seeds.

The government may not approve or may limit commercialization of genetically modified corn products, which could have an adverse impact on the future of the company.

Even though we believe biotechnology is important in agricultural applications and the government has supported and approved some uses of genetically modified seeds, we cannot predict whether or when the government will approve the full commercialization of GM seeds, including modified corn. The government may not approve the full commercialization of GM corn, and it may even ultimately conclude to limit or ban commercialization and/or research relating to genetically modified corn and other seed products. Any of these actions could have an adverse impact on our future development, and we would not be able to recover our research and development costs spent in developing biotechnology products.

Any operations outside China will be subject to foreign regulatory and legislative requirements, and it will be costly to comply with those regulatory requirements. If we are unable to meet these requirements, we will not be able to distribute our products.

Foreign regulatory and legislative requirements will impact the development and distribution of our seed products in the global market.

Certain markets may require rigorous testing and pre-approval prior to a market release of the GM seeds. For example, prior to the entry into the United States market, importers of non-United States seeds will need to obtain regulatory approval from various federal and state governmental agencies. The United States Department of Agriculture has to determine if there are any “plant pest” issues with the specific crop and traits. Further, some products may have to be submitted to the US Environmental Protection Agency (the “EPA”) to determine if there are any pesticide-related traits that are subject to regulation. There may also have to be submitted a Microbial Commercial Activity Notice (MCAN) to the EPA, which includes detailed information describing the seed’s characteristics and genetic construction, health and environmental effects, and other data, before GM seeds can be used in the United States for commercial purposes. Finally, even if a seed product has the required certificates and permits, there will be continuous Food and Drug Administration (“FDA”) regulation compliance about food safety, which place responsibility on the seed producer to assure the safety of the GM seed in the food chain and proof that GM crop seeds are “substantially equivalent” to non-modified versions of the seed. In the United States, there is also substantive state regulations applying to seeds: for example, some states have required specific labeling, banned planting and cultivation, and imposed additional certification requirements for use of GM seeds. These types of central and local government regulation and restrictions exist in many other countries around the world.

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Obtaining and maintaining permits and certificates for production and sales, and obtaining and maintaining testing, planting and import approvals for our GM seeds, can be time-consuming and costly, with no guarantee of success. In addition, regulatory and legislative requirements may change over time which may affect sales and profitability in those markets. The failure to receive necessary permits or approvals could have long-term effects on our ability to enter into foreign markets.

It may take us a long time to generate revenue from our new agribusiness e-commerce platform.

We have traditionally been a seed development, production and distribution company. Recently, after the sale of the production and distribution aspects of our prior business, we decided to augment our traditional seed development business by expanding into the e-commerce space. Although we believe we can utilize our experience in seed distribution, our rural China customer base, and our strong brand name in the e-commerce venture, there is no guarantee that we can successfully develop and launch the e-commerce platform or that the e-commerce platform will be profitable. Furthermore, our prior experience in seed distribution was largely via traditional sale methods and our previous customer base may not be willing to try our new e-commerce platform. To attract new customers, we may need to price aggressively to gain market share or remain competitive in new categories. It may be difficult for us to achieve profitability in the new product categories and our profit margin, if any, may be lower than we anticipated, which would adversely affect our overall profitability and results of operations.

Our new venture in e-commerce depends on our joint partnership with third party suppliers and distributors.

We anticipate that our e-commerce platform will provide agricultural seed products (e.g., corn seeds, rice seeds, and vegetable seeds), other agricultural inputs (e.g., fertilizers and agricultural chemicals), foods, household products, and other consumer products to our customers. We do not produce any of the products we intend to sell on the e-commerce platform and will have to rely heavily on products provided by unrelated suppliers. Because we are a new player in e-commerce and have not built up a customer base yet, we may not have much purchasing power and may not be able to negotiate favorable terms with suppliers.

Furthermore, we are not familiar with the non-seed products we are intending to sell on the platform and it may also make it more difficult for us to inspect and control quality of those products being sold on the platform. We may receive more customer complaints about the products we are not familiar with and face costly product returns or product liability claims as a result of selling them, which would harm our brand and reputation as well as our financial performance.

We are dependent on our relationships with our strategic partners for joint venture development.

The success of our new joint venture development depends on our relationships with our joint venture partners. We believe partnering with local distributors using joint-venture structure will provide incentives for local distributors to prioritize our customers’ needs and orders and will ensure our customers’ orders will be fulfilled efficiently and effectively. We, however, cannot assure you that we will satisfy the conditions required to maintain these relationships and we also cannot assure you that whether the local distributor partners will be able to meet the needs of our customers or grow effectively meet the development objectives of the joint ventures.

Joint ventures, partnerships, and companies that we enter into present a number of challenges that could have a material adverse effect on our business and results of operations and cash flows.

We have developed five joint ventures in China and, as part of our business strategy, we may enter into other joint ventures or similar transactions. These transactions typically involve a number of risks and present financial, managerial and operational challenges, including the existence of unknown potential disputes, liabilities or contingencies that arise after entering into the joint venture related to the counterparties to such joint ventures We could experience financial or other setbacks if transactions encounter unanticipated problems due to challenges, including problems related to execution or integration. Any of these risks could reduce our revenues or increase our expenses, which could adversely affect our results of operations and cash flows.

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We are relying heavily on our partners, including Elastos and the local distributors, to establish and operate the e-commerce platform.

We have little experience in e-commerce platform development, blockchain technology and agricultural business other than seeds. To successfully establish the e-commerce platform, we will need our partners’ help in a number of other areas, such as user traffic acquisition, advertising, technology, social graphs and IT infrastructure. While we can benefit from our partners’ experience in building platforms, connecting e-commerce with social network and blockchain technologies and new agricultural distribution business, our success is also reliant on our partners willingness to develop and maintain the platform for us. In the event that we cannot maintain our cooperative relationships with our joint venture partners on terms favorable to us or at all, we will need to source other business partners to provide services such as distribution channels, promotion services, as well as IT and payment services, and we may lose access to key strategic assets, which could result in material and adverse effects on our business and results of operations.

Network errors could adversely affect our user experience and market acceptance of our products, which may materially and adversely affect our business and results of operations.

Our e-commerce platform or content on our platform may contain network or programming errors that adversely affect the user experience and market acceptance of the offered products. Errors in products, delivery, content, connection will negatively impact brand image and our customers willingness to use our platform. We may not be able to detect and resolve all these errors effectively. Programming errors or defects may adversely affect user experience, cause users to refrain from subscribing for our services, buying our products, or cause our delivery errors or delays and prevent our customers from using our service.

If we fail to keep up with industry trends or technological developments, our business, results of operations and financial condition may be materially and adversely affected.

The e-commerce industry is rapidly evolving and subject to continuous technological and market preference changes. Our success will depend on our ability to keep up with the changes in technology and user behavior resulting from new developments and innovations. For example, we believe our use of blockchain technology to track the origin of seeds is an effective way to combat fake seeds and intellectual property infringement issues related to the seeds but our competitors may be able to develop better technologies to solve the same problem. Technological innovations may also require substantial capital expenditures in product development as well as in modification of products, services or infrastructure. We cannot assure that we can obtain financing to cover such expenditure. If we fail to adapt our products and services to such changes in an effective and timely manner, we may suffer from decreased user traffic and user base, which, in turn, could materially and adversely affect our business, financial condition and results of operations.

We operate in a relatively new and evolving market.

Many elements of our business are unique, evolving and relatively unproven. Our business and prospects primarily depend on the continuing development and growth of the e-commerce in China as well as the expansion of 4G communication network in rural China, and the continuing modernization of rural logistics system, which are affected by numerous factors and not within our control. Furthermore, product quality, user experience, technological innovations, development of internet and internet-based services, regulatory environment and macroeconomic environment are also important factors that affect our business and prospects. The markets for our products are relatively new and rapidly developing and are subject to significant challenges. In addition, our continued growth depends, in part, on our ability to respond to constant changes in the e-commerce industry, particularly in the use e-commerce platforms in rural China, rapid technological evolution, continued shifts in customer demands, frequent introductions of new products and services and constant emergence of new industry standards and practices. Developing and integrating new products, services or infrastructure could be expensive and time-consuming, and these efforts may not yield the benefits we expect to achieve. If we cannot successfully introduce our e-commerce platform to rural China or maintain and grow our customer base once the platform is launched, our business, financial condition and results of operation may be materially and adversely affected.

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The potential uncertainty in the government regulation in China regarding e-commerce could delay the launch of our e-commerce platform and have an adverse effect on our business.

The laws and regulations in China regarding internet services, e-commerce and data privacy are still under development. The authorities are still in the process of developing various methods and guidelines related to the implementation of the Cyber security laws, internet laws and data security laws. The new rules will impose additional compliance requirements related to the communication, storage and automation of our data. We believe there remains uncertainties as to the interpretation and application of the current law and regulation. Complying with such requirements could cause us to incur substantial expenses or require us to alter or change our practices in a manner that could harm our business. 

There is no guarantee that the Integrated Saline-Alkaline Land Reclamation Technology (“ISALR”) can be deployed on a large scale or can integrate with our seed breeding technology.

Although the ISALR Technology has been successfully tested on various crops across several provinces in China, it is uncertain whether the technology could be deployed on a large scale inside China or be used outside of China. The success in ISALR technology also relies on the support of various level of the Chinese government, so the global trading dynamics and subsidy policies from the Chinese government are important to the deployment of ISALR technology. Additional, we are hoping to incorporate our seed technology with the seed and soil treatment technologies from Longhan. It is unclear the technology integration will be successful. It is also unclear regarding the competitions since this is relatively a new field of agricultural technology and the intellectual protection could also be challenging.

The degree of public acceptance or perceived public acceptance of our biotechnology products can affect our operations.

Although all genetically modified products must go through rigorous testing, some opponents of the technology consistently attempt to raise public concern about the potential for adverse effects of genetically modified seed products on human or animal health, other plants and the environment. The potential for the adventitious presence of commercial biotechnology traits in conventional seed, or in the grain or products produced from conventional or organic crops, is another factor that could affect the public’s acceptance of these traits. Public concern can affect the timing of, and whether we are able to obtain, government approvals. Even after approvals are granted, public concern may lead to increased regulation or legislation, which could affect our business and operations, and may adversely affect sales of our products to farmers, due to their concerns about available markets for the sale of crops or other products derived from biotechnology.

The global competition in biotechnology will affect our business.

We believe we are a leader in biotechnology in China since we have been conducting our proprietary biotechnology research program for many years and have an internal biotech research center. However, as multinational corporations engaged in the crop seed business expand into the agricultural market in China, we anticipate that they will have a greater portfolio of seed products and more advanced technologies than us. Major multinational competitors have a long history in the research and commercialization of their products, sophisticated marketing capabilities and strong intellectual property estates, all of which may give them competitive advantage over us. Any of these competitive advantages could cause our existing or future products to become less competitive or outdated, and adversely affect our product acceptance in the market place and our results of operations.

Our globalization plans may be difficult to achieve due to the expense of establishing a market presence.

Although we believe we have potential seeds that could be of interest outside of China, to establish a global brand and presence will be difficult. Establishing a brand and maintaining a local presence will take substantial resources and time.  

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We face significant international competition in the GM seed market and the competition may affect our overall sales.

The GM seed market outside China is highly competitive, dominated by a limited number of companies. Many of our competitors have greater experience of the GM market and substantially greater resources in the research and development of plant biotechnology. These companies also have substantial production facilities for crop seeds. In addition, our competitors have established market presence, have obtained patent protection in some instances for different seeds, and have built up their brand reputation and distribution networks globally. For example, in the United States Monsanto Company and E.I. DuPont de Nemours and Company (Pioneer), dominate the GM corn seed market with approximately 70% of that market. These companies’ extensive GM portfolio of seeds and their success in developing new traits in the seeds could render our existing products less competitive, including within the China markets, resulting in reduced sales and licensing opportunities compared to our expectations.

We may not be able to maintain our market advantage by improving our GM seeds to fit the needs of the market.

GM seeds varieties need to be improved and altered over a relatively short time frame because the weeds and insects develop resistance to herbicides and pesticides, which often renders the benefits of a particular GM traits less effective. GM seeds need to be altered to tolerate higher doses and/or new varieties of herbicides and pesticides and other farming practices. If our GM seed portfolio does not keep pace with these changes or goes in a direction that is not effective in the market, our position in the market would be adversely impacted. Alternatively, we believe that this characteristic of GM seeds gives us an opportunity to introduce our products into various seed markets needing new varieties. We will be required to continue to invest in new research to develop our portfolio of GM seeds so that our GM seeds can adapt to new herbicides and pesticides and differing soil, weather and growing conditions.

We operate in a competitive industry. If we are unable to compete successfully, we may not succeed in our e-commerce platform.

We believe e-commerce is popular in rural China and with the Chinese government’s introduction of 4G network and expansion of rural logistics will make rural e-commerce a valuable market. The e-commerce market is highly competitive and we face competition for customer and their time and spending primarily from the other e-commerce platforms provided by bigger and more mature e-commerce giants in China. We believe that we will compete with our competitors based on a number of factors, such as the diversity of products, product features, services, social interaction features, quality of user experience, brand awareness and reputation. Many of our competitors may have greater financial, marketing or technology resources than we do, which enable them to respond more quickly to technological innovations or changes in user demands and preferences, acquire more attractive content and devote greater resources towards the development, promotion and sale of products than we can. Also, they may provide their users with content that we do not have the license to offer. If any of our competitors achieves greater market acceptance or is able to provide more attractive content offerings than we do, our user traffic and market share may decrease, which may result in a loss of users and a material and adverse effect on our business, financial condition and results of operations.

We have a relatively short operating history in the field of biotechnology research and are subject to the risks of any developing enterprise, any one of which could limit our growth and our product and market development.

It continues to be difficult to predict how our business will develop over the long term. Accordingly, we are still facing all of the risks and uncertainties encountered by companies in the earlier stages of development, such as:

· uncertain and continued market acceptance for our product extensions and our services;

· evolving nature of the crop seed industry in the PRC, which is marked by seed company consolidation, changing aspects of government subsidies to farmers and becoming more limited, over production of crop seeds, and less adherence to the qualities of branded seeds, among other things;

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· highly competitive conditions from both other branded seeds and unbranded seeds and changing customer preferences or needs that will harm sales of our products;

· maintaining our competitive position in the PRC and competing with Chinese and international companies, many of which have longer operating histories and greater resources than us;

· the aging technology of our seed products that do not reflect current needs and the continual need to develop new seed products;

· the cost of our products compared to other sources of seeds for the same crops;

· maintaining our current licensing arrangements and entering into new ones to expand our product offerings in both our domestic market and sought after international markets;

· continuing to offer commercially successful products to attract and retain a larger base of direct customers and ultimate users;

· continuing our existing arrangements with farms that grow our crop seed products and entering into new arrangements with additional production farms;

· maintaining effective control of our costs and expenses; and

· retaining our management and skilled technical staff and recruiting additional key employees.

If we are not able to meet the challenges of our businesses and managing our business plan, the likely result will be slowed growth, lower margins, additional operational costs and lower income, any of which will affect shareholder value.

Any diversion of management attention to matters related to corporate reorganization or any delays or difficulties encountered in connection with changing operations may have an adverse effect on our core business, results of operations, and/or financial condition. 

Corporate reorganization and transformation activities present challenges, including geographical coordination, personnel integration and retention of key management personnel, system integration and the unification of corporate culture. These efforts generally divert management attention from our core business, cause a temporary interruption of or loss of momentum in our business and the loss of key personnel from the acquired companies. In addition, any proposed acquisitions and corporate reorganization activities will cause us to incur substantial costs, none of which are generally recoverable.

From time to time we must evaluate whether or not to discontinue a line of business or an expansion effort, which if discontinued could have an adverse impact on our financial position.

From time to time we evaluate whether or not to continue a particular line of business or an expansion effort. In the past we implemented restructuring programs to eliminate our activities in agricultural chemicals and cotton seed development, sales centers, seed distribution and other unprofitable activities. In 2017, we sold all of our seed production and distribution business to Beijing Shihui Agricultural Development Co. Ltd. Whenever a company undertakes to discontinue a line of business, there are expenses associated with the sale or closing of those related operations, which are reflected in the accounting for discontinued operations. The actual and accounting costs for discontinued operations may have an adverse effect on the financial position of the company in the period of discontinuance, which may result in an adverse market reaction and decline in our stock price. 

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We or our licensors may be subject to intellectual property infringement claims, which may force us to incur substantial legal expenses and, if determined adversely against us or our licensors, may materially disrupt our business.

We cannot be certain that our licensed or self-developed proprietary seed products, our blockchain technology for e-commerce platform and the ISALR technologies do not or will not infringe the intellectual property rights held by third parties. We, or any of our licensors, may be subject to legal proceedings and claims from time to time related to the intellectual property of others. If we, or any of our licensors, are found to have violated the intellectual property rights of others, we may be required to pay damages and be enjoined from using such intellectual property, and we may incur new or additional licensing fees if we wish to continue using the infringing products, or be forced to develop or license alternative products. In addition, we may incur substantial expenses in defending against these third party infringement claims, regardless of their merit.

Efforts to protect our intellectual property rights and to defend against claims can increase our costs and may not always succeed. Any failures could adversely affect our sales and results of operations or restrict our ability to conduct our business.

Intellectual property rights are important to our business. The seed markets in China face substantial counterfeiting. We endeavor to obtain and protect our intellectual property rights where our products are produced. However, we may be unable to obtain protection for our intellectual property. Even if protection is obtained, competitors, growers or others in the chain of commerce may raise legal challenges to our rights or illegally infringe our rights, including through means that may be difficult to prevent, detect or defend. In addition, because of the rapid pace of technological change and the confidentiality of patent applications in some jurisdictions, competitors may be issued patents from applications that were unknown to us prior to issuance. These patents could reduce the value of our commercial or pipeline products or, to the extent they cover key technologies on which we have unknowingly relied, require that we obtain licenses at a financial cost to us or cease using the technology, no matter how valuable the patents may be to our business. We cannot assure you that we would be able to obtain such licenses on acceptable terms. Also, litigation may be necessary to enforce our intellectual property rights, protect our trade secrets or determine the validity and scope of the proprietary rights of others. There is a risk that the outcome of such potential litigation may not be in our favor. Such litigation may be costly and may divert management attention as well as consume other resources which could otherwise be devoted to our business. An adverse determination in any such litigation will impair our intellectual property rights and may harm our business, prospects and reputation. In addition, we have no insurance coverage against litigation costs due to lack of this kind of insurance being available in China, and we would have to bear all costs arising from such litigation to the extent we are unable to recover such costs from other parties. The occurrence of any of the foregoing may harm our business, results of operations and financial condition.

Finally, implementation of PRC intellectual property-related laws has historically been lacking, primarily because of the ambiguities in the PRC laws and the difficulties in enforcement. Accordingly, intellectual property rights and confidentiality protections in China may not be as effective as they are in the United States or other countries, which increases the risk that we may not be able to adequately protect our intellectual property. The increase in counterfeiting seed products in the market is also affecting the sales of our products.

Failure to develop and market new products could impact the Company’s competitive position and have an adverse effect on the Company’s financial results.

The Company’s operating results will depend on our ability to renew our pipeline of new seed products and to bring those products to the market. This ability could be adversely affected by difficulties or delays in product development such as the inability to identify viable new products, greater than anticipated development costs, technical difficulties, regulatory obstacles, competition, lack of demand, insufficient intellectual property protection, or lack of market acceptance of new products and services. Due to the lengthy development process, technological challenges and intense competition, there can be no assurance that any of the products the Company is currently developing, or could begin to develop in the future, will achieve substantial commercial success. Consequently, if we are not able to fund our research and development activities and deliver new products to the markets we serve on a timely basis, our growth and operations will be harmed. In addition, sales of the Company’s new products could cannibalize sales of some of its current products, offsetting the benefit of even a successful product introduction.

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If we fail to introduce and commercialize new crop seeds, we will not be able to recover research, development and cover our other costs.

We cannot guarantee the development and performance of new crop seed varieties, whether licensed or proprietary, or that they will meet our customers’ expectations. Farmers generally need time to learn about new seed varieties and how to plant and tend them. Their traditional planting experience may make it difficult for them to adapt to the new varieties. The process and timing for new seed products to gain market recognition and acceptance is long and uncertain. If we fail to introduce and commercialize a new seed variety that meets the demand of farmers and to provide the proper education about the seeds to distributors, farmers and the public, we may not be able to generate sufficient sales to cover our costs or generate a financial return on our investment.

We may be exposed to product quality claims, which may cause us to incur substantial legal expenses and, if determined adversely against us, may cause us to pay significant damage awards.

The performance of our seeds depends on climate, geographical areas, cultivation method, farmers’ degree of knowledge and other factors in addition to genetic traits and the quality of our seeds. Natural disasters may also affect the performance of our seeds, particularly when farmers are not able to timely and effectively respond to those disasters. Furthermore, the cultivability of some farmland is deteriorating because of toxic and hazardous materials resulting from farmers’ overuse of chemical herbicides and pesticides and the fall-out from other sources of environmental pollution. These factors generally cause underproduction, but farmers may attribute underproduction to seed quality. We may be subject to legal proceedings and claims from time to time relating to our seed quality. The defense of these proceedings and claims can be both costly and time consuming and may significantly divert efforts and resources of our management personnel. An adverse determination in any such proceeding could subject us to significant liability and damage our market reputation and prevent us from achieving increased sales and market share. Protracted litigation could also result in our customers or potential customers deferring or limiting their purchase of our products.

We have limited business insurance coverage in China. 

PRC insurance companies do not offer extensive business insurance products. As a result, we have very limited business liability insurance, business disruption insurance, or product liability coverage for our operations in China. We have determined that the difficulties associated with acquiring such insurance on commercially acceptable terms make it impractical for us to obtain such coverage. Most likely we would bear the effects of any business disruption, litigation or natural disaster resulting in our incurring substantial costs and the diversion of our resources, and could adversely affect our operations and financial condition.  

Risks relating to doing business in China

If we do not comply with PRC regulations, we may not be able to operate our business or we may be fined, both of which would adversely affect our business, operations and revenues.

The PRC has many regulations relating to the seed business and internet sales business. Seed products must be licensed and undergo a stringent review process before they may be sold in the PRC. Environmental regulation in the future may be potentially concerned with the development, growing and use of GM seed products. Seed development companies also have requirements for their facilities, personnel and investment. The internet sales business has evolving privacy regulations. We believe we currently have all the necessary licenses for our business, and that we are in compliance with the other applicable laws and regulations. If we are not in compliance, we may be fined or lose the ability to sell a particular seed or operate our business altogether. If the fines are substantial or if our ability to sell or operate is withdrawn, this will result in additional costs or the loss of revenues and could prevent us from continuing as an operating business.

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The technical services agreements between Origin Biotechnology and the other operating subsidiaries may be subject to scrutiny by the PRC tax authorities for transfer pricing adjustments. 

We could face adverse tax consequences if the PRC tax authorities determine that our technical service agreements between Origin Biotechnology and the other PRC operating subsidiaries (and possibly our former subsidiaries), were not entered into based on arm’s length negotiations. If the PRC tax authorities determine that these agreements were not entered into on an arm’s length basis, they may adjust our income and expenses for PRC tax purposes in the form of a transfer pricing adjustment. A transfer pricing adjustment could result in a reduction, for PRC tax purposes, of deductions recorded by the operating subsidiaries, which could adversely affect us by:

· increasing the PRC operating subsidiaries’ tax liability without reducing Origin Biotechnology’s tax liability, which could further result in late payment fees and other penalties to our PRC operating subsidiaries for under-paid taxes; or

· limiting Origin Biotechnology’s ability to maintain preferential tax treatment and government financial incentives, which, if the transfer pricing adjustment is significant, could result in Origin Biotechnology failing to qualify for those preferential tax treatments and government financial incentives.

As a result, any transfer pricing adjustment could have an adverse impact on our financial condition.

Our business benefits from certain PRC government subsidies. Expiration of, or changes to, these incentives could have a material adverse effect on our operating results.

The PRC government has in the past provided reduced taxes and subsidies and other support across various industries, including the agricultural industry. For instance, the government subsidizes farmers for their seed purchases, and has increased spending on rural infrastructure. Sales of agricultural products from producers to intermediaries or to farmers are exempt from PRC Value-Added Tax (“VAT”). More recently, the government has cut back on these preferential treatments to the seed industry and farmers. In addition, subsidy policies have an adverse effect on our ability to market our products. Farmers can buy crop seeds designated as “high-quality” at subsidized prices, however, the designation of seeds as “high-quality” is at the discretion of the local government. It is possible that this policy could result in preferential treatment for local seed producers, with locally produced seeds being designated as “high-quality” while ours are not designated as such. If such preferential treatment were to occur, the price for our seeds to farmers in those provinces will be higher than the subsidized local seeds, and the sale of our seeds in that province will suffer, adversely affect our results of operations.

The discontinuation of any of the preferential tax treatments currently available to our PRC subsidiaries could materially increase our tax liabilities.

Beijing Origin is entitled to a preferential enterprise income tax rate of 15% as a result of having the qualification of a “high and new technology enterprise”.  This qualification is effective for a three-year period from October 2017 and subject to an annual evaluation by the relevant government authorities in China. Additionally, Beijing Origin has recently received a “breed-produce-distribute” integrated crop seed license and is currently applying for a more favorable tax rate. The financial position of the company after the sale of our corn related production and distribution assets may cause the termination of the high and new technology enterprise qualification reapplication and cause an adverse impact on tax or tax rate.

The discontinuation of any of our preferential tax treatments could materially increase our tax obligations, and our future application for more favorable tax rate based on our “breed-produce-distribute” integrated crop seed license may not be approved.

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Under China’s Enterprise Income Tax Law, we may be classified as a “resident enterprise” of China. Such classification could result in unfavorable tax consequences to us and our non-PRC shareholders

Under the current Enterprise Income Tax Law, or the New EIT Law, an enterprise established outside of China with “de facto management bodies” within China is considered a “resident enterprise,” meaning that it can be treated in a manner similar to a Chinese enterprise for enterprise income tax purposes. The implementing rules of the EIT Law define de facto management as “substantial and overall management and control over the production and operations, personnel, accounting, and properties” of the enterprise. In April 2009, the SAT issued a circular, known as Circular 82, which provides certain specific criteria for determining whether the "de facto management body" of a PRC-controlled enterprise that is incorporated offshore is located in China. Although this circular only applies to offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC individuals or foreigners like us, the criteria set forth in the circular may reflect the SAT's general position on how the "de facto management body" text should be applied in determining the tax resident status of all offshore enterprises. According to Circular 82, an offshore incorporated enterprise controlled by a PRC enterprise or a PRC enterprise group will be regarded as a PRC tax resident by virtue of having its "de facto management body" in China and will be subject to PRC enterprise income tax on its global income only if all of the following conditions are met: (i) the primary location of the day-to-day operational management is in the PRC; (ii) decisions relating to the enterprise's financial and human resource matters are made or are subject to approval by organizations or personnel in the PRC; (iii) the enterprise's primary assets, accounting books and records, company seals, and board and shareholder resolutions, are located or maintained in the PRC; and (iv) at least 50% of voting board members or senior executives habitually reside in the PRC. 

However, it is unclear how tax authorities will determine tax residency based on the facts of each case. If the PRC tax authorities determine that our British Virgin Islands holding company is a “resident enterprise” for PRC enterprise income tax purposes, a number of unfavorable PRC tax consequences could follow. First, we may be subject to enterprise income tax on our worldwide taxable income as well as PRC enterprise income tax reporting obligations. Second, we may be required to withhold a 10% withholding tax from dividends we pay to our shareholders that are non-resident enterprises.

In addition to the uncertainty in how the “resident enterprise” classification could apply, it is also possible that the rules may change in the future, possibly with retroactive effect.

Adverse changes in political and economic policies of the PRC, including its policy of reforming its economic system, could have an adverse effect on the growth of private businesses in the PRC such as ours.

Although the PRC has been reforming its economic system to rely more on market forces to influence the deployment of economic resources, it still has strong elements of a planned economy based on governmental dictates and priorities that determine or at least influence business endeavors. We cannot predict whether or not the government will continue to encourage economic liberalization and further loosen its control over the economy and encourage private enterprise or whether it will strengthen its controls through planned industrial policy and control financial and other elements of economic condition. We also cannot predict the timing or extent of future economic policy that may be proposed. Any imposition of planned economy regulation or similar kinds of restrictions could reduce the freedom of private businesses to operate in a profitable manner, restrict inflows of capital or stifle investor willingness to participate in the PRC economy. To the extent we need additional capital; any restrictions on foreign ownership, foreign investment and repatriation of profits will hamper our ability to find capital outside of the PRC.

A return to profit repatriation controls may limit our ability to pay dividends and expand our business, and may reduce the attractiveness of investing in PRC business opportunities.

PRC law allows enterprises owned by foreign investors to remit to other countries their current account items, such as profits, dividends and bonuses earned in the PRC, and the remittance does not require prior approval by the State Administration of Foreign Exchange, or SAFE, upon the proper production of qualified commercial vouchers or legal documents as required by the regulations. However, dividend payments are subject to prior satisfaction of corporate and withholding tax obligations, corporate reserve requirements and board determined social benefit allocations. SAFE regulations generally require extensive documentation and reporting about other kinds of payments to be transmitted outside of China, some of which is burdensome and slows payments. The availability of foreign exchange assets in the banking system will also effect the ability to repatriate profits as well as provide funding for foreign operations. If there is a return to payment restrictions and reporting, the ability of a PRC company to attract investors will be reduced.

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Also, our investors may not be able to obtain the benefits of the profits of the business generated in the PRC for other reasons. Relevant PRC laws and regulations permit payment of dividends only from accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. Each of our subsidiaries and our affiliated entities in China is required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital, and to further set aside a portion of its after-tax profits to fund the employee welfare fund at the discretion of the shareholders’ meeting or the board. These reserves are not distributable as cash dividends. In addition, the PRC tax authorities may require us to adjust our taxable income under the contractual arrangements we currently have in place in a manner that would materially and adversely affect our subsidiary’s ability to pay dividends and other distributions to us. Any limitation on the ability of our subsidiary and our affiliated entity to distribute dividends or other payments to us could materially limit our ability to grow, make investments or acquisitions that could be beneficial to our businesses or otherwise fund and conduct our business.

Pursuant to PRC enterprise income tax law, dividends payable by a foreign-invested enterprise, or FIE, including Origin Biotechnology, from sources in the PRC to its foreign investors are subject to a 10% withholding tax, unless any such foreign investor’s jurisdiction of incorporation has a tax treaty with China that provides for a different withholding arrangement. No such treaty currently exists with the British Virgin Islands.  Prior to 2008, dividend payments to foreign investors made by FIEs were exempt from PRC withholding tax.

Any fluctuations in exchange rates may adversely affect your investment.

The value of the Renminbi against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in political and economic conditions. Because our earnings and cash from operations are denominated in Renminbi, as the reporting currency, fluctuations in exchange rates between U.S. dollars and Renminbi will affect our balance sheet and earnings per share when stated in U.S. dollars. The translation of Renminbi amounts into United States dollar amounts has been made for the convenience of the reader. Such translation amounts should not be construed as representations that the Renminbi amounts could be readily converted into United States dollar amounts at that rate or any other rate. The appreciation or depreciation in the value of the Renminbi relative to the U.S. dollar would affect our financial results when reported in U.S. dollar terms without giving effect to any underlying change in our business or results of operations. Fluctuations in the exchange rate will affect the relative value of any dividend we issue which will be exchanged into U.S. dollars, the value of any U.S. dollar denominated investments we make in the future and any earnings on such investments.

There are government regulations that limit or prohibit foreign investment in the PRC, which may restrict our growth.

Notwithstanding the general restriction on foreign investment in the seed industry in the PRC, our corporate structure currently enables us to receive foreign investment. Our continued ability to receive foreign investment may be important to our ability to continue to expand our business rapidly and to manage that expansion effectively. We cannot be certain that a change in the regulations allowing us to receive foreign investment will not occur. In the event of such a change, our plan to expand our business could be disrupted.

PRC regulations relating to offshore investment activities by PRC residents may increase the administrative burden we face and create regulatory uncertainties that could restrict our overseas and cross-border investment activity. Failure by our shareholders who are PRC residents to make any required applications and filings pursuant to such regulations may prevent us from being able to distribute profits, if any, and could expose us and our PRC resident shareholders to liability under PRC law.

SAFE promulgated regulations that require registration with local SAFE offices in connection with direct or indirect offshore investment by PRC residents, including PRC individual residents and PRC corporate entities. These regulations apply to our shareholders who are PRC residents and also apply to our prior and future offshore acquisitions. In particular, the SAFE regulations require PRC residents to file with competent SAFE offices information about offshore companies in which they have directly or indirectly invested and to make follow-up filings in connection with certain material transactions involving such offshore companies, such as increases or decreases in investment amount, transfers or exchanges of shares, mergers or divisions, long-term equity or debt investments, or external guarantees or other material events that do not involve return investment.

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The SAFE regulations required prior registration of direct or indirect investments previously made by PRC residents in offshore companies. If a PRC resident with a direct or indirect stake in an offshore parent company fails to make the required SAFE registration, the PRC subsidiaries of such offshore parent company may be prohibited from making distributions of profit to the offshore parent and from paying the offshore parent proceeds from any reduction in capital, share transfer or liquidation in respect of the PRC subsidiaries. Further, failure to comply with various SAFE registration requirements described above could result in liability under PRC law for foreign exchange evasion.

We believe our major shareholders who are PRC residents, or whose shares are beneficially owned by PRC residents, have completed foreign exchange registration with the local foreign exchange bureau according to these SAFE regulations. However, with these regulations there is uncertainty concerning the reconciliation of the new regulations with other approval requirements, it is unclear how the regulations, and any future legislation concerning offshore or cross-border transactions, will be interpreted, amended and implemented by the relevant government authorities. We cannot assure you that all of our shareholders who are PRC residents will comply with our request to make or obtain any applicable registrations or approvals required by the regulations or other related legislation. The failure or inability of our PRC resident shareholders to receive any required approvals or make any required registrations may subject us to fines and legal sanctions, restrict our overseas or cross-border investment activities, limit our PRC subsidiary to make distributions or pay dividends or affect our ownership structure. As a result, our business operations and our ability to distribute a dividend to you could be adversely affected.

The PRC legal system has inherent uncertainties that could limit the legal protections available to you.

All of our assets and all of our operations are in the PRC. The PRC legal system is based on written statutes. Prior court decisions may be cited for reference but are not binding on subsequent cases and have limited precedential value. Since 1979, the PRC legislative bodies have promulgated laws and regulations dealing with such economic matters as foreign investment, corporate organization and governance, commerce, taxation and trade. However, because of the limited volume of published decisions and their non-binding nature, the interpretation and enforcement of these laws and regulations involve uncertainties. The laws in the PRC differ from the laws in the United States and may afford less protection to our non-PRC shareholders.

You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing original actions in the PRC based on United States judgments against us, our subsidiaries, officers and directors.

We are incorporated in the British Virgin Islands and our PRC operating subsidiaries are formed under PRC law. Substantially all of our assets are located in the PRC. In addition, some of our directors and executive officers reside within the PRC, and substantially all of the assets of these persons are located within the PRC. It may not be possible to affect service of process within the United States or elsewhere outside the PRC upon our directors, or executive officers and experts, including effecting service of process with respect to matters arising under United States federal securities laws or applicable state securities laws. The PRC does not have treaties providing for the reciprocal recognition and enforcement of judgments of courts with the United States and many other countries. As a result, recognition and enforcement in the PRC of judgments of a court in the United States or many other jurisdictions in relation to any matter, including securities laws, may be difficult or impossible. Furthermore, an original action may be brought in the PRC against our assets and our subsidiaries, our directors and executive officers and experts only if the actions are not required to be arbitrated by PRC law and only if the facts alleged in the complaint give rise to a cause of action under PRC law. In connection with any such original action, a PRC court may award civil liability, including monetary damages.

A reversion in the Chinese government’s policy of favoring state owned enterprise including seed companies at the expanse of privately owned companies may disadvantage our competitive position in the industry.

In China, state owned enterprises including state owned seed companies typically enjoy preferential policy treatments such as more favorable access to capital, tax breaks and subsidies at various levels of governments. These treatments have created barriers of entry protecting state companies at the expense of private ones, both domestic and international. Despite the reform of the Chinese seed industry in 2008 and the anticipated market-driven industry consolidation going forward, any reversion in the Chinese government’s policy to protect state owned seed companies may again pose competitive challenges to non-state owned companies such as Origin.

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We may become a passive foreign investment company, which could result in adverse U.S. tax consequences to U.S. holders.

Depending upon the value of our shares and the composition of our assets and income over time, we could be classified as a passive foreign investment company, or PFIC, by the IRS, for U.S. federal income tax purposes. If we were classified as a PFIC in any taxable year in which you hold our shares and you are a U.S. investor, you would generally be taxed at higher ordinary income rates, rather than lower capital gain rates, when we dispose of those shares at a gain in a later year, even if we are not a PFIC in that year. In addition, a portion of the tax imposed on your gain would be increased by an interest charge. Moreover, if we were classified as a PFIC in any taxable year, you would not be able to benefit from any preferential tax rate with respect to any dividend distribution that you may receive from us in that year or any later year. Finally, you would also be subject to special U.S. tax reporting requirements.

Based on our understanding and current assessment, we believe that we were not a PFIC for the taxable year 2015. However, there can be no assurance that we will not be a PFIC for the taxable year and/or later taxable years, as PFIC status is re-tested each year and depends on the facts in such year. For example, we would be a PFIC for the taxable year 2015 if the sum of our average market capitalization, which is our share price multiplied by the total number of our outstanding shares, and our liabilities over that taxable year is not more than twice the value of our cash, cash equivalents, and other assets that produce, or are held for the production of, passive income. We could also be a PFIC for any taxable year if the gross income that we and our subsidiaries earn from passive investments is substantial in comparison with the gross income from our business operations. While we will continue to examine our PFIC status, we cannot assure you that we will not be a PFIC for any future taxable year.

Risks relating to our shares

Certain provisions in our organizational documents may discourage our acquisition by a third party, which could limit your opportunity to sell your shares at a premium.

Our memorandum and articles of association include provisions that could limit the ability of others to acquire control of us. Under those provisions, our board of directors has the power to issue preferred shares with such rights attaching to them as they decide and this power could be used in a manner that would delay, defer or prevent a change of control of us. These provisions could have the effect of depriving you of the opportunity to sell your shares at a premium over prevailing market prices by discouraging third parties from seeking to acquire control of us in a tender offer or similar transactions.

We qualify as a foreign private issuer and, as a result, are subject to reduced requirements with respect to the reporting of financial statements and other material events to our shareholders and the SEC.

As a foreign private issuer, we are obligated to file an Annual Report with audited financial statements and Form 6-K reports with the United States Securities and Exchange Commission, or the SEC, at such times as we release information to the public either voluntarily or pursuant to the laws of the British Virgin Islands or the PRC. Therefore, the regularity of financial and other information may be less than would be applicable to a domestic United States registered company under the rules and regulations of the SEC. Investors may not receive information on a timely basis, which could increase their risk of investment in us.

Because we are a foreign private issuer, we have elected to follow British Virgin Islands law in connection with compliance under the Nasdaq Marketplace Rules, which restrict the application of the Nasdaq corporate governance requirements.

The Nasdaq Marketplace Rules permit foreign private issuers to elect not to be governed by all the corporate governance rules. We have elected to avail ourselves of the exemption provided by Nasdaq, and we have elected to be governed by only the British Virgin Island laws and the terms of our memorandum and articles, which for example do not require us to hold an annual meeting each year. Consequently, investors may not have the ability to express their opinion on our business and the actions of directors through the voting process for directors. In other respects, we do follow the Nasdaq Marketplace Rules, such as having a nominations and compensation committee, but these are voluntary and may be eliminated at any time.

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A consistently active trading market for shares of our ordinary shares may not be sustained.

Historically, trading in our ordinary shares has been volatile. Generally, the market for our ordinary shares is characterized as “thinly-traded.” There have been, and may in the future be, extended periods when trading activity in our shares is minimal, as compared to a seasoned issuer with a large and steady volume of trading activity. The trading volume at a point in time, combined with the availability of stock, generally will impact the price at which our ordinary shares trade. Trading of a relatively small quantity of ordinary shares may disproportionately influence the market price of our ordinary shares. A consistently active and liquid trading market in our securities may never develop or be sustained.

Our stock price may be volatile.

The market price of our ordinary shares is likely to be highly volatile and could fluctuate widely in response to various factors, many of which are beyond our control, including the following: our ability to execute our business plan; operating results that fall below expectations; industry or regulatory developments; investor perception of our industry or our prospects; economic and other external factors; and the other risk factors as discussed below.

In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our ordinary shares.

Leverage and debt service obligations may adversely affect our cash flows.

We currently have no short-term borrowings and current portion of long-term borrowings of approximately RMB78.24 million (US$11.37 million).  The degree to which we are leveraged could, among other things:

· require us to dedicate a portion of our near term cash flows from operations and other capital resources to debt service;

· make it difficult for us to obtain necessary financing in the future for working capital, acquisitions or other purposes on favorable terms, if at all;

· make us more vulnerable to industry downturns and competitive pressures;

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

· require us to dedicate a portion of our near term cash flows from operations and other capital resources to debt service;.

Our ability to meet our debt service obligations will depend upon our future performance, which will be subject to financial, business and other factors affecting our operations, many of which are beyond our control.

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In the course of preparing our consolidated financial statements for the year ended September 30, 2018, we and our independent registered public accounting firm identified weaknesses in our internal control over financial reporting. If we fail to implement, achieve and maintain an effective system of internal controls, we may be unable to accurately report our financial results, and investor confidence and the market price of our shares may be adversely impacted.

In the course of preparing our consolidated financial statements for the years ended September 30, 2018, our accountant noticed material weakness in our internal control over financial reporting because during certain period of the fiscal year 2018, the Company does not have sufficient qualified financial reporting and accounting personnel with an appropriate level of expertise to properly address complex accounting issues under U.S. GAAP, and to prepare and review our consolidated financial statements and related disclosures to fulfill U.S. GAAP and Securities and Exchange Commission financial reporting requirements on a timely basis, resulted from staff turnover during the fiscal year 2018 and during the course of the audit for fiscal year 2018, BDO China Shu Lun Pan Certified Public Accountants LLP, our independent registered public accounting firm, has corrected the misstatements relating to accounts and disclosures, in aggregate, material to the consolidated financial statements for the year ended September 30, 2018.

We are in the process of remediating the above issues. We hired James Chen whom became the CFO March, 2018, to oversee the accounting issues and prepare the financial statements in the future. Additionally, the existing controls and procedures will be reviewed and steps will be taken to return the financial reporting to its former efficiencies using the reviewed controls and procedures. We cannot assure you that the measures we take will be sufficient to remediate the material weakness in our internal control over financial reporting, and, if we fail to timely achieve and maintain the adequacy of our internal controls, we may continue to be unable to conclude that we have effective internal controls over financial reporting. Moreover, effective internal controls over financial reporting are necessary for us to produce reliable financial reports and are important to prevent fraud. As a result, our failure to achieve and maintain effective internal controls over financial reporting could result in the loss of investor confidence in the reliability of our financial statements, which in turn could harm our business and negatively impact the market price of our ordinary shares.

Our auditor, like other independent registered public accounting firms operating in China, is not permitted to be subject to inspection by Public Company Accounting Oversight Board, and as such, investors may be deprived of the benefits of such inspection.

The independent registered public accounting firm that issues the audit reports included in our annual reports filed with the SEC, as an auditor of companies that are traded publicly in the United States and a firm registered with the Public Company Accounting Oversight Board (United States), or PCAOB, is required by the laws of the United States to undergo regular inspections by PCAOB to assess its compliance with the laws of the United States and professional standards. Because our auditor is located in China, a jurisdiction where PCAOB is currently unable to conduct inspections without the approval of the PRC authorities, our auditor, like other independent registered public accounting firms operating in China, is currently not inspected by PCAOB. Inspections of other firms that PCAOB has conducted outside of China have identified deficiencies in those firms’ audit procedures and quality control procedures, which may be addressed as part of the inspection process to improve future audit quality. The inability of PCAOB to conduct inspections of independent registered public accounting firms operating in China makes it more difficult to evaluate the effectiveness of our auditor’s audit procedures or quality control procedures. As a result, investors may be deprived of the benefits of PCAOB inspections.

On May 24, 2013, the PCAOB announced that it has entered into a Memorandum of Understanding (“MOU”) on Enforcement Cooperation with the China Securities Regulatory Commission (the “CSRC”) and the Ministry of Finance (the “MOF”).  The MOU establishes a cooperative framework between the parties for the production and exchange of audit documents relevant to investigations in both countries’ respective jurisdictions.  More specifically, it provides a mechanism for the parties to request and receive from each other assistance in obtaining documents and information in furtherance of their investigative duties.  In addition to developing enforcement MOU, the PCAOB has been engaged in continuing discussions with the CSRC and MOF to permit joint inspections in China of audit firms that are registered with the PCAOB and audit Chinese companies that trade on U.S. exchanges. On December 7, 2018, the SEC and the PCAOB issued a joint statement highlighting continued challenges faced by the U.S. regulators in their oversight of financial statement audits of U.S.-listed companies with significant operations in China. However, it remains unclear what further actions the SEC and PCAOB will take to address the problem.

ITEM 4. INFORMATION ON THE COMPANY

A. History and development of the Company.

Origin was first incorporated in the British Virgin Islands on February 10, 2005, and is governed by the BVI Business Companies Act, 2004, or BCA, by re-registration on July 10, 2006.

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Chardan China Acquisition Corp., the predecessor of Origin, was a blank check company organized as a corporation under the laws of the State of Delaware on December 5, 2003, formed for the purpose of effecting a business combination with companies having operations based in China.

On December 20, 2004, Chardan entered into a stock purchase agreement, referred to as the Stock Purchase Agreement, with State Harvest, a company incorporated in the British Virgin Islands on October 6, 2004, and all the shareholders of State Harvest. On February 10, 2005, Chardan formed a wholly-owned subsidiary under the laws of the British Virgin Islands, under the name “Origin Agritech Limited” to effect the stock acquisition of State Harvest. Chardan merged into Origin to re-domesticate out of the United States, and immediately thereafter, Origin acquired all of the issued and outstanding stock of State Harvest.

On June 26, 2007, our common shares began trading on the Nasdaq Global Select Market, where they continue to trade. Prior to trading on that market, our common shares had been listed on the Nasdaq Global Market from November 8, 2005 to June 25, 2007.

Until the recent past, our main strategic focus was on the corn seed distribution business and corn seed biotechnologies in China. In 2015, we announced our strategic transition from a traditional seed company to a biotechnology seed company. We have developed transgenic corn seed products including our first generation biotech product phytase traits, second generation biotech product glyphosate tolerance traits and our new technologies of stacked traits of Bt and glyphosate tolerance genes. In 2016, we completed the laboratory and field production trials for our first generation pest/weed trait. We anticipate that, our first generation weed and pest/weed traits will be incorporated into our elite corn inbred lines and into the products of leading Chinese seed industry partners preparing for future regulatory approval and commercialization.

We announced our intention to expand our crop seed business globally in 2016. We received the first transgenic corn seed export permit from China’s Government agencies, following required protocols. Our U.S. collaborator secured an importation permit for these seeds from the United States Department of Agriculture (“USDA”). In late 2016 corn seeds containing our lead trait event and a back-up were successfully planted in a USDA designated greenhouse. Subsequently, the new seeds produced in the greenhouse were tested in a collaborative trial in Iowa in the summer of 2017, and the results confirmed our field observations in China. Notwithstanding the positive results of the seeds, our ability to establish a market in the United States was determined be to very costly and difficult, therefore, the Company ended these efforts at the end of 2017 and closed its Iowa, United States office shortly thereafter.

In September 2016, we entered into a Master Transaction Agreement, along with our controlled companies Beijing Origin Seed Limited (“Beijing Origin”), Denong Zhengcheng Seed Limited (“Denong”), Changchun Origin Seed Technology Development Limited, (“Changchun Origin”), Linze Origin Seed Limited (“Linze Origin”), with Beijing Shihui Agricultural Development Co. Ltd., a company incorporated under the Laws of the PRC (“Shihui”), to sell our commercial seed production and distribution assets and certain other assets in the PRC to Shihui (the “Sale”). In 2018, we closed the first phase of the Master Transaction Agreement and sold the subsidiaries Denong, Changchun Origin and Linze Origin. We terminated the second phase of the Master Transaction Agreement and retained our commercial seed business under Beijing Origin along with the headquarters building in Beijing. We continue to retain our biotech research facilities and business in China.

The net proceeds from the first phase of the Sale was used mainly to reduce bank borrowing. Retaining the commercial seed business under Beijing Origin and the headquarters building in Beijing allows us to regain the capability to generate operating cash flows to fund new business development. More importantly, the commercial seed business and our strong brand equity in the vast agriculture farm land allow us to enter the e-commerce and land reclamation businesses. The highly appreciated value of the Beijing Headquarters building will still allow us to seek additional bank loans and attract potential strategic investors.

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In addition to the commercial seed business and seed technology, we are in the process of developing an agribusiness e-commerce platform to connect the rural farmers in China with the agricultural and other product suppliers and distributors. The Chinese rural business environment is changing as the result of new directions for Chinese rural development, fast growing technologies in e-commerce, expansion of 4G communication network in rural China, and the recent modernization of rural logistics system. Since Origin has been a leading agriculture seed supplier in China for more than two decades and has built a strong brand name in rural China, we want to utilize the brand name and our customer base in and provide seed products and services to the farmers via a new e-commerce platform. We believe our e-commerce network is unique because our partnership with Elastos Foundation helps us utilize the blockchain technology to track the source of seed supply via our e-commerce platform. With the new blockchain technologies to be provided by Elastos Foundation, our e-commerce platform could track and document original source of seed products and other agricultural supplies. This could potentially resolve the intellectual property infringement problems the Chinese farmers and seed providers face over the years.

To further our plan with the e-commerce platform, we established a new subsidiary Beijing State Harvest Zhongying in August 2018. Currently, we are planning to sell agricultural seed products (e.g., corn seeds, rice seeds, and vegetable seeds), other agricultural inputs (e.g., fertilizers and agricultural chemicals), foods, household products, and other consumer products on our e-commerce platform. At this point we have launched a mobile app to start the agricultural e-commerce platform: Origin e-Commune Network.

In addition, we entered into five joint ventures: Hubei Aoyu, Anhui Aoyu in Anhui province, Xuzhou Aoyu in Jiangsu province, Shandong Aoyu in Shandong province and Henan Aoyu in Henan province. Origin 50% of equity in Anhui Aoyu and 51% of equity in all other four joint ventures. The remaining equity interests in those joint ventures are held by local distributors respectively. The establishment of these five joint ventures completes the first stage of the Origin e-Commune Network development. These five JVs will be the cornerstone of Origin's SEED+ rural e-commerce business. The successful development of these five joint ventures demonstrated the acceptance of the major distributors toward revolutionary e-commune network philosophy in providing integrated and customized technology solution to the farmers across China.

Through our e-commune network, we expect not only to offer farmers agricultural input products, but also provide much broader pre- and post-harvest services. Furthermore, the Origin e-Commune Network will create a system where distributors and farmers will participate as partners rather than middle level distributorship and end-users in the current distribution system.

In October 2018, we identified a strategic investor, Longhan Investment Management, Co., Ltd ("Longhan") and entered into a Share Subscription Agreement with Longhan, and the agreement was later assigned to Tiger Capital Fund SPC (“Tiger Fund”), Tiger Fund purchased 1,397,680 Shares of the Company's common stock for an aggregate purchase price of US$7,743,147.20.

We entered a strategic cooperation agreement with Longhan, under which Origin and Longhan will work together to start the commercialization of Integrated Saline-Alkaline Land Reclamation ("ISALR") technology in 2019. Origin and Longhan will integrate seed treatment, soil treatment technologies and seed breeding and biotechnology, as well as Origin's agricultural e-commerce platform.

On May 17, 2019, the Company entered into a Cooperation Framework Agreement with Beijing Changping Technology Innodevelop Group (BC-TID), an entity owned by the government of Changping District of Beijing City. Under this agreement, BC-TID and Origin will form a new entity, which 51% and 49% of equity interests would be owned by BC-TID and the Company, respectively. Based on the agreement, Beijing Origin will contribute the headquarters building in Beijing and certain of its seed technology assets related to genetically modified seeds to the new entity. BC-TID will fund the joint venture with a total of RMB204 million in cash. Also agreed under this agreement, the new entity will pay off the bank loan of RMB78 million, which is collateralized by the Company’s headquarters building in Beijing, upon receiving the RMB204 million investment from BC-TID. The transaction is subject to the satisfaction or waiver of several conditions set forth in the agreement.

Our principal executive offices are located at No. 21 Sheng Ming Yuan Road, Changping District, Beijing 102206, China, and our telephone number is (86-10) 5890-7588.

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B. Business Overview.

Overview

Origin Agritech Limited, along with its subsidiaries, is focused on agricultural biotechnology and an e-commerce platform, operating primarily in the PRC. Our seed research and development branch specializes in crop seed breeding and genetic improvement while our e-commerce branch focus on delivering agricultural products to farmers in China via online and mobile ordering and tracking the source of the agricultural products via blockchain technologies. Origin believes that it has built a solid capacity for breeding technologies, including marker-assisted breeding and doubled haploids technologies, which it believes, along with its rich germplasm resources, will allow it to become a global seed technology company and establish successful e-commerce platform for farmers in rural China.

We built an agricultural biotechnology research center in 2005 and have been leading the development of biotechnology among crop seed companies in China since then. We have established plant genetic engineering technology platforms, including transforming herbicide tolerance, insect resistance, nitrogen utilization efficiency, and drought stress tolerance traits into corn inbred lines. Of note, we made significant strides in developing our exclusive herbicide tolerance, insect resistance and phytase products. In November 2009, our genetically modified phytase corn received the Bio-Safety Certificate from China’s Ministry of Agriculture. This was the world’s first genetically modified phytase corn and also the first genetically modified corn seed product in China. The certificate was renewed by the Ministry of Agriculture in January 2015. We also are pursuing the approval of other GM seed products in China, including glyphosate tolerant corn and insect resistant corn. We believe we have established a substantial seed product and germplasm pipeline.

Through the subsidiary Xinjiang Origin, the Company maintains its “Green Pass” status, providing the Company with the competitive advantage of introducing new hybrid varieties to the Chinese market under an expedited government approval process.

We seek to utilize China’s emerging technology base for our future development. In particular, from time to time we enter and further develop cooperative agreements with publicly funded research institutes in China. In exchange for providing funding to these institutes, we receive rights, which are frequently exclusive rights, to market any seeds developed by these institutes. When a seed is ready to be marketed, we negotiate with the institute to establish an arrangement by which we are permitted to sell the newly developed seeds in exchange for the payment of certain fees to the institute. We believe that these cooperative agreements allow us to access new products without expending substantial costs for our own research and development.

In the first quarter of 2015, we submitted a patent application to the United States Patent and Trademark Office for our glyphosate-tolerance technologies which entered public stage in 2016. In addition, we have also applied for a patent in Brazil for similar biotechnologies. In 2016, we filed a patent application on insect resistant corn technology with Patent Cooperation Treaty (PCT), an international patent system assists applicants seeking patent protection of their inventions internationally. We also filed a patent on insect resistant corn technology in Argentina in 2016. We believe these patents will further strengthen our leading position in the genetically modified seed technologies in China and will allow us to expand our biotechnology position in the international seed market

In April 2016, we entered into a commercial licensing agreement with DuPont Pioneer, the advanced seed and genetic business of DuPont. Pursuant to the license, the Company and DuPont will jointly develop new seeds for Chinese farmers.

In 2017, our export of a corn germplasm from China to our then collaboration partner, Arcadia, in California was successfully completed in compliance with all regulations and protocols.  Seed was harvested in March and April 2017 in California and tested positively during the summer 2017 in Iowa. Notwithstanding our efforts to establish a business and market presence in the United States in the 2016 and 2017 time period, we curtailed our operations and marketing efforts in the United States effective at the end of calendar 2017 and closed our office in Iowa in 2018.

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In September 2017, Origin entered into a commercial license and collaboration agreement with KWS SAAT SE (“KWS”). KWS is a global seed company, active in the business of maize, sugar beet and cereal seed production and marketing, as well as research and development in plant breeding. The agreement is the continuation of a collaborative effort dating back to 2011 when the two companies formed an arrangement under which Origin granted rights to certain of its transgenic traits in maize to KWS and performed services on behalf of KWS relating to those traits and accompanying technologies. This 2017 agreement provides for the prolongation and extension of the collaboration between the companies covering the rights of KWS to use the traits for commercial purposes, including marketing seeds with improved performance. 

Under the 2017 agreement, both companies grant to each other a non-exclusive, transferable and sub-licensable to its affiliates only, license to use the Origin transgenic traits and the KWS germplasm and resulting project material for testing, research and development with the primary aim to introgress the Origin traits into KWS germplasm and test the generated project material for agronomic performance and efficacy. The parties will develop a project plan, which will cover a budget and project details, and include testing by Origin in China under project plan protocols. KWS will provide funding according to the project plan, which plan budget will not include funding for other operations of Origin. KWS will have rights to certain information about the testing by Origin. KWS will also have testing rights outside of China, at its own cost and fulfillment of regulatory requirements. Origin also grants to KWS an exclusive, non-transferable, sub-licensable commercial license to use the Origin transgenic traits for all purposes related to the production, distribution and commercialization of the transgenic material developed under the project plan and the defined KWS varieties in China. The license terms include milestone payments subject to fulfillment of pre-conditions, including regulatory permitting, and royalty fees on sales based on quantities of seed sold that have the licensed traits. It is anticipated that royalty revenue for germplasm would not commence until fiscal year 2019, after 2018 growing season testing, and trait revenue would not commence until 2019 at the earliest, after final biotech cultivation approvals by the Chinese government are obtained. Notwithstanding these predictions, there can be no assurance given that Origin will generate any significant revenues from the license arrangements or that they will commence as anticipated .

The Company has arrangements with a number of leading academic institutions in the PRC, including the Chinese Academy of Agricultural Sciences. Genes for three new trait leads for multiple insect resistances have been accessed from the leading discovery laboratory in China. These will provide Origin with candidates for next generation insect control seeds for a broad array of insect pests.  This pipeline enrichment will be evaluated extensively in the coming summer months. Multiple modes of action against the most serious insect pests is critical to ensuring effective protection and insect resistance management.

Five additional product registrations were granted as of September 30, 2018 for Origin’s elite corn hybrids utilizing the “green channel” system, which is a critical requirement towards an effective licensing business in China with our partners.

On the e-commerce front, we underwent certain internal restructuring and established a new subsidiary, Zhongying, in August 2018. In 2018, we have also established five joint ventures in the provinces of Hubei, Anhui, Jianshu, Shandong, and Henan. In each joint venture, Origin holds at least 50% of the equity interest in the joint venture and local distributors hold the remaining equity interests. Using our e-commerce platform, farmers would be able to order all their agricultural needs, including seeds, fertilizers, chemicals and tools and other household products and consumer products from suppliers and distributors on the platform. Origin also intends to apply blockchain technologies to the e-commerce platform in the future through the partnership with Elastos Foundation.

In October 2018, we entered into a strategic partnership with Longhan Investment Management, Co., Ltd. (“Longhan”) to start the commercialization of Integrated Saline-Alkaline Land Reclamation ("ISALR") technology in 2019. Origin and Longhan are hoping to integrate seed treatment, soil treatment technologies and seed breeding & biotechnology, as well as Origin’s agricultural business platform.

On May 17, 2019, the Company entered into a Cooperation Framework Agreement with Beijing Changping Technology Innodevelop Group (BC-TID), an entity owned by the government of Changping District of Beijing City. Under this agreement, BC-TID and Origin will form a new entity, which 51% and 49% of equity interests would be owned by BC-TID and the Company, respectively. Based on the agreement, Beijing Origin will contribute the headquarters building in Beijing and certain of its seed technology assets related to genetically modified seeds to the new entity. BC-TID will fund the joint venture with a total of RMB204 million in cash. Also agreed under this agreement, the new entity will pay off the bank loan of RMB78 million, which is collateralized by the Company’s headquarters building in Beijing, upon receiving the RMB204 million investment from BC-TID. The transaction is subject to the satisfaction or waiver of several conditions set forth in the agreement.

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Research and Development

Developments in the science of genetics have allowed seed producers to create entirely new products. Compared with conventional varieties, the obvious advantages of these new products, known as GM products, are higher yield, better quality and increased insect-resistance and herbicide tolerance. Farmers plant GM varieties to save time and cost, while also reducing field labor. GM corn, soybean and cotton have been widely used in the United States and many other countries to guard against insect damage and to increase yield. Since receiving the Chinese government approval in 1997, cotton that has been genetically modified to guard against damage from borer insects is now widely planted and accepted in China. The Chinese market has widely accepted GM cotton and the PRC Ministry of Agriculture has approved GM corn and rice traits in biosafety evaluations. We believe that the Chinese government also is encouraging of GM crops, generally, although it faces a low level of public acceptance. We believe that GM food crop seeds in time will be approved by the PRC Ministry of Agriculture for production and sale and will be accepted in the Chinese market over time.

Utilizing our existing hybrid seed product line, the Company seeks to further increase crop yield and produce higher quality seeds with the addition of GM traits. We commenced our own biotechnology research program in early 2000’s with a goal of having technology in place to produce GM products when demand for these products is sufficiently high. In 2005, we built an internal research and development center in China for GM crop seeds. Our key focus is biotechnology for GM varieties of corn. We currently employ people who are primarily engaged in genetic transformation, molecular biomarker testing and genetic mapping activities. Our development efforts go beyond our internal biotechnology center, as this unit serves as a central hub to connect with other research facilities in other parts of China. We are collaborating with the China Agricultural University, Zhejiang University and China Academy of Agriculture Science in the field of biotechnology. These cooperative arrangements help enhance our research capabilities and will help enable us to develop and commercialize our products. We have established several plant genetic engineering technology platforms, which incorporate increased herbicide tolerance, insect resistance, nitrogen efficiency, and drought stress tolerance traits into corn inbred lines. The GM traits and products we are working on now include increased herbicide tolerance, insect resistance, nitrogen efficiency, and drought stress tolerance in corn. We developed phytase GM corn, the first genetically modified corn seed product in China. Notwithstanding our obtaining the Bio-Safety Certificate from the Chinese government, there can be no assurance that GM products generally will be approved in China, and we expect that the introduction and acceptance of GM products will be cautious.

In addition to biotechnology, our internal research and development also invests considerable effort in the conventional breeding of hybrid. In August 2016, we hired a new Chief Technology Officer, Dr. Jihong Liang, to direct our global biotechnology and plant genetic research, and to coordinate and accelerate external collaborations with private, academic and governmental partners to further develop our technologies, traits and seed products. In order to maintain our position as a quality producer of advanced products and develop new seed products through our biotechnology programs, we plan to invest substantially in our research and development activities.

The Company has received government funding for research and development activities. Such funding was received in the fiscal years of 2016, 2017 and 2018 in the amounts of RMB10.37 million, RMB2.66 million and RMB9,193 million (US$1.3 million) respectively.

Intellectual Property 

Our intellectual property includes trademarks and patents relating to our seed products. Substantially all of the intellectual property has been registered for IP protection in China (or is the subject of a pending application). We believe that our intellectual property is crucial to our business, and bears directly on our ability to generate revenues.

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We currently have nineteen Chinese patents registered with the State Intellectual Property Office (“SIPO”) of various countries. Among these nineteen patents, fourteen domestic patents in China, one in each of US, Brazil and Argentina, and two PCT patent are related to the biotechnology corn seed. Also, we have applied for one additional patents in the field of our biotechnology corn seed in 2017, and the applications have been accepted and are now being reviewed by SIPO.

In addition, we currently have thirty-one Chinese trademarks registered with the Trademark Office of China’s State Administration for Industry and Commerce (“SAIC”).

In addition to the domestic patents and patent applications, we have filed patent application outside of China. During the first quarter of fiscal year 2015, we submitted a patent application to the United States Patent and Trademark Office for our glyphosate-tolerance technologies which entered public stage in 2016. In addition, we have also applied for a patent in Brazil for similar biotechnologies. In 2016 we filed a patent application on insect resistant corn technology with Patent Cooperation Treaty (PCT), an international patent system assists applicants seeking patent protection of their inventions internationally. We also file a patent on insect resistant corn technology in Argentina in 2016. We file one new patent in china in 2017 relating to the method of detection of origin’s transgenic event that is insect resistant and herbicide tolerant. We believe these patents will strengthen further our leading position in the genetically modified seed technologies in China and will allow us to expand our biotechnology position in the international seed market.

Out-Bound Licensed Products

We have entered into licenses to co-develop seeds with other entities and sell our developed seed to third party distributions. We entered into two commercial licensing agreements with DuPont Pioneer, the advanced seed and genetic business of DuPont, in April 2016 and January 2017. Pursuant to the April license, we and DuPont will jointly develop new seeds for Chinese farmers, and pursuant to the January license, we may gain access to non-GM corn seed products. This opportunity will be further exploited when the business condition becomes feasible and beneficial.

In September 2017, Origin entered into a commercial license and collaboration agreement with KWS SAAT SE (“KWS”). KWS is a global seed company, active in the business of maize, sugar beet and cereal seed production and marketing, as well as research and development in plant breeding. The agreement is the continuation of a collaborative effort dating back to 2011 when the two companies formed an arrangement under which Origin granted rights to certain of its transgenic traits in maize to KWS and performed services on behalf of KWS relating to those traits and accompanying technologies. This 2017 agreement provides for the prolongation and extension of the collaboration between the companies covering the rights of KWS to use the traits for commercial purposes, including marketing seeds with improved performance.

Under the 2017 agreement, both companies grant to each other a non-exclusive, transferable and sub-licensable to its affiliates only, license to use the Origin transgenic traits and the KWS germplasm and resulting project material for testing, research and development with the primary aim to introgress the Origin traits into KWS germplasm and test the generated project material for agronomic performance and efficacy. The parties will develop a project plan, which will cover a budget and project details, and include testing by Origin in China under project plan protocols. KWS will provide funding according to the project plan, which plan budget will not include funding for other operations of Origin. KWS will have rights to certain information about the testing by Origin. KWS will also have testing rights outside of China, at its own cost and fulfillment of regulatory requirements. Origin also grants to KWS an exclusive, non-transferable, sub-licensable commercial license to use the Origin transgenic traits for all purposes related to the production, distribution and commercialization of the transgenic material developed under the project plan and the defined KWS varieties in China. The license terms include milestone payments subject to fulfillment of pre-conditions, including regulatory permitting, and royalty fees on sales based on quantities of seed sold that have the licensed traits. It is anticipated that royalty revenue for germplasm would not commence until fiscal year 2019, after 2018 growing season testing, and trait revenue would not commence until 2019 at the earliest, after final biotech cultivation approvals by the Chinese government are obtained. Notwithstanding these predictions, there can be no assurance given that Origin will generate any significant revenues from the license arrangements or that they will commence as anticipated.

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Licensed Seed Products

We signed research agreements with domestic seed companies to incorporate Origin biotech traits into their leading seed varieties in a similar relationship as we have developed with the multinational seed companies. The process is generally planned in two steps: first to introgress the traits into partners parental lines and conduct field tests to confirm efficacy; once the results are confirmed and meet the expectations, then we enter into the second step which involves negotiation of a commercial agreement to define rights and benefit sharing.

With regards to the licensed GM varieties, we have entered into a strategic cooperation agreement with the China Academy of Agriculture Science, or CAAS, to work on biotechnology research and development. That agreement gives us the right to produce and sell the GM crop varieties that are developed in connection with this arrangement, subject to our obligation to reimburse certain of CAAS’ expenses.

Competition

We face competition at three primary levels, including large Chinese companies, small local seed companies, and large multinational hybrid and GM seed producers. Currently, we believe that we can compete effectively with each of these competitors and that we can continue to do so in the future. We also face competition from counterfeiting of corn seeds, which has become an increasing problem in China.

We believe we possess a competitive technology base, including the capability to develop genetically modified seeds. However, there is little public information in this regard and, as a result, other companies’ internal research pipelines remain unclear. Much of the genetically-modified product research remains at the academic level. The majority of the largest crop seed companies have been in existence for considerably longer periods of time than we have, and though they have breeding techniques, they are somewhat entrenched in their ways. Some of these larger entities are evolved state owned enterprises and some stayed as state-owned entities. We compete within this group on the basis of our consistent product quality, brand identity, customer and technical support, enforcement of our intellectual property rights and a pipeline of proprietary products.

The local seed companies in China are the legacy of the centrally planned agricultural economy that was predominant in China until recently. Most of these were affiliated with county governments, which played a role in determining what crops would be grown and by whom. As was often the case with planned economies, these extensions of the bureaucracy had no profit motive, and no incentive to improve efficiencies, increase sales or innovate with new products. Market expansion was limited by the tight geographic boundaries within which they were designed to operate.

The majority of these local companies lack the scale and the resources to compete with us in a number of ways. They lack access to the improved, proprietary hybrids. For the most part they do not have research and development programs for new seeds, effective marketing, advertising, technical support or customer service operations

We also face competition from the large multinational companies, including Pioneer (DuPont), Monsanto and Syngenta. These companies present a formidable competitive threat because of their financial resources, the high quality of their seed products, and biotechnological capabilities. These companies will present significant competition in the international market context. However, the unique aspects of the Chinese crop seed market, which distinguishes it from the markets in Western countries, have proven a hurdle for market success for these very large companies, even though they have come to the China market through joint ventures formed with existing Chinese seed companies.

These multinationals rely heavily on GM seed products in the non-PRC markets. GM seed products have only begun to be accepted in China and have been relatively limited, and the extent of future acceptance is not yet determinable. To date, phytase corn and Bt Rice are the only genetically modified major food crop seed products that have received safety certificates, and they have yet to obtain approval for commercial seed sales in China. The limited GM technology approval therefore currently limits their competitive advantage. Should GM seed products become approved by the government on a larger scale and begin to gain broader acceptance in the market, as we expect they will in the future, the large biotech companies will become more serious competitors.

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On the e-commerce front, we face competitions from other e-commerce platforms that specialize in seed related business, such as 51zhongzi.com. We also face competition from general e-commerce platforms that sell products we intend to sell on our platform, such as Taobao and JD.com. We compete to attract, engage and retain customers based on a number of factors, such as our historical connection to our target consumers developed from our seed business and the diversity of products, social networking features, quality of user experience, brand awareness and reputation. Many of our competitors may have greater financial, marketing or technology resources than we do, which could enable them to respond more quickly to technological innovations or changes in user demands and preferences, license more attractive content, and devote greater resources towards the development, promotion and sale of products than we can. We anticipate that our platform is different from our competitors because we focus on products for farmers and we utilize blockchain technology to track the origin of our products.

PRC Government Regulation 

PRC Seed Law and Other Relevant Regulations

Participation in the crop seed business is a highly regulated activity in the PRC. In July 2000, China enacted its Seed Law, which became effective on December 1, 2000 (the “Seed Law”). The Seed Law was amended in August 2004, September 2011 and November 2015. The latest revision to the Seed Law amendment became effective on January 1, 2016 (the “Revised Law”). The Seed Law sets forth provisions concerning the development, approval, production and distribution of crop seeds.

Seed Production and Operation License

The Revised Law combined the seed production license and distribution license regimes into one Seed Production and Operation License (“SP&O License”). An SP&O License can be obtained at either the provincial level or the national level. Depends on the variety of seeds the licensee is seeking to produce, the license application requires minimum facility size with respect to office space, laboratory space, breeding space, and storage space; minimum equipment and machinery specifications; minimum number of technical personnel on-site; and minimum number of registered seed breed being produced.

Seed Registration Process

In September 2012, the Ministry of Agriculture issued the first group of Breed-Produce-Distribute Vertically-Integrated Crop Seed Distribution Licenses (BPDVI License) based on new administrative measures. Beijing Origin was included as a licensee among the first 32 crop seed companies that received the BPDVI License.

Many types of seeds must undergo a stringent regulatory review before they may be sold in China. Prior to 2016, 28 types of seeds were subject to approval requirements before being sold in China. The Revised Law has reduced the seed types that need pre-sale approval from 28 to 5 major seeds that now are rice, corn, wheat, soybean and cotton seeds. The reduction is intended to incentivize seed research innovation and guarantee China's food security. Producers for seeds other than the abovementioned five major ones will only need to register their products with the regulators under the Revised Law.

Seed approval can be applied at the provincial level and/or the national level. Under the Revised Law, seeds that have been approved in one province can be distributed in other provinces that share a similar ecological region, as long as the approved seeds register with the relevant agricultural department in those provinces. An approval at the national level means the approved seed can be distributed nationwide.

The approval process requires the applicant to submit the application to the provincial variety authorization committee and/or the national variety authorization committee. The seed must have undergone two growing seasons of monitored growth in at least five different locations in a province (depending on the type of seed, some seeds may require monitored growth in up to 20 different locations in the province). These tests are conducted and administered by the government designated institutes, the number of products one Company may submit for testing is usually limited to a small number due to testing capacity limitation. Seeds submitted for testing are planted together with control seeds that are typically the most popular seeds with farmers in the testing locations. Only seeds that have an increased yield of 8% or higher versus the control seeds and that rank among the top six seeds then being tested are cleared to proceed to the second year of testing, during which the results of the initial test season must be confirmed.

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The most significant development in the hybrid corn seed approval process in China is the introduction of the Corn Seed Green Pass Test System. Origin is now one of a few major seed companies in China able to use the national level Corn Seed Green Pass Test System. Under this system, Origin can introduce to the market our new hybrid varieties with the field tests conducted by us at our own test sites following a protocol developed by the government. This is an important step to accelerate new product introduction to the market.

Seeds developed outside of China must also follow the above procedures before they can be distributed in China.

The ability to process an application for approval is an important element of success, especially in view of the long timeframe associated with obtaining approval after the seed has been developed. Failures and delays in getting the approvals on a timely basis can seriously disrupt the production company’s seed production plan. A minimum of six years – three years to obtain approval and three years to develop the first crop of seed for commercial distribution – generally is required to bring a seed to the market after it has been developed. Because of our extensive network of seed-producing farmers, we have consistently been able to bring new products to the market within a short period of time. Other seed companies often take an additional season or more to bring an approved product to the market, which can be a significant disadvantage for other companies.

As of the September 30, 2018, we have thirty one registered breeds of seeds.

GMO Safety Regulations

The Chinese government published Regulations on Administration of Agricultural Genetically Modified Organisms Safety in December 2011 and the regulations were updated in October 2017 (the “GMO Regulations”). The GMO Regulations govern the research, experiment, production, processing, marketing, import and export of agricultural genetically modified organisms (“GMO”) in China. The GMO Regulations classified agricultural genetically modified organisms, or GMO, into Classes I, II, III and IV according to the extent of their risks to human beings, animals, plants, microorganisms and the ecological environment. The principal difference among the classes is the reporting obligation to the relevant agricultural administration. The testing of agricultural GMO will normally go through three stages, i.e. restricted field testing, enlarged field testing and productive testing. Depending on the classification of the GMO, the GMO research entity will differing levels of reporting obligation to the agricultural administrative department of the State Council (“Ministry of Agriculture”) prior to the commencement of the testing and when the GMO advances from one testing stage to the next testing stage. After the completion of productive testing, the GMO research entity may make an application to the Ministry of Agriculture Department for a safety certificate of the tested GMO. Our products are generally classified as Class I. As of September 30, 2018, the Company has received safety certificate for its phytase corn products. Two of our products are in the Biosafety certification application stage.

A production license from the Ministry of Agriculture is required for the production of GMO seeds (the “GMO License”). To obtain a GMO License, the business must obtain a safety certificate of agricultural GMO and passed variety examination, plant and breed in the designated areas, adopt appropriate safety administration and precautionary measures and comply with other conditions provided for by the Agricultural Department. We are in the process of applying for GMO Biosafety certificate as application were submitted in April, 2019.

International Expansion of Our Biotechnology Business

Although we continue to consider expanding our biotechnology business internationally, expansion into markets where we have little experience and brand acknowledgement will be difficult and may be unsuccessful. There can be no assurance that we will achieve any level of international expansion or that it will generally start earning revenues. Currently our expansionary plans are limited and will be dependent on having sufficient capital to establish and sustain operations in other jurisdictions.

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The GM corn seed varieties need to be improved and altered over time to maintain efficacy of the traits and quality of the seeds because of variable weather and soil conditions, farming practices and changing resistance of weeds and insects to herbicides and pesticides. It appears, however, that farmers, when faced with changing conditions for, or growing resistance to pests and weeds to the benefits of, one variety of GM seeds, tend to stay with GM products changing over to new varieties, rather than abandoning GM products. We believe that this characteristic of the GM corn seeds and the farmer’s behavior may give us an opportunity to introduce our double stacked products into other markets outside of China.

Entry into international markets will take substantial time and economic resources. For example, GM products in the United States are regulated under health, safety, and environmental legislation, mostly at the federal level under the Coordinated Framework for Regulation of Biotechnology. United States regulation focuses on the nature of the product rather than the process in which they are produced. Plant GM products are regulated by the United States Department of Agriculture’s Animal and Plant Health Inspection Service under the Plant Protection Act. GM products in food, drugs and biological products are regulated by the Food and Drug Administration under the Federal Food, Drug and Cosmetic Act and the Public Health Service Act. GM products that have pesticide and microorganism qualities are regulated by the Environmental Protection Agency pursuant to the Federal Insecticide, Fungicide and Rodenticide Act and the Toxic Substances Control Act. The importation of GM plants are regulated under the Plant Protection Act, which can be used to prohibit or restrict the importation, entry, exploitation and movement in interstate commerce of any plant that may result in the introduction of plant pests and noxious weeks within the United States. GM plants are considered potential plant pests, and therefore are subject to a notification process, permitting process and determination of non-regulated status before entry into the United States market.

Additionally, some states in the United States separately are establishing regulation with respect to GM plants. These regulations take a number of forms, including banning the planting and cultivating of GM plants, labeling requirements and permitting requirements. We may have to meet these requirements depending on the anticipated markets for our products.

The international markets are highly competitive. In the United States, for example, it is estimated that Monsanto Company and E.I. DuPont de Nemours Inc. (Pioneer) dominate the corn seed market in the United States, with about 70% of the market. It is estimated that independent seed producers only have about 11% of the market. We believe that we will have to compete based on many different aspects of a market, including seed traits, overall seed quality, customer acceptance and service, and value added technology. Additionally, our ability to compete will be impacted by shifts in acreage planted with corn, commodity price changes, and weather conditions and planting practices. Our competitive position will also be affected by government farm subsidies and government programs that favor certain crops and seeds such as those that encourage and subsidize GM seeds to be used in marginal lands and draught prone areas.

Foreign Ownership Restrictions of Chinese Companies 

Currently, China restricts foreign ownership of businesses in the seed industry. A foreign invested enterprises, or FIE that is engaged in the production, marketing, distribution and sale of food crop seeds is limited to 49% foreign ownership pursuant to the Regulation on the Approval and Registration of Foreign Investment Enterprises in Agricultural Seed Industry (effective on September 8, 1997) and the Foreign Investment Industrial Guidance Catalogue (effective on December 1, 2007).

In addition to restrictions in the conventional seed business, China forbids FIEs from engaging in the development, production and distribution of genetically modified corn seeds pursuant to the Foreign Investment Industrial Guidance Catalogue distributed by the Ministry of Commence of China in 2007. Furthermore, FIEs need to obtain government approvals to engage in the breeding of GM research and testing pursuant to the Agricultural Genetically Modified Organisms Safety Regulation.

Based on the foregoing, we conduct our seed development activities under Beijing Origin, which is a domestic company and not a FIE.

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Regulations Relating to E-Commerce and Internet Privacy

China’s e-commerce business is governed by the Administrative Measures for Online Trading which would require our e-commerce platform to be registered with the State Administration of Industry and Commerce or its local branches and we will need to make the information stated in our business license available to the public. The laws also provide strong protections to customers related to invoicing, returning policies and seller verification. We are subject to these measures as a result of our online direct sales and online marketplace and will be required to adopt measures to ensure safe online transactions, protect online shoppers’ rights and prevent the sale of counterfeit goods. Failure to comply with these consumer protection laws could subject us to administrative sanctions, such as the issuance of a warning, confiscation of illegal income, imposition of a fine, an order to cease business operations, revocation of business licenses, as well as potential civil or criminal liabilities.

Once the e-commerce platform is launched, we will be governed by the laws and regulations in China regarding personal information protection. Under the Several Provisions on Regulating the Market Order of Internet Information Services, issued by the Ministry of Industry and Information Technology (“MIIT”) in 2011. Our e-commerce platform, as an Internet Content Providers, may not collect any user personal information or provide any such information to third parties without the consent of a user and must expressly inform the users of the method, content and purpose of the collection and processing of such user personal information and may only collect such information necessary for the provision of its services. Our e-commerce platform will also be required to properly keep the user personal information, and in case of any leak or likely leak of the user personal information, we must take immediate remedial measures and, in severe circumstances, to make an immediate report to the telecommunications regulatory authority. In addition, pursuant to the Decision on Strengthening the Protection of Online Information issued by the Standing Committee of the National People’s Congress in December 2012 and the Order for the Protection of Telecommunication and Internet User Personal Information issued by the MIIT in July 2013, any collection and use of user personal information must be subject to the consent of the user, abide by the principles of legality, rationality and necessity and be within the specified purposes, methods and scopes. We would be required to keep such information strictly confidential, and is further prohibited from divulging, tampering or destroying of any such information, or selling or proving such information to other parties. Any violation of the above decision or order may subject our e-commerce platform to warnings, fines, confiscation of illegal gains, revocation of licenses, cancellation of filings, closedown of websites or even criminal liabilities.

The mobile app of our e-commerce platform will be governed by the Administrative Provisions on Mobile Internet Applications Information Services. Pursuant to these provisions, owners or operators of mobile apps that provide information services are required to be responsible for information security management, establish and improve the protective mechanism for user information, observe the principles of legality, rightfulness and necessity, and expressly state the purpose, method and scope of, and obtain user consent to, the collection and use of users’ personal information. In addition, the new Cyber Security Law also requires network operators to strictly keep confidential users’ personal information that they have collected and to establish and improve user information protective mechanism. We have required our users to consent to our collecting and using their personal information, and established information security systems to protect user’s privacy.

Tax

Origin and State Harvest are both tax-exempted companies organized in the British Virgin Islands.

Our PRC Operating Companies are organized in the PRC and governed by PRC laws. PRC enterprise income tax, or EIT, is calculated based on taxable income determined under PRC accounting principles.  Under the New EIT law, effective January 1, 2008, FIEs and domestic companies are now subject to a uniform EIT rate of 25% and the tax exemption, reduction and preferential treatments which were applicable only to FIEs were ended. However, any enterprises established before the promulgation of the New EIT law in 2008 that were entitled to preferential tax treatments for a fixed period continued to be entitled to such preferential tax treatment until the expiration of those periods.

The applicable tax rate under new EIT law to Beijing Origin is 15% since January 1, 2008, because Beijing Origin has been approved as new technology enterprises and enjoys the reduced New EIT rate of 15%. Our other operating companies are subject to the New EIT at a uniform rate of 25%. The preferential treatment of high and new technology enterprise or HNTE, is subject to a reapplication every three-year period. The financial position of the Company after the sale of our corn related production and distribution assets may cause the termination of the HNTE qualification or restrict reapplication for that status, in which event there would be an adverse impact on our tax obligations and tax rate.

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Pursuant to the Provisional Regulation of China on Value Added Tax, or VAT, and their implementing rules, all entities and individuals that are engaged in the sale of goods, the provision of repairs and replacement services and the importation of goods in China are generally required to pay VAT at a rate of 13% of the gross sales proceeds received since April 1, 2019, less any deductible VAT already paid or borne by the taxpayer. Pursuant to the Notice of the Ministry of Finance and the State Taxation Administration on Exempting the Value Added Tax for Agricultural Material, self-produced agricultural products sold by agricultural producers shall be exempt from VAT. Pursuant to an approval document received from Beijing Haidian District State Tax Bureau, Beijing Origin has been entitled to exemption from VAT since August 1, 2001.

Dividend Distribution

Under PRC law, FIEs in China, including Origin Agritech may pay dividends only out of their accumulated profits, if any, determined in accordance with PRC accounting principles. In addition, FIEs in China are required to set aside at least 10% of their after-tax profit based on PRC accounting standards each year for their general reserves until the accumulative amount of such reserves reaches 50% of registered capital. These reserves are not distributable as cash dividends. The Board of Directors of a FIE has the discretion to allocate a portion of its after-tax profits to staff welfare and bonus funds, and expansion (development) funds which may not be distributed to equity owners except in the event of liquidation. The amount set aside as of September 30, 2017 and 2018 were RMB24,789 and RMB20,848, respectively. We are currently in compliance with all applicable PRC laws and regulations relating to our business.

Discontinued Operations

In September 2017, we sold our seed production and distribution business to Beijing Shihui Agricultural Development Co. Ltd. pursuant to a Master Transaction Agreement. The first stage of the sale was completed on July 31, 2017 pursuant to which we sold our production, processing and distribution services, production and processing centers and marketing centers to Shihui. In September 2018, we terminated the second phase of the Master Transaction Agreement and retained our commercial seed business under Beijing Origin along with the headquarters building in Beijing. For additional information, please refer to Note 4 - Discontinued Operations in our consolidated financial statements.

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C. Organizational structure.

Origin Agritech is a holding company with no operations of its own. We conduct our operations in China primarily through our PRC Operating Companies. The following diagram illustrates our current organizational structure as of September 30, 2018. 

(1) We do not have any ownership interest in Beijing Origin, Henan Origin Xinjiang Origin and Henan Aoyu, rather, through State Harvest, we have entered into a series of stock consignment agreements with their respective shareholders which provides us control of Beijing Origin and its subsidiaries. 

 The table below lists each of our group companies, their place of incorporation and their percentage of ownership interest as of October 1, 2018:

	Place of incorporation	Percentage
Name	(or establishment)/operation	of ownership
State Harvest	British Virgin Islands	100% owned by Origin
Origin USA	Des Moines, Iowa, USA	100% owned by Origin (operations suspended)
Origin Biotechnology	Haidian District, Beijing, PRC	100% owned by State Harvest
Zhongying	Haidian District, Beijing, PRC	100% owned by Origin Biotechnology
Beijing Origin	Haidian District, Beijing, PRC	97.96% controlled by State Harvest
Henan Origin	Zhengzhou, Henan Province, PRC	92.04% owned by Beijing Origin
Xinjiang Origin	Jinbo City, Xinjiang Province, PRC	51% owned by Beijing Origin
Henan Aoyu Zhongye Limited	Zhengzhou City, Henan Province, PRC	51% owned by Beijing Origin

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Stock Consignment Agreements 

Under Chinese law, foreign ownership of businesses engaged in the breeding of new varieties, development, production, marketing, distribution and sale of hybrid food crop seeds is limited to 49% pursuant to the Regulation on the Approval and Registration of Foreign Investment Enterprises in Agricultural Seed Industry and The Foreign Investment Industrial Guidance Catalogue. State Harvest, as a non-Chinese corporation, may not directly own more than 49% of any of the PRC Operating Companies. However, Chinese law does not forbid the owner of stock to consign rights associated with the stock, as long as the owner does not transfer title to the stock. Moreover, if we engage in the research and development of genetically modified seed products, then foreign entities are not currently permitted to own any of the seed production company.

To gain control over the PRC Operating Companies (other than Origin Biotechnology, which is not subject to the 49% ownership restriction and which State Harvest entirely owns), State Harvest entered into a series of stock consignment agreements with shareholders of those companies or, the parent of those entities. These agreements consign all of the rights of ownership of the shares involved other than legal title, effectively transferring the control of the shares subject to the agreements. Those rights include the right to manage in all respects the shares held in title by the shareholders that are parties to them, including all shareholder rights to call meetings of shareholders, to submit shareholder proposals, to elect directors, to vote the shares on all matters and to exercise all other rights of a shareholder in respect of the shares consigned. More specifically, the consignment agreements include giving the right to select, replace and increase the number of the directors and supervisors, recommend new directors and supervisory personnel and to exercise management rights, controlling rights and decision-making power over the shares of the subject company. Additionally, the shares of the PRC operating companies are pledged.

Each title holder of these shares has agreed not to interfere with the consignee’s exercise of its rights and to cooperate fully and promptly to permit them to exercise its authority over the consigned shares. This includes all limitations on the ability of the consignee to transfer or dispose of the shares to someone other than to the consignee, give guarantees using the shares, consign the shares to another, alter the ownership proportion in any way, dispose of any rights in the ownership of the shares, and agree to any debt or restructuring of the shares. The consignee has the right to take all action in respect of the consigned shares to avoid any damage or infringement of its rights, including in the event of the consigning shareholder’s bankruptcy. The consignee, under the agreements, has virtually all of the property rights of the consigned shares, including the profits, interests, dividends, bonuses and residual assets, except for legal title. If in the future any stock subject to the consignment agreements can be legally transferred, then, without further action by the consignee, it shall be transferred to the consignee in whole or in part for no additional consideration to the consigning shareholder.

The stock consignment agreements also provide that if and when the restriction on foreign ownership of food production companies to 49% is removed or the allowed ownership percentage is increased, the consigned shares will then be transferred to the consignee. If not, the consignment agreements continue in full force and govern the consignee’s rights over the shares.

The agreements are subject to force majeure limitations. The term of the agreements is initially three years, but they are automatically renewed indefinitely until both the consignee and the consignor agree to terminate. There is no unilateral right of termination except in the event of a breach, in which event the non-breaching party may cancel the consignment agreement after notice and a reasonable cure period has passed and the breach continues. The consigning shareholders have warranted their authority to enter into the agreements and that the consignee has the exclusive right to control the shares that are subject to the consignment agreements. The agreements are binding on the successors, assignors and heirs of the respective consigning shareholders.

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The importance of the stock consignment agreements is that, under U.S. GAAP, the consignee corporation may consolidate the financial reporting of those PRC Operating Companies whose shares are subject to stock consignment agreements in the manner of wholly and majority owned subsidiaries and enjoy the economic benefits of such subsidiaries. Each stock consignment agreement is subject to enforceability and other limitations of the laws and rules of PRC. The consignee may not transfer the consignment agreement, except as permitted by PRC law. However, we may transfer our interest in the intermediate consignee corporation without limitation. If there is non-performance by the shareholder or some or all of an agreement is unenforceable, we and the consignee may lose the benefits of the agreements and suffer severe economic loss as a result. No assurance can be given that the consignee will be able to enforce its rights vis-à-vis the consigning shareholders in the courts of the PRC, and we are not aware of any cases where these types of stock consignment agreements have been interpreted by PRC courts.

We believe that these agreements are enforceable under current PRC law. However, none of these kinds of agreements have yet been subject to judicial review or interpretation. The consignment agreements provide that if there is any interpretation of the terms by a PRC court, the agreements should be construed in such a way as to give the consignee as much of the full and actual ownership and full beneficial rights and benefits of the consigned stock as is possible, so as to approximate full ownership under all applicable law.

In the event that the consignment agreement is not enforced or is terminated because of a breach by the consignee that is not cured, the right to the underlying stock would be lost and the economic rights would be terminated. However, such a termination would not terminate the separate agreements entered into by Beijing Origin and Henan Origin to transfer technology from those companies to Origin Biotechnology, so even in the event of a termination of a consignment agreement, the consignee would continue to own the applicable PRC entity’s technology and intellectual property through Origin Biotechnology, its wholly owned subsidiary (see “Technical Service Agreements” below). Also, the termination of one shareholder’s consignment agreement does not cause the termination of any of the other consignment agreements, so it would only result in a reduction in consigned shares under the consignee’s control.

The following is a table of the parties to the consignment agreements of the Company:

PRC Operating Company	Consigning Owner	% of Shares Consigned
Beijing Origin	Gengchen Han		34.40	%
	Yasheng Yang		28.68	%
	Liang Yuan		25.80	%
	Yuping Zhao		3.99	%
	Weidong Zhang		3.13	%
	Weicheng Chen		1.96	%
			97.96	%
Henan Origin	Beijing Origin		92.04	%
	Yingli Zhang		4.08	%
	Yasheng Yang		3.88	%
			100.00	%

Technical Service Agreements

All of the intellectual property rights of the Company are held by Origin Biotechnology pursuant to technical service agreements dated December 25, 2004. The purpose of this arrangement was to permit better management and licensing of the intellectual property that the three assignors developed. Under the technical service agreements, Origin Biotechnology will provide technical research and production and distribution services to the other PRC operating companies. These services include support in the research and development of agricultural seeds, analysis of breeding technologies, environment and feasibility suggestions, technical tutorials and breeding field supervision, market analysis and seed promotion, insect prevention and technical education to distributors and farmers. The fees payable under the agreements are variable, depending on differing formulae for different categories of seeds, and are to be charged on the sales of certain seed products in each fiscal year. These agreements are considered intra-company transactions.

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Master Transaction Agreement

In September 2016, Origin entered into a Master Transaction Agreement to sell its seed production and distribution business to Beijing Shihui Agricultural Development Co. Ltd. (“Shihui”). In fiscal year 2017, Origin sold 98.58% equity ownership interest in Denong, 100% equity ownership interest in Changchun Origin and 100% equity ownership interest in Linze Origin, which represent our production, processing and distribution services, production and processing centers and marketing centers. The Master Service Agreement was terminated in September 2018 and the Company retained the headquarter building located in Beijing.

D. Property, plant and equipment.

Our principal executive offices are located in the Changping District in Beijing where we own approximately 10,320 square meters of office space, and the right to use approximately 19,250 square meters of land. The land uses right, and the property, plant, and equipment of our headquarters in Beijing currently secures a four-year finance lease of RMB78 million. The lease program is with Beijing Agriculture Finance Leasing, LLC..

We own or lease manufacturing facilities, laboratories, seed production and other agricultural facilities, office space, warehouses, research stations and breeding centers in various locations in China. The leased facilities are rented at regular commercial rates, and management believes other facilities are available at competitive rates should it be required to change locations or add facilities.

From 2015 to date, our capital expenditures consisted primarily of construction and purchase of plant and equipment, which are located in the PRC and financed mainly by bank borrowing. The table below sets forth the amount of our capital expenditures for the periods shown:

For the year ended  September 30,	For the year ended  September 30,	For the year ended  September 30,	For the year ended  September 30,
2016	2017	2018	2018
RMB	RMB	RMB	US$
15.71 million	2.62 million	2.98 million	0.43 million

We believe that our existing facilities are adequate to conduct our current and foreseeable future business operations.

ITEM 4A. UNRESOLVED STAFF COMMENTS 

Not Applicable 

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion of our financial results of operations and condition is based upon and should be read in conjunction with our consolidated financial statements and their related notes included in this Annual Report on Form 20-F. This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including, without limitation, statements regarding our expectations, beliefs, intentions or future strategies that are signified by the words “expect,” “anticipate,” “intend,” “believe,” or similar language. All forward-looking statements included in this Annual Report are based on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements. Actual results could differ materially from those projected in these forward-looking statements. In evaluating our business, you should carefully consider the information provided under the caption “Risk Factors” in this Annual Report on Form 20-F. We caution you that our businesses and financial performance are subject to substantial risks and uncertainties.

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A. Operating Activities and Results.

Corporate Strategies Origin started as a hybrid corn seed company in 1997 as the first private seed company in China. With the success in and strong cash flow from the hybrid corn seed business, Origin started its seed biotechnology research in early 2000’s and established Origin Life Science Center in 2005. The Company has invested in the seed biotech product development and funded the biotech research and development with its free cash flow from the traditional hybrid seed business. Currently, the Company is waiting for the final commercialization approval from the Chinese government for its seed biotech products. In addition to the biotech corn seed technologies, the Company has initiated new business strategic directions, including Origin e-Commune Network and Saline-Alkaline land reclamation business.

Biotechnology Progress

While we continue to advance our GMO product pipelines with phytase traits and glyphosate tolerance technologies, our most significant progress made in the last several years is in the new biotech pipelines of stack traits of insect resistance and herbicide tolerance. The Company continues to test the double stacked products of Bt and glyphosate tolerance genes against the technologies currently used in the global market.

In 2016, Origin completed the laboratory and field production trials for its first generation PEST/WEED trait. In these trials, molecular characteristics, field efficacy, environmental safety and food safety were thoroughly evaluated and the results met critical biosafety regulation standards. Dossiers summarizing the laboratory and field-test studies internal to Origin and in collaboration with third party research labs were submitted in November 2016 to request Phase 5 Safety Certificate approval. In 2017 we conducted more tests following the feedback from the National Committee of Biosafety. Optimized and complete regulatory dossiers were re-submitted in November 2017 to request Safety Certificate approval. Origin’s first generation WEED and PEST/WEED traits have been incorporated into the elite corn inbred lines of Origin and into the products of leading Chinese seed industry partners preparing for future regulatory approval and commercialization.

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For the double stacked Bt and GT genes, our repeated field testing in both our northern testing site (for summer testing) and southern testing site (for winter testing and with heavy natural insect pressure) has shown very positive and stable insect resistance results. We believe the Bt gene (Cry1Ah) used in our double stacked traits could be highly valuable in markets outside of China.

Origin’s first generation biotechnology trait for insect resistance and herbicide tolerance (PEST/WEED) were successfully exported in 2017 from China to the United States. This represented the first export of such technology by a Chinese seed company to a strategic partner based in the U.S for GM seed products. These corn seeds with insect resistance and herbicide tolerance technologies were entered into collaborative field experiments in the summer of 2017 which confirmed their efficacy of the traits.

Based on our successful development in biotech seed products, we have continued to take steps to secure our biotechnologies intellectual property protections. We believe these patents will strengthen our position in the genetically modified seed technologies and will allow us to maintain our leading position in China and enter the global biotech traits market.

Overall Analysis

On September 26, 2016, we entered into an Master Transaction Agreement with Beijing Shihui, a related party being controlled by close family members of our Chairman (who is currently our Chief Executive Officer), formerly known as Beijing Shihui Agricultural Ltd. (“Shihui”), under which Shihui agreed to purchase the seed production and distribution assets, the office building in Beijing, PRC, and generally the business of commercial corn seed production and sales operated by us. We eventually only sold the corn seed production and distribution assets and business of commercial corn seed production and sales operated by us to Shihui and the Master Transaction Agreement was terminated in September 2018.

The assets and liabilities of the entities that were sold and to be sold have been reclassified as “assets of discontinued operations” and “liabilities of discontinued operations” within current and non-current assets and liabilities, respectively, on the consolidated balance sheets as of September 30, 2017 and 2018. The results of operations of the entities or assets that were sold and to be sold have been reclassified to “net (loss) income from discontinued operations” in the consolidated statements of income and comprehensive income for the years ended September 30, 2016, 2017 and 2018. We will mainly discuss the continuing business in the following paragraphs.

For the fiscal year ended September 30, 2018, revenue was RMB12.9 million, compared to RMB0.9 million for the fiscal year ended September 30, 2017.

Operating expenses from continuing operation for the fiscal year ended September 30, 2018 were RMB41.4 million (US$6.0 million), representing a decrease of 41% from RMB69.7 million in the fiscal year 2017. General and administrative expenses for the fiscal year ended September 30, 2018 were RMB32.1million (US$4.7 million), a decrease of 11% from RMB36.1 million year-over-year. Research and development expenses were RMB27.1 million (US$3.9 million) in fiscal year 2018, compared to RMB38.7 million in fiscal year 2017.

Net loss from continuing operation for the fiscal year ended September 30, 2018 was RMB152.8 million (US$22.2 million), compared with net loss from continuing operation of RMB121.8 million in fiscal year 2017.

Net loss attributable to Origin for the fiscal year ended September 30, 2018 was RMB153.7 million (US$22.3 million), compared to the net loss of RMB75.7 million for the fiscal year ended September 30, 2017.

Net loss per share was RMB(50.18) or US$(7.29) for the fiscal year 2018, compared with net loss per share of RMB(26.95) in fiscal year 2017.

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As of September 30, 2018, and 2017, we had approximately RMB2.0 million (US$0.3 million) and RMB3.2 million, respectively, in cash and cash equivalents of continuing operations. Total borrowings of continuing operations as of September 30, 2018 and 2017 were RMB78.2 million (US$11.4 million) and RMB107.3 million, respectively. During fiscal year 2018, net cash used in operating activities was RMB10.0 million (US$1.5 million), compared with net cash used by RMB120.2 million for the fiscal year ended September 30, 2017. Net cash provided by investing activities was RMB47.6 million (US$6.9 million) for the fiscal year ended September 30, 2018 compared with net cash provided by investing activities of RMB29.5 million for the fiscal year ended September 30, 2017. Net cash provided used in financing activities was RMB35.4 million (US$5.1 million) for the fiscal year ended September 30, 2018 compared with net cash provided by financing activities of RMB47.0 million for the fiscal year ended September 30, 2017.

Research and Development Activities

Origin was built on its research and development platform and we believe a commitment to research and development is essential to the growth of the Company, particularly as we orientate our operations to biotechnology. During fiscal year 2018, we continue to make significant progress both in our conventional hybrid crop seed development programs and biotechnology research and development activities.

Key developments for Origin’s GM corn seeds:

Phytase: Four commercial hybrids with phytase traits have completed a number of variety production tests. These varieties with phytase traits have been submitted to the Chinese government (the Ministry of Agriculture) to obtain variety safety certificates. We are waiting for the final approval from the Chinese government.

Glyphosate Tolerance: One GM glyphosate tolerance event (the unique DNA recombination event that took place in one plant cell) completed a third year Phase 4 – Production Test and the summary of test results has been submitted to the MOA for the Phase 5 – Safety Certificate.

Glyphosate(G2) Tolerance insect resistance (Bt): The double stacked traits of insect resistance and glyphosate tolerance genes have completed the second year Production Test (Phase 4). The lab and field tests conducted internally and in collaborations with 3^rd party research institutes and universities that are certified by MOA showed consistently positive performance same as that we have observed in the tests of previous years. The molecular characteristics, field efficacy of insect resistance and herbicide tolerance traits, agronomic performance, environmental safety, food safety of the transgenic event were thoroughly evaluated. These results meet the standards of the government GM regulations. The summary of these results has been submitted to MOA for safety certificate (phase 5).

Triple Stacked Traits: Stacked triple and quadruple traits of insect resistance and herbicide tolerance genes with different resistance mechanisms have been under intermediate testing. These traits are expected to increase herbicide tolerance and expand the insecticidal spectrum and durability. More than 3,000 events of the stacked traits were screened in a greenhouse environment of Phase 1-Laboratory Research. More events will be generated to meet the high standard of efficacies.

Backcrossing Programs: Multiyear programs of backcrossing of our biotech products, including phytase, glyphosate tolerance, and stacked traits of Bt and G2 genes, into corn varieties from our own product lines as well as several product lines of multinational companies are progressing well. Successful backcrossing products into our own varieties are and will be submitted for government approvals in due course.

Hybrid Corn Seed Development Program:

The most significant development in the hybrid corn seed approval process in China is the introduction of the Corn Seed Green Pass Test System. Origin is now one of a few major seed companies in China able to use the national level Corn Seed Green Pass Test System. Under this system, Origin can introduce to the market our new hybrid varieties with the field tests conducted by us at our own test sites following a protocol developed by the government. This is an important step to accelerate new product introduction to the market.

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Previously in China, new hybrid seed varieties needed to go through an official approval process prior to sales. This approval process typically involves three to four years of registered trials and normally proceeds according to the following sequential steps:

Pre-Registration ¨ Registration Trial 1 ¨ Registration Trial 2 ¨ Field Demo ¨ Approval

Each step leading up to approval takes approximately one year unless it needs to be repeated. In some localities the Registered Trial 2 and Field Demo steps are treated as one and the same step.

In the standard official approval process, the government test sites are limited by the size of test fields. So seed companies are limited in the amount of varieties submitted for testing. Under the new Corn Seed Green Pass Test System, Origin can conduct testing of much larger pools of varieties even in the early stage, which allows us to better screen the varieties from our breeding programs and introduce the best varieties earlier.

During fiscal year 2018, the fourth year under the new Green Pass Test System, we had more than 33 tests going through different stages of the testing stages. As the results of multiyear testing, we received five registration approval for three of our new varieties. During the fiscal years 2014 to 2018, we received a total of 17 approvals for our corn seed hybrid products. 

Hybrid Corn Seed Registration and Approval table

									Registration
	Pre-Registration		Registration		Registration				Trial 2 +
Year	Trial		Trial 1		Trial 2		Field Demo		Field Demo		Approved
2011		72		16		5		5		4		0
2012		33		18		5		5		3		3
2013		44		12		3		6		2		7
2014		18		6		3		5		3		8
2015		13		27		4		3		N/A		7
2016		9		13		6		5		3		2
2017		1		28		6		4		6		5
2018		30		20		15		12				6

Note: One variety may be tested for more than one ecological zone, therefore one variety may receive more than one approval, e.g. in 2017, we received five approvals for three varieties.

Research and Development Outlook 

One of our businesses is biotechnology research. We initially were approved for the first GM corn seed crop in China. Our glyphosate-tolerant gene has been approved to advance to the next phase of development. We seek to become the leader in biotechnology and GM product commercialization in China. We expect that GM crop seeds will eventually gain acceptance in China and for this reason we continue to pursue biotechnology seed development and invest in genetic modification programs that focus on improving yields, product quality, and insect resistance and disease tolerance for corn seeds and other selected crop seeds. The development of biotechnology attributes remains one of our business strategies. A significant proportion of our management resources are dedicated to building these capabilities across the Company.

During the past few years, we have established several plant genetic engineering technology platforms. These include introducing traits such as herbicide tolerance, insect resistance, nitrogen efficiency, and drought stress tolerance into inbred corn lines. We seek to efficiently utilize modern biotechnology in China and aim to expand beyond China.

Currently, we possess exclusive rights to five genetic traits in various stages of testing and development. We have continued to build our technology platform based upon cooperative relationships with top universities and research institutes in China. These cooperative arrangements allow us to limit our own risk exposure and fixed cost structure and maximize our flexibility in developing applicable technology.  

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Under government regulations, a registrant company must follow the following procedures prior to registration and marketing GM crops in China. Each step (except laboratory research) has an associated reporting and approval process established by the Ministry of Agriculture, the clearance of which is necessary in order to proceed:

1. Laboratory Research: defined by genetic manipulations and research work conducted under a control system within laboratory;

2. Intermediate Testing Phase: a small-scale test conducted under a regulated control system;

3. Environmental Release Test: a medium-scale test conducted under natural condition by taking relatively secure measures;

4. Production Test: a relatively large-scale test before production and application; and

5. Obtaining the safety certificate on genetically modified organisms

Since we are considered a domestic Chinese company, we can proceed through all five phases of the GM approval in China, while international entities are restricted to only phrase one, and currently forbidden to proceed to phases two through five. We have already had several of our products submitted to testing in phases two through four, and one product has completed the five-step process. We are the first company to obtain safety certificate for GM corn seeds in China.

If GM seed products are approved by the government on a broader scale and begin to gain widespread acceptance in the market, large international biotech companies could likely become more serious competitors. However, they may continue to face numerous obstacles in competing with us in China. Foreign companies are currently prohibited from developing or producing genetically modified plant seeds, breeding livestock and poultry, or producing aquatic seed according to Catalog Guiding Foreign Investment Industries (distributed by Ministry of Commence of China). As a result, we believe we will continue to be in a competitive position in the genetically modified segment of the seed market when it becomes meaningful and legally permissible to do so.

Key factors affecting our growth, operating results and financial condition

We expect our future growth, operating results and financial condition to be driven and affected by a number of factors and trends including but not limited to:

· our ability to strategically manage our growth and expansion, organically or through mergers and acquisitions. If we do not manage our growth effectively, our growth may slow down and we may not be able to achieve or maintain profitability;

· our ability to fit acquisitions and our corporate reorganization into our growth strategies to generate sufficient value to justify their cost;

· our ability to develop new products and new commercial avenues;

· our ability to evaluate our business lines and take action to discontinue aspects of our business as well as to take cost savings measures for the future growth of the company;

· our ability to partner or joint venture for the creation of more advanced bio-technology products or develop new enterprises;

· our ability to launch and develop our on-line marketing platform;

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· our ability to continue to license or acquire crop seeds from third party developers and our ability to develop proprietary crop seeds;

· future consolidations in the crop seed industry in China that may give rise to new or strengthened competitors;

· the possibility that the crop seed industry in China may favor genetically modified seeds over hybrid seeds, and our ability to develop and market such products;

· the impact of regulation affecting our industry; and

our benefits from certain government incentives including tax incentives, the expiration of which, or changes to which, could have an adverse effect on our operating results.

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of those financial statements requires us to make estimates and judgments that affect the reported amount of assets and liabilities, revenues and expenses and related disclosure of contingent assets and liabilities at the date of our financial statements. Actual results may differ from these estimates under different assumptions or conditions.

Critical accounting policies are those that reflect significant judgments or uncertainties, and potentially result in materially different results under different assumptions and conditions. We have described below what we believe are our most critical accounting policies that involve a high degree of judgment and the methods of their application. For a description of all of our significant accounting policies, see Note 2 to our consolidated financial statements.

Discontinued Operations

The Company reports operating results for discontinued operations separately from continuing operations to distinguish the financial impact of disposal transactions from ongoing operations. Through September 30, 2018, the Company reported discontinued operations when the operations and cash flows of a component of the Company had been eliminated or intended to be eliminated from ongoing operations. For a component to be disposed of by sale, financial results were classified as discontinued only when held for sale criteria were met. For a component to be disposed of other than by sale, financial results were not classified as discontinued until abandonment, distribution, or exchange occurred, depending on the manner of disposal. In the annual report for the year ended September 30, 2016 and 2017, the operating results of the seed production and distribution entities and assets mainly including Changchun Origin, Denong, Linze Origin, Zhengzhou Branch and office building in Beijing, PRC are presented as discontinued operations. The office building in Beijing, PRC was previously planned to be sold to Beijing Shihui. However, the Company changed the original plan and decided not to sell this part of assets. On September 21, 2018, the Company and certain subsidiaries of the Company entered into a Termination Agreement. Pursuant to this agreement, the Company will not transfer the above-mentioned office building in Beijing to Beijing Shihui.

As the office building in Beijing no longer meets the held-for-sale criteria, this part of assets has been reclassified as held and used and the related operation results were reclassified to continuing operations for all periods presented in this report.

Revenues

We utilize the guidance set forth in the FASB’s ASC Topic 605, “Revenue Recognition”, regarding the recognition, presentation and disclosure of revenue in our consolidated financial statements. We recognize revenue when pervasive evidence of an arrangement exists, the price is fixed and determinable, collection is reasonably assured and delivery of products or services has been rendered.

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Revenue is recognized when pervasive evidence of an arrangement exists, products have been delivered, the price is fixed or determinable, collectability is reasonably assured and the right of return has expired. We generally determines the final selling price after a period the goods are delivered to the customers. Accordingly, we defers revenues recognition until the selling price has been finalized with the customers. The estimated amounts of revenues billed in excess of revenues recognized are recorded as deferred revenues.  

Impairment of long-lived assets

The Company reviews the carrying value of long-lived assets to be held and used, including other intangible assets subject to amortization, when events and circumstances warrants such a review. The carrying value of a long-lived asset is considered impaired when the anticipated undiscounted cash flow from such asset is separately identifiable and is less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair market value of the long-lived asset and intangible assets. Fair market value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. Losses on long-lived assets and intangible assets to be disposed are determined in a similar manner, except that fair market values are reduced for the cost to dispose. The Company has performed an impairment analysis on the plant and equipment in Xinjiang Originbo Seed Company Limited and recorded an impairment loss of RMB25,873 during the year ended September 30, 2017. The impairment loss was reported in discontinued operations as the impaired long-lived assets are related to the seed production and distribution business.

Write-down of Inventories

Our inventories are stated at the lower of cost or net realizable value. Any excess of the cost over the net realizable value of the inventories is recognized as a provision for reduction in the value of inventories. 

We assess the write-downs of inventories using three criteria: 1) the quality of seeds according to standards promulgated by the PRC government on the germination percentage and purity level of seeds; 2) a comparison of the inventory unit cost with the market selling price and subsequent write-down of those inventories where the unit cost exceeds its expected net selling price; and 3) evaluation of the unsold balance of the existing inventory that cannot be sold in the coming three years, based on sales forecasts and marketing plan.

We have assessed the product quality, unsold quantity and the amount unit cost exceed the selling price performed by our quality inspectors and sales staff on an annual basis, and accordingly, determined the inventory write-downs based on the assessment results. We believe that the current methodologies on impairment assessment are adequate to address the risks of inventory write-downs. For fiscal year 2018, we had written off of provision of RMB13.6 million (US$2.0 million) for inventories, compared to provision of RMB18.8 million for fiscal year 2017 and RMB20.5 million for fiscal year 2016.

Due to the nature of the seed industry, we normally produce seeds according to our annualized production that is developed at least one year before delivery to our customers. If our production plan is too aggressive, we could produce more seeds than the market demands, resulting in aged seeds. We may decide not to sell the aged seeds as crop seed products, taking into account factors such as the quality of the seeds and commodity pricing. In that case, the aged inventory may be sold as common feed products at greatly reduced prices. Aged inventory could result in asset impairment risk, in which case we would suffer a risk of additional inventory write-downs.

Our inventories and provisions related to the seed production and distribution business are reported in discontinued business. Our inventories reported in the continuing business mainly consist of low value supplies and parent seeds that are used for research and development activities.

Income taxes

Income taxes are accounted for using the asset and liability method. Under this method, deferred income tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which these temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance would be provided for those deferred tax assets if it is more likely than not that the related benefit will not be realized. A full valuation allowance has been established against all net deferred tax assets as of December 31, 2017 and 2018 based on our estimates of recoverability.

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Stock-based compensation

We adopted FASB ASC 718-10, to measure our issued share options based on the grant-date fair value of the options and recognized as compensation expense over the requisite service period, with a corresponding addition to equity. We adopt the Black-Scholes Model to value the fair value of the share options.

Results of Operations

Fiscal Year Ended September 30, 2018 Compared To Fiscal Year Ended September 30, 2017

Revenues

For the fiscal year ended September 30, 2018, revenue from continuing operation was RMB12.9 million (US$1.9 million), compared to RMB0.9 million for the fiscal year ended September 30, 2017.

Operating expenses

Operating expenses from continuing operation for the fiscal year ended September 30, 2018 were RMB41.4 million (US$6.0 million), representing a decrease of 41% from RMB69.7 million in the fiscal year 2017. 

General and administrative 

General and administrative expenses from continuing operation primarily consist of salary and compensation, depreciation and amortization, legal fees, professional expenses and other expenses, including travel and other general business expenses and office supplies. General and administrative expenses for the fiscal year ended September 30, 2018 were RMB32.1 million (US$4.7 million), a decrease of 11% from RMB36.1 million year-over-year.

Research and development

Research and development expenses from continuing operation primarily consist of salary and compensation expenses of personnel engaged in the research and development of our proprietary crop seeds and genetically modified products, travelling expenses, depreciation of plant and equipment, and expenses paid to certain research institutes to carrying research projects on behalf of Origin during the period. Research and development expenses were RMB27.1 million (US$3.9 million) in fiscal year 2018, compared to RMB38.7 million in fiscal year 2017.

Other income, net

Other income from continuing operation primarily consists of raw material sales, office building rental income and government subsidy income, offset by costs related to raw material sales and fixed assets disposal gain. Other income increased to RMB18.3 million (US$2.7 million), in fiscal year 2018 from RMB5.0 million in fiscal year 2017.

Loss from continuing operations

As a result of the impact of the components described above, loss from continuing operations were RMB35.5 million (US$5.2 million), in fiscal year 2018 compared with loss from continuing operations of RMB69.6 million in fiscal year 2017.

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Interest expense

Interest expense was RMB22.8 million (US$3.3 million) for the fiscal year 2018 compared to RMB9.0 million a year ago.

Net Loss

Net loss attributable to Origin for the fiscal year ended September 30, 2018 was RMB153.7 million (US$22.3 million) compared to the net loss of RMB75.7 million for the fiscal year ended September 30, 2017.

Fiscal Year Ended September 30, 2017 Compared To Fiscal Year Ended September 30, 2016

Revenues

For the fiscal year ended September 30, 2017, RMB0.9 million was recorded from continuing operation, however for the fiscal year ended September 30, 2016, we recorded revenue of RMB0.5 million primarily due to fees for services from the Company’s collaborators.

Operating expenses

Operating expenses from continuing operation for the fiscal year 2017 were RMB69.7 million, representing an increase of 6% from RMB66.0 million in the fiscal year 2016.

General and administrative 

General and administrative expenses from continuing operation primarily consist of salary and compensation, depreciation and amortization, legal fees, professional expenses and other expenses, including travel and other general business expenses and office supplies. General and administrative expenses for the fiscal year 2017 were RMB36.1 million, an increase of 9% from RMB33.0 million in the fiscal year 2016 mainly due to the increasing expense in US subsidiary.

Research and development

Research and development expenses from continuing operation primarily consist of salary and compensation expenses of personnel engaged in the research and development of our proprietary crop seeds and genetically modified products, travelling expenses, depreciation of plant and equipment, and expenses paid to certain research institutes to carrying research projects on behalf of Origin during the period. Research and development expenses decreased to RMB38.7 million in fiscal year 2017 from RMB41.3 million in fiscal year 2016.

Other income, net

Other income primarily consists of raw material sales, office building rental income and government subsidy income, offset by costs related to raw material sales and fixed assets disposal gain or loss. Other income decreased to RMB5.0 million in fiscal year 2017 from RMB8.3 million in fiscal year 2016.

Loss from continuing operations

As a result of the impact of the components described above, loss from continuing operations were RMB69.6 million in fiscal year 2017 compared with loss from continuing operations of RMB65.5 million in fiscal year 2016.

Net loss from discontinued operations.

Net income from discontinued operations was RMB15.6 million in fiscal year 2017, compared to a loss of RMB3.8 million in fiscal year 2016. The net income from discontinued operations in fiscal year 2017 was a result of the disposal of our seed distribution and production business.

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Interest expense

Interest expense was RMB9.0 million for the fiscal year 2017 compared to RMB7.6 million a year ago. This mainly represents interest expense from the total borrowing of continuing operations.

Net Loss

Net loss attributable to Origin for the fiscal year ended September 30, 2017 was RMB75.7 million compared to the net loss of RMB65.6 million for the fiscal year ended September 30, 2016.

B. Liquidity and Capital Resources.

As of September 30, 2017 and 2018, we had approximately RMB3.2 million and RMB2.0 million (US$0.3 million), respectively, in cash and cash equivalents. Our cash and cash equivalents primarily consisted of cash on hand and short term liquid investments with maturities of three months or less deposited with banks and other financial institutions.

We financed our operations through cash generated from operating activities and bank borrowings. As of September 30, 2018, we had a total current portion of long-term borrowings of RMB78.2 million (US$11.4 million).

The following table shows our cash flows with respect to operating activities, investing activities and financing activities for the 12 months ended September 30, 2016, 2017, and 2018.

Item	September 30
(In thousands)
	2016			2017			2018			2018
	RMB			RMB			RMB			US$
Net cash provided by (used in) operating activities		47,905			(120,167	)		(10,045	)		(1,457	)
Net cash (used in) provided by investing activities		(6,481	)		29,539			47,591			6,919
Net cash provided by (used in) financing activities		(48,816	)		47,008			(35,376	)		(5,142	)
Net (decrease) increase in cash and cash equivalents		(7,392	)		(43,620	)		2,170			320
Cash and cash equivalents, beginning of year		66,025			54,509			3,245			472
Effect of exchange rate changes on cash and cash equivalents		(4,124	)		(7,644	)		(3,425	)		(503	)
Cash and cash equivalents, end of year		54,509			3,245			1,990			289

Operating activities:

Net cash used in operating activities was RMB10.0 million (US$1.5 million) for the fiscal year ended September 30, 2018, compared with cash used in operating activities of RMB120.2 million for the fiscal year ended September 30, 2017. 

Investing activities:

Net cash provided by investing activities was RMB47.6 million (US$6.9 million) for the fiscal year ended September 30, 2018, compared with cash provided by investing activities of RMB29.5 million for the fiscal year ended September 30, 2017.

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Financing activities:

Net cash used in financing activities was RMB35.4 million (US$5.1 million) for the fiscal year ended September 30, 2018, compared with cash provided by financing activities of RMB47.0 million for the fiscal year ended September 30, 2017. The Company reduced the bank borrowing in fiscal year 2018.

Relevant PRC laws and regulations permit payments of dividends by our PRC operating companies only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. In addition, the statutory general reserve fund requires that annual appropriations of 10% of net after-tax income be set aside prior to payment of any dividends. As a result of these and other restrictions under PRC laws and regulations, our PRC Operating Companies are restricted in their ability to transfer a portion of their net assets to us either in the form of dividends, loans or advances.

Even though we currently do not require any such dividends, loans or advances from our PRC Operating Companies, we may in the future require additional cash resources from our PRC Operating Companies due to changes in business conditions, to fund future acquisitions or developments, or merely to declare and pay dividends or distributions to our shareholders, although we currently have no intention to do so.

Substantial doubt about the ability to continue as going concern

The Company incurred net losses of RMB76.8 million RMB106.3 million and RMB152.8 million (US$22.2 million) in the years ended September 30, 2016, 2017 and 2018, respectively. Working capital deficit was RMB45.0 million and RMB217.3 million (US$31.6 million) as of September 30, 2017 and 2018, respectively. Accumulated deficit was RMB258.1 million and RMB411.7 million (US$59.9 million) as of September 30, 2017 and 2018, respectively. We are currently seeking to restructure the terms of our liabilities by raising funds to pay off liabilities. Our ability to continue as a going concern is depend upon obtaining the necessary financing or negotiating the terms of the existing borrowing to meet our current and future liquidity need.

On October 16, 2018, the Company entered into a Share Subscription Agreement with Longhan Investment Management, Co., Ltd. (“Longhan”) to sell 1,397,680 shares of the Company’s common stock for an aggregate purchase price of US$7,743,147. On January 4, 2019, the Company entered into a Financing Support Agreement with Tiger Capital Fund SPC (“Tiger Fund”) and Longhan. This agreement allows Tiger Fund to join Longhan to invest in Origin under the Share Subscription Agreement dated as of October 16, 2018 by and between Longhan and the Company. Under the Share Subscription Agreement and the Financing Support Agreement, Longhan and Tiger Fund purchased 1,397,680 shares of the Company’s common stock for an aggregate purchase price of US$7,743,147 as of the date of this report.

On May 17, 2019, the Company entered into a Cooperation Framework Agreement with Beijing Changping Technology Innodevelop Group (BC-TID), an entity owned by the government of Changping District of Beijing City. Under this agreement, BC-TID and Origin will form a new entity, which 51% and 49% of equity interests would be owned by BC-TID and the Company, respectively. Based on the agreement, Beijing Origin will contribute the headquarters building in Beijing and certain of its seed technology assets related to genetically modified seeds to the new entity. BC-TID will fund the joint venture with a total of RMB204 million in cash. Also agreed under this agreement, the new entity will pay off the bank loan of RMB78 million, which is collateralized by the Company’s headquarters building in Beijing, upon receiving the RMB204 million investment from BC-TID. The transaction is subject to the satisfaction or waiver of several conditions set forth in the agreement.

As of September 30, 2018, the amount due to Beijing Shihui, Zhangye Shihui Agricultural Development Co. Ltd. (“Zhangye Shihui”), Xinjiang Ginbo Seeds Center, Linze Origin Seeds Limited and Dr. Han Gengchen, the Chairman and Chief Executive Director of the Company, amounted to RMB137,811, RMB10,000, RMB10,000, RMB123,579 and RMB9,692, respectively. These related parties agreed that they shall not request the Company to repay outstanding balances until the Company are in a position to repay.

Besides the expected cash inflows from the aforementioned existing agreements, the Company is also seeking funds from other resources including but not limited to licensing its core seed traits to its customers, applying for government grants for research and development activities, pursuing other capital investment from investors and selling certain company assets. The Company consistently reviews its working capital requirements and has also taken steps to reduce expenses. The Company curtailed its operations in the United States at the end of 2017 and formally closed its offices in Iowa, United States shortly thereafter.

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Despite the Company’s effort to obtain additional funding and reduce operating costs, there is no assurance that the Company’s plans and actions will be successful. In addition, there can be no assurance that in the event additional sources of funds are needed they will be available on acceptable terms, if at all.

C. Research and Development, Patents and Licenses, etc.

We focus our research and development efforts on biotechnology, crop breeding and the development of new crop seeds. In November 2001, we established a seed research and development center in Tongzhou, Beijing, which conducts research and development of commercial crop breeding. In September 2005, we established the “Origin Life Science Research Center” in Zhong-Guan-Cun (ZGC) Life Science Park in Beijing, the principal activities of which include crop gene engineering, molecular marker-assisted breeding, and molecular identification. We also have six breeding stations located in different regions in China.

We have established technological cooperative relationships with five universities and sixteen research institutes in China, including Zhejiang University, China Agricultural University, Chinese Academy of Agricultural Sciences, and Henan Agriculture University. We employ seventy-two full-time research personnel.

Our research and development expenditures were RMB41.3 million, RMB38.7 million and RMB27.1 million (US$3.9 million) for fiscal years ended September 30, 2016, 2017 and 2018, respectively.

D. Trend Information.

Other than as disclosed elsewhere in this Annual Report, we are not aware of any trends, uncertainties, demands, commitments or events in the period from October 1, 2017 to September 30, 2018 that were reasonably likely to have a material effect on our net revenues, income, profitability, liquidity or capital resources, or that caused the disclosed financial information to be not necessarily indicative of future operating results or financial conditions, or that had the trends relating to the current-year increases in expenses and reduction in revenues and profits.

E. Off-balance Sheet Arrangements.

We do not have any off-balance sheet guarantees, interest rate swap transactions or foreign currency forward contracts or outstanding derivative financial instruments. We do not engage in trading activities involving non-exchange traded contracts.

F. Tabular Disclosure of Commitments and Contingencies.

We have various contractual obligations that will affect our liquidity. The following table sets forth our contractual obligations as of September 30, 2018. 

	Payments due by period
Contractual Obligations	Total		Less than 1 year		1-3 years		3-5  years		More than 5 years
Capital Commitment
Short term Debt Obligations		-		-		-		-		-
Long term Debt Obligations		78,235		78,235		-		-		-
Interest on Debt Obligations		7,747		7,747		-		-		-
Operating Lease Obligations		6,684		905		1,064		922		3,793
Total		92,666		86,887		1,064		922		3,793

G. Safe Harbor.

Except for historical facts and financial data, the information included in Items 5.A through 5.D and 5.F is deemed to be a “forward looking statement” as that term is defined in the statutory safe harbors. The safe harbor provided in Section 27A of the Securities Act and Section 21E of the Exchange Act shall apply to all forward-looking information provided in this Item 5.

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ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A. Directors and Senior Management.

The following table sets forth certain information regarding our directors and executive officers as of May 31, 2019.

Name	Age	Position
Gengchen Han	63	Chairman of the Board, Chief Executive Officer
James Chen	53	Chief Financial Officer, Director
Michael W. Trimble	61	Independent Director
Rong Chen	62	Independent Director
Fei Wang	41	Independent Director

Dr. Gengchen Han is the Chairman of Origin and has been the Chief Executive Officer of Origin since December 3, 2018. He also served, in the past, as the President and the Chief Executive of Origin at various times. Dr. Han is also the Executive Chairman of Beijing Origin and its affiliated companies, a position that he has held since founding the business in 1997. Dr. Han was the Co-Chief Executive Officer and Chief Executive Officer of the Company from its inception in 1997 until January 1, 2009 and from August 1, 2011 to April 25, 2016. Dr. Han has more than 20 years of experience in research and development of hybrid seed products, particularly corn seed. From 1982 until 1984, Dr. Han was a lecturer at the Henan Agriculture University. From 1984 to 1987, Dr. Han received his Ph.D. degree in Plant Breeding and Cytogenics from Iowa State University. From 1989 until 1990 he worked for the International Maize and Wheat Improvement Center, or CIMMYT, in Mexico. He worked for Pioneer Hi-bred International from 1990 to 1996; his positions there included Regional Technical Coordinator for Asia/Pacific and Regional Supervisor for China Business.

Dr. Z. James Chen became a director of Origin in August 2017 and the Chief Financial Officer of the Company on December 3, 2018. Previously, Dr. Chen was the Chief Financial Officer of Origin from January 2012 to January 2016 and the Chief Executive Officer of Origin from February 2018 to December 2018. Mr. Chen was the CFO of Yunji, Inc. Prior to being employed by Origin, Dr. Chen served as an Investment Manager at Abu Dhabi Investment Authority (ADIA) and he worked as an equity research analyst at Morgan Joseph and BB&T Capital Markets. Dr. Chen also worked as a Product Manager at Celanese and as a License Product Technology Manager at Univation Technologies, a joint venture between ExxonMobil and Dow Chemical. Dr. Chen received his Ph.D. Degree in Chemical Engineering from the University of Connecticut and his M.B.A degree from New York University.

Dr. Michael W. Trimble has been a director of Origin since May 2006. Dr. Trimble is the founder of Trimble Genetics International LLC, or Trimble Genetics, and has been the President of Trimble Genetics since 2001. Trimble Genetics is a plant genetics research company that has expanded business and research relationships to include activities in North America, South America, Asia, Europe, the Middle East and Africa. Dr. Trimble is a leader in plant genetics research with over thirty years of experience in crop breeding and the agricultural seed industry. Dr. Trimble is an inventor of numerous patents in the field of plant genetics. Dr. Trimble graduated with a Ph.D. degree from the University of Minnesota and also completed graduate programs at Purdue University and Iowa State University.

Mr. Rong Chen became a director of Origin in July 2018. Mr. Chen is the founder of Elastos Foundation. He is a technology industry veteran for over 30 years with 18 years of entrepreneurial experience and 8 years of operating system development experience at Microsoft. Mr. Chen launched Elastos Foundation in June 2017 to develop cryto-tokens and blockchain technologies. Mr. Chen founded Kortide in Beijing in 2000 to design and implement Elastos, an advanced operating system for a secure Internet, from scratch. Mr. Chen has a computer science B.Eng degree from Tsinghua University and a Master degree from the University of Illinois at Urbana-Champaign. Mr. Chen agreed to join Origin's board as announced in the Company's press release dated February 15, 2018 when the Company announced the cooperation with Elastos Foundation.

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Ms. Fei Wang became a director of Origin in February 2019. Ms. Wang currently serves as Global Finance Director of UTStarcom Holdings Corp. (“UTStarcom”), a provider of broadband equipment and solutions, which is listed on NASDAQ. Ms. Wang has served in various financial functions, including Investor Relation Director, since 2011. Prior to UTStarcom, Ms. Wang has had more than seven years financial experience in several publicly listed multinational companies based in the United States. Ms. Wang received her master’s degree in Financial Accountancy from the Rutgers University and her bachelor’s degree in Accounting from City University of New York. Ms. Wang is a member of the American Institute of Certified Public Accountants.

B. Compensation.

The aggregate cash compensation paid to our directors and executive officers as a group was RMB1.5 million (US$0.2 million) for the twelve months ended September 30, 2018. Options granted are stated in the chart found below.

2009 Performance Equity Plan

On April 22, 2010, our company adopted the 2009 Performance Equity Plan, under which we are able to issue equity awards with the right to acquire up to 1,500,000 ordinary shares to our directors, officers, employees, individual consultants and advisors. The main purpose of the plan was to provide an existing structure and renewable benefit plan for senior management and directors and others providing services to the company. We had outstanding awards for 70,000 options under the 2009 Plan at September 30, 2018. 

2014 Performance Equity Plan

On December 22, 2014, the company adopted the 2014 Performance Equity Plan, under which we are able to issue equity awards for up to 5,000,000 ordinary shares to our directors, officers, employees, individual consultants and advisors. The main purpose of the plan is to provide an existing structure and renewable benefit plan for senior management and directors and others providing services to the company. In addition to current equity awards to the directors and officers, we plan to expand our equity awards to a broader range of employees in order to align our employee incentives towards our stock performance. We had outstanding awards for 211,300 options under the 2014 Plan at September 30, 2018. 

Those awards held by the directors and officers are listed below.

Name	Ordinary Shares Underlying Outstanding Option		Exercise Price		Grant Date	Expiration Date
Gengchen Han		12,000	$	14.8 /Share	January 2, 2015	January 1,2020
		12,000	$	13.8 /Share	January 4, 2016	January 4, 2021
		12,000	$	20.7 /Share	January 3, 2017	January 2, 2022
		12,000	$	9.10 /Share	January 2, 2018	January 1, 2023
Michael Trimble		500	$	14.8 /Share	January 2, 2015	January 1,2020
		500	$	13.8 /Share	January 4, 2016	January 4, 2021
		2,000	$	20.7 /Share	January 3, 2017	January 2, 2022
		2,000	$	9.1 /share	January 2, 2018	January 1, 2023
James Chen		5,000	$	14.8 /Share	January 2, 2015	January 1,2020
		1,000	$	9.1 /Share	January 2, 2018	January 1,2023
		20,000	$	8.2 /Share	March 1, 2018	February 28,2023

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C. Board Practices.

Terms of directors and executive officers

Our directors are not subject to a specific term of office and hold office until the next annual meeting of shareholders or until such director’s earlier resignation, removal from office, death or incapacity. Any vacancy on the board of directors resulting from death, resignation, removal or other cause and any newly created directorship resulting from any increase in the authorized number of directors between meetings of shareholders may be filled either by the affirmative vote of a majority of all the directors then in office (even if less than a quorum) or by a resolution of shareholders.

Our officers are appointed by the board of directors and hold office until their successors are duly elected and qualified, but may be removed at any time, with or without cause, by resolution of directors. Any vacancy occurring in any office may be filled by resolution of directors.

Employment Agreements

Dr. Han has an employment agreement with us. The agreement currently has a term of three years commencing on January 1, 2018. Dr. Han is entitled to insurance benefits, five weeks’ vacation, a car and reimbursement of business expenses and, if necessary, relocation expenses. The agreement is terminable by Origin for death, disability and cause. Dr. Han may terminate the agreement and his employment for good reason, which includes Origin’s breach, the executive’s loss of his seat on the board of directors, and change of control of Origin. In the event of termination for good reason or without cause, the executive will receive compensation and benefits under his employment agreement through the earlier of two years from the date of termination or through the term of the agreement. The agreements contain provisions for the protection of confidential information and a three-year non-competition period within China.

Board committees 

Our board of directors has established an Audit Committee, a Compensation Committee and a Nominations Committee.

Audit Committee

The members of our Audit Committee are Fei Wang (chairman), Michael Trimble and Rong Chen. Our board of directors has determined that all of our Audit Committee members are independent directors within the meaning of Nasdaq Marketplace Rule 4200(a)(15) and meet the criteria for independence set forth in Rule 10A-3(b)(1) of the Securities Exchange Act of 1934.

The board of directors has determined that each of Ms. Fei Wang and Messrs. Michael Trimble and Rong Chen has an understanding of Generally Accepted Accounting Principles and financial statements, the ability to assess the general application of such principles in connection with our financial statements, including estimates, accruals and reserves, experience in analyzing or evaluating financial statements of similar breadth and complexity as our financial statements, an understanding of internal controls and procedures for financial reporting and an understanding of Audit Committee functions.

The board of directors believes that Ms. Wang qualifies as an “audit committee financial expert” within the meaning of all applicable rules. The board of directors believes that Ms. Wang has financial expertise because of her educational backgrounds and her extensive experience in financial reporting for private and public companies.

We adopted an Audit Committee charter, amended by the board of directors at the board meeting held on August 16, 2007, under which the Audit Committee is responsible for reviewing the scope, planning and staffing of the audit and preparation of our financial statements. This includes consultation with management, the auditors and other consultants and professionals involved in the preparation of the financial statements and reports. The Audit Committee is responsible for performing oversight of our relationship with our independent auditor. The Audit Committee also has a general compliance oversight role in assuring that our directors, officers and management comply with our code of ethics, reviews and approves related party transactions, deals with complaints regarding accounting, internal controls and auditing matters, and oversees compliance with accounting and legal requirements applicable to us.

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Pursuant to the terms of its charter, as amended, the Audit Committee’s responsibilities include, among other things:

· annually reviewing and reassessing the adequacy of the Audit Committee’s form of charter;

· reviewing our annual audited financial statements with our management and our independent auditors and the adequacy of our internal accounting controls;

· reviewing analyses prepared by management and independent auditors concerning significant financial reporting issues and judgments made in connection with the preparation of our financial statements;

· engaging of the independent auditor;

· reviewing the independence of the independent auditors;

· reviewing our auditing and accounting principles and practices with the independent auditor and reviewing major changes to our auditing and accounting principles and practices as suggested by the independent auditor or our management;

· appointment of the independent auditor; and

· approving professional services provided by the independent auditors, including the range of audit and non-audit fees.

The Audit Committee pre-approves the services to be provided by our independent auditors. The Audit Committee also reviews and recommends to the board of directors whether or not to approve transactions between us and any officer or director that occurs outside the ordinary course of business.

Compensation Committee

The members of our Compensation Committee are Rong Chen (chairman), Michael Trimble and Ms. Fei Wang. The Compensation Committee also administers our equity award plans, including the authority to make and modify awards under the 2009 and 2014 Performance Equity Plans. The current charter of the Compensation Committee, which was adopted March 16, 2007, provides that the committee is responsible for:

· reviewing and making recommendations to our board of directors regarding our compensation policies and forms of compensation provided to our directors, officers and other senior employees;

· reviewing and determining performance-based awards and compensation for our officers and other employees;

· reviewing and determining share-based compensation (including the 2009 and 2014 Performance Equity Plans) for our directors, officers, employees and consultants;

· administering our equity incentive plans (including the 2009 and 2014 Performance Equity Plans) in accordance with the terms thereof; and

· such other matters that are specifically delegated to the Compensation Committee by our board of directors from time to time.

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 Nominating Committee

Our Nominating Committee consists of Michael W. Trimble (chairman), Rong Chen and Fei Wang. The Nominating Committee is responsible for overseeing the selection of persons to be nominated to serve on our board of directors. The Nominating Committee will identify, evaluate and recommend candidates to become members of the Board of Directors with the goal of creating a balance of knowledge and experience.  The Nominating Committee is not a fully independent committee.

Pursuant to a vote by the board of directors taken at a board meeting held March 16, 2007, the Nominating Committee charter was amended. Pursuant to the terms of its charter, as amended, the Nominating Committee’s responsibilities include, among other things:

· actively seeking and evaluating qualified individuals to become new directors as needed;

· reviewing current directors’ suitability when their terms expire or one has a significant change in status;

· making recommendations with respect to succession planning for the co-chief executive officer and other officers; and

· such other matters that are specifically delegated to the Nominating Committee by our board of directors from time to time.

Summary of Significant Differences in Corporate Governance Practices for Purposes of Rule 5615 of the Nasdaq Marketplace Rules

We are incorporated under the laws of the British Virgin Islands. Our ordinary shares are registered with the SEC and are listed on the Nasdaq Global Select Market. As a result, our corporate governance framework is subject to laws of the British Virgin Islands, or BVI, the securities laws and regulations of the United States and the listing requirements of the Nasdaq Stock Market.

Under Rule 5615 of the Nasdaq Marketplace Rules, a foreign private issuer may follow its home country practice in lieu of the requirements of the Nasdaq Marketplace Rules. Rule 5605 requires U.S. domestic listed companies have a majority of independent directors on its board of directors. We are not required to have a majority of independent directors on our board of directors under BVI laws. However, currently, three of our five directors are independent directors under applicable Nasdaq rules.

Under Rule 5605 a U.S. domestic listed company is required to have a nominations committee and compensation committee. We are not required to have such committees under the BVI laws, and therefore are not required to have these committees under the Nasdaq rules. Notwithstanding the fact that they are not required, we do have these two committees, and follow the Nasdaq Marketplace rules in the independence requirements of the members.

Under Rule 5620, a U.S. domestic issuer must solicit proxies and provide proxy statements for all meetings of shareholders. There are no such mandatory requirements under BVI laws, and therefore, we are not required to hold an annual meeting of the shareholders. There were no specific items that our board of directors requested the shareholders to vote on.

Under Rule 5635, a US domestic listed company is required to obtain shareholder approval of equity award plans and issuances of equity securities in excess of certain amounts when at less than market or book value. There are no such mandatory requirements under BVI law. We do not plan to get shareholder approval for future increases in the 2009 Plan and 2014 Plan or for any other equity award plan approved by the directors in the future or for issuances of equity securities that exceed 20% of the outstanding shares of the Company if they are sold at less than market or book value.

We have filed documentation with Nasdaq exempting the company under those provisions that BVI law does not require. 

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D. Employees.

We currently have 59 employees, including management, managers and research and related personnel. All of our employees are located in China.

We offer our employees additional annual merit-based bonuses in accordance with the overall performance of our company, his or her department and the individual. We are required by applicable PRC regulations to contribute amounts approximate to 20%, 7.7%, 9.7%, 1%, 0.6% and 0.7%, of our employees’ aggregate salary to a pension contribution plan, a medical insurance plan, a housing fund, an unemployment insurance plan, a personal injury insurance plan and a maternity insurance plan, respectively, for our employees.

Our employees are not covered by any collective bargaining agreement. We believe that we have a good relationship with our employees.  

E. Share Ownership.

The following table sets forth information with respect to the beneficial ownership of our ordinary shares as of May 31, 2019, by each of our directors and executive officers who beneficially own our ordinary shares, and other principal shareholders.

	Shares Beneficially Owned  ( * )
	Number		Percentage of Total
Directors and Executive Officers:
Gengchen Han, Chairman of the Board and CEO (1)(2)		584,383		12.72	%
James Chen, Chief Financial Officer (1)(3)		80,895		1.76	%
Michael W. Trimble, Director (4)		31,000		0.67	%

* Beneficial ownership and percentage is determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended.

(1)       The business address of each of the individuals is c/o 21 Shengmingyuan Road, Changping District, Beijing, PRC 102206. See Item 6B. “Directors, Senior Management, and Employees – Compensation” for discussion of option included in the table granted under the 2009 and 2014 Performance Equity Plans.

(2)       The shares reported in the above table are held by Dr. Han through a personal holding company, Sinodream Limited, a company formed under the laws of the British Virgin Islands of which he is the sole shareholder, officer and director. Therefore, Dr. Han will have voting and dispositive authority over all the shares. Includes 48,000 shares that may be acquired under stock options held by Dr. Han.

(3)       Includes 26,000 shares that may be acquired under stock options held by Mr. Chen..

(4)       The business address of Mr. Trimble is 6159 Brandywine Drive, Johnston, IA 50131. Includes 5,000 shares that may be acquired under stock options held by Mr. Trimble.

None of the above shareholders have voting rights that differ from the voting rights of other shareholders.

A substantial number of the ordinary shares are held in “street name,” and the company believes that a large portion of these shares represent holdings of non-United States shareholders through brokers in non-United States jurisdictions. Because these holdings are in street name, the company cannot determine the actual number or jurisdictions in which these shares are held.

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ITEM 7 MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A Major shareholders.

Please refer to Item 6.E “Directors, Senior Management and Employees – Share Ownership.”

1. Related party transactions.

Stock Consignment Agreements

In order to comply with PRC regulations, we operate our business in China through our PRC Operating companies. We have entered into stock consignment agreements with our PRC Operating Companies other than Origin Biotechnology. The material provisions of these agreements are discussed under Item 4.C of this Annual Report.

Technical Service Agreements

All of the intellectual property rights of the Company are held by Origin Biotechnology pursuant to technology service agreements dated December 25, 2004. The material provision of the technology service agreements are discussed under Item 4.C of this Annual Report.

Corn Originator Agreement

Beijing Origin entered into this agreement with Trimble Genetics International LLC, or Trimble Genetics, a plant genetics research company. Michael W. Trimble, one of our directors, is the founder and president of Trimble Genetics and currently owns 100% of its equity interest. Under this agreement, Beijing Origin hires Trimble Genetics as its agent to test, promote, license and collect research fees on hybrids involving inbred lines of corn developed by Beijing Origin. Trimble Genetics retains fifty percent of such research fees and pays the remaining fifty percent to Beijing Origin. This agreement is immaterial in amount or significance.

Corn Inbred and Hybrid Transfer and Use Agreement

Beijing Origin entered into this agreement with Trimble Genetics on September 6, 2002. Under this agreement, Trimble Genetics provides corn inbreds and hybrids to Beijing Origin for experimental testing purposes. The agreement applies to all corn inbreds and hybrids transferred from Trimble Genetics to Beijing Origin previously, currently or in the future. If a hybrid from the testing proves to be marketable, the parties will negotiate a license agreement. If for any reason, it is not possible to conclude a license agreement, Beijing Origin agrees to return all remnant inbred seed and to destroy any inbreds or hybrids that may have originated from the material provided by Trimble Genetics. This agreement is immaterial in amount or significance.

New Corn Seed Liyu 35 Joint Development Agreement

Beijing Origin entered into three Joint Development agreements with Liyu on March 30, 2006 to jointly develop a new hybrid corn seed, Liyu 35. The proprietary right to the seed developed under this agreement belongs to Liyu but Beijing Origin has exclusive production and marketing rights to this variety of seed. The agreement has no fixed term or termination date, but the agreement automatically terminates if the seeds produced by Beijing Origin are less than 3 million kilograms for three consecutive years, subject to limited exceptions. The fees payable by Beijing Origin represent a percentage of revenues from the sale of the varieties and plus a flat fee.

Joint Development Agreements

Beijing Origin is a party to three joint development agreements with Corn Research Institute of Li County in Hebei Province, China, to develop new hybrid corn seeds. Corn Research Institute of Li County was incorporated as Liyu on May 2004, of which a 30% equity interest was owned by Yang Yasheng, one of our major shareholders and a former director. Yang Yasheng transferred his 30% interest to Beijing Origin on September 2004. On March 11, 2004, Corn Research Institute of Li County, Liyu and Beijing Origin entered into an agreement pursuant to which all the rights and obligations of Corn Research Institute of Li County under the three joint development agreements were assumed by Liyu after the dissolution of Corn Research Institute of Li County. In accordance with these joint development agreements, the parties agreed to jointly develop six varieties of new corn hybrid seeds, Liyu 26, Liyu 16, Liyu 6, Liyu 15, Li 168, and Liyu 35. The proprietary rights to the varieties of seeds developed under these agreements belongs to Corn Research Institute of Li County, now Liyu but Beijing Origin has exclusive right to production and marketing of these seeds. The fees payable by Beijing Origin represent a percentage of revenues from the sale of the varieties, and plus a flat fee with respect to Liyu 26 and Liyu 16. The agreements have no fixed term or termination date. The agreements may be terminated for breach by either party. We may terminate the agreements at any time, in effect, by not producing seeds, without penalty.

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Xinjiang Origin

In May 2011 Beijing Origin established Xinjiang Origin for seed production and distribution.  Beijing Origin invested RMB51 million for a 51% ownership of Xinjiang Origin.

Technology Transfer Agreement

Beijing Origin, or its predecessor, entered into this agreement with Henan Agriculture University in 1998. Henan Agriculture University currently owns a 2.04% equity interest in Beijing Origin. Under this agreement, the proprietary right to the new variety of seed, Yuyu 22, belongs to Henan Agriculture University. Beijing Origin has the right to propagate, produce and sell the new corn variety. The fee payable under this agreement is RMB20 per mu (unit of area equivalent to 0.164 of an acre) of seed production area per year. There is no fixed term or termination date of this agreement.

IT and Distribution Arrangements with Beijing Shihui Agricultural Development Co, Ltd.

Based in Beijing, China, Beijing Shihui Agricultural Development Co, Ltd (“Shihui”) was established in 2010 by the brother of the Company’s Chairman, Dr. Han Gengchen. As of the date of this report, Dr. Han’s son and brother are the principal shareholders of Shihui. Shihui is mainly engaged in crop seed sales, information technology services and internet operations. Shihui has been providing seed distributing services to Origin since 2014.

During fiscal year 2015, the Company acquired information systems of RMB2.0 million from Shihui.

During 2014 and 2015, Shihui took over Origin’s sales employees and sales centers in Hubei, Sichuan, Xuzhou, Shenyang, Zhengzhou, Hunan and Shandong. During the fiscal year 2016 and 2017, the sales to Shihui were RMB102.2 million and RMB183.5 million, respectively..

In September, 2017, the Company entered into a loan agreement with Shihui pursuant to which the Company provided a loan of RMB21 million to Shihui. The loan is unsecured, and does not have a defined due date. Shihui is a company of which the principal shareholders are the brother and son of Dr. Han Gengchen, our chairman of the board and of which the brother of Dr. Han is the principal executive officer.

From time to time, the Company has provided security to the institutional lenders of Shihui, none of which has been called upon by the lenders. Shihui is a company of which the principal shareholders are the brother and son of Dr. Han Gengchen, our chairman of the board and of which the brother of Dr. Han is the principal executive officer.

Shihui’s office is located at the headquarters of Origin in Beijing, China in fiscal year 2016. The rent charged to Shihui was RMB0.25 million.

Master Transaction Agreement with Beijing Shihui

On September 26, 2016, the Company entered into a definitive agreement and sold its proprietary China-based commercial corn seed production and distribution business for RMB421 million to Shihui. In September 2018, we terminated the second phase of the Master Transaction Agreement and retained our commercial seed business under Beijing Origin along with the headquarters building in Beijing. Shihui is a company of which the principal shareholders are the brother and son of Dr. Han Gengchen, our chairman of the board and of which the brother of Dr. Han is the principal executive officer.

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Partnership Agreement/Arrangement with Elastos Foundation

In February 2018, Origin entered into a partnership agreement/arrangement with Elastos Foundation (“Elastos”) to jointly develop an e-commerce agribusiness platform utilizing the blockchain technologies developed by Elastos. Mr. Rong Chen, a director of Origin, is the founder of Elastos.

Strategic Cooperation Agreement with Longhan

In October 2018, Origin entered into a strategic cooperation agreement with Longhan Investment Management Co., Ltd. ("Longhan") pursuant to which both companies will work together to start the commercialization of Integrated Saline-Alkaline Land Reclamation ("ISALR") technology in 2019, both in China and globally, and will integrate Longhan's technologies with Origin's seed technologies and agricultural business platform. Longhan is a major shareholder of Origin and the founder and CEO of Longhan is the President of Origin.

2. Interests of experts and counsel.

Not applicable.

ITEM 8. FINANCIAL INFORMATION

A. Consolidated states and other financial information.

We have appended consolidated financial statements filed as part of this Annual Report. See Item 18 “Financial Statements.”

Legal Proceedings 

There are legal proceedings against Linze Origin Seed Limited and Beijing Origin involving unsettled purchase orders to suppliers of Linze Origin Seed Limited. Pursuant to court order and mediations, the total compensation of these proceedings amounted to RMB23.7 million plus interests which primarily shall be settled by Linze Origin Seed Limited, and Beijing Origin shall be jointly and severally liable for these claims.

With respect to the legal proceedings and claims described above, such claims primarily shall be settled by Linze Origin Seed Limited and the Company's liability, if any, with respect to such claims, is uncertain. At present, the Company is unable to estimate a reasonably possible range of loss, if any, that may result from such litigation. If an unfavorable outcome were to occur in the litigation described above, the impact could be material to the Company's business, financial condition, or results of operations.

We may from time to time be subject to various legal or administrative proceedings, either as plaintiff or defendant, arising in the ordinary course of our business. Except otherwise disclosed in this report, we are not currently a party to, nor are we aware of, any legal proceeding, investigation or claim that, in the view of our management, is likely to materially and adversely affect our business, financial position or results of operations.

Dividend Policy

We have never declared or paid any dividends, nor do we have any present plan to pay any cash dividends on our ordinary shares in the foreseeable future. We currently intend to retain most, if not all, of our available funds and any future earnings to operate and expand our business.

Our board of directors by resolution may authorize payment of dividends if the directors are satisfied, on reasonable grounds, that Origin will, immediately after the distribution of dividends, (i) satisfy the solvency test as stipulated in Section 56 of the BVI Business Companies Act, (ii) any of our applicable contractual obligations and (iii) the laws of China. Even if our board of directors decides to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that the board of directors may deem relevant.

Significant changes.

No significant changes since September 30, 2018

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ITEM 9 THE OFFER AND LISTING

A. Offering and listing details.

Origin’s ordinary shares are listed on the Nasdaq Global Select Market where they trade under the SEED ticker symbol. On July 10, 2018, we effected a 1-for-10 reverse stock split of our authorized ordinary shares (the “Reverse Stock Split”).

B. Plan of distribution.

Not applicable.

C. Markets.

See Item 9.A above.

D. Selling shareholders.

Not applicable.

E. Dilution.

Not applicable.

F. Expense of the issue.

Not applicable.

ITEM 10. ADDITIONAL INFORMATION

A. Share capital.

Not applicable.

B. Memorandum and articles of association.

We incorporate by reference into this Annual Report the description of our amended and restated memorandum and articles of association contained in our 20-F annual report, as amended, initially filed with the Commission on July 14, 2006.

C. Material contracts.

We have not entered into any material contracts other than in the ordinary course of business and other than those described in Item 4, “Information on the Company,” Item 7, “Major Shareholders and Related Party Transactions,” filed (or incorporated by reference) as exhibits to this Annual Report or otherwise described or referenced in this Annual Report.

D. Exchange controls.

British Virgin Islands

There are no material exchange controls restrictions on payment of dividends, interest or other payments to the holders of our ordinary or preferred shares or on the conduct of our operations in the BVI, where we are incorporated. There are no material BVI laws that impose any material exchange controls on us or that affect the payment of dividends, interest or other payments to nonresident holders of our ordinary or preferred shares. BVI law and our amended and restated memorandum and articles of association impose no material limitations on the right of non-residents or foreign owners to hold or vote our ordinary or preferred shares.

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China

The core regulations governing foreign currency exchange in China are the Foreign Exchange Administration Regulations of the PRC, promulgated by the State Council in 1996 and amended in August 2008, or the Foreign Exchange Regulations. Under the Foreign Exchange Regulations, payments of current account items, such as profit distributions and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval from SAFE by complying with certain procedural requirements. By contrast, the conversion of Renminbi into other currencies and remittance of the converted foreign currency outside the PRC to pay capital expenses such as the repayment of foreign currency-denominated loans or foreign currency is to be remitted into China under the capital account or foreign currency such as a capital increase or foreign currency loans to our PRC subsidiaries, prior approval from or registration with appropriate government authorities is required.

Pursuant to the Circular of Further Improving and Adjusting Foreign Exchange Administration Policies on Foreign Direct Investment, or the SAFE Circular 59 promulgated by SAFE on November 19, 2012, which became effective on December 17, 2012 and was amended on May 4, 2015, the opening of various special purpose foreign exchange accounts, such as pre-establishment expenses accounts, foreign exchange capital accounts and guarantee accounts, the reinvestment of Renminbi proceeds by foreign investors in the PRC, and remittance of foreign exchange profits and dividends by a foreign invested enterprise to its foreign shareholders no longer require the approval or verification of SAFE, and multiple capital accounts for the same entity may be opened in different provinces, which was not possible previously.

In February 2015, SAFE promulgated the Circular of Further Simplifying and Improving the Policies of Foreign Exchange Administration Applicable to Direct Investment, or SAFE Circular 13, which became effective on June 1, 2015. The SAFE Circular 13 cancels the administrative approval requirements of foreign exchange registration of foreign direct investment and overseas direct investment, and simplifies the procedure of foreign exchange-related registration, and foreign exchange registrations of foreign direct investment and overseas direct investment will be handled by the banks designated by the foreign exchange authority instead of SAFE and its branches.

The Circular on the Reforming the Administration of Foreign Exchange Settlement of Capital of Foreign-invested Enterprises, or SAFE Circular 19 which was issued by the SAFE on March 30, 2015 and effective from June 1, 2015, allows foreign-invested enterprises, within the scope of business, to settle their foreign exchange capital on a discretionary basis according to the actual needs of their business operation and provides the procedures for foreign-invested enterprises to use Renminbi converted from foreign currency-denominated capital for equity investment.

In January 2017, SAFE promulgated the Circular on Further Improving Reform of Foreign Exchange Administration and Optimizing Genuineness and Compliance Verification, or SAFE Circular 3, which stipulates several capital control measures with respect to the outbound remittance of profit from domestic entities to offshore entities, including (i) under the principle of genuine transaction, banks shall check board resolutions regarding profit distribution, the original version of tax filing records and audited financial statements; and (ii) domestic entities shall hold income to account for previous years’ losses before remitting the profits. Further, according to SAFE Circular 3, domestic entities shall make detailed explanations of the sources of capital and utilization arrangements, and provide board resolutions, contracts and other proof when completing the registration procedures in connection with an outbound investment.

Offshore Investment

The Circular of the SAFE on Issues Concerning the Foreign Exchange Administration over the Overseas Investment and Financing and Round-trip Investment by Domestic Residents via Special Purpose Vehicles, or the SAFE Circular 37 and became effective on July 4, 2014 regulates foreign exchange matters in relation to the use of special purpose vehicles, or SPVs, by PRC residents or entities to seek offshore investment and financing or conduct round trip investment in China. Under the Circular 37, an SPV refers to offshore enterprises directly established or indirectly controlled by PRC residents for the purpose of seeking offshore equity financing or making offshore investment, using legitimate domestic or offshore assets or interests, while “round trip investment” refers to the direct investment in China by PRC residents or entities through SPVs, namely, establishing foreign-invested enterprises to obtain the ownership, control rights and management rights. SAFE Circular 37 requires that, before making contribution into an SPV, PRC residents or entities are required to register with the local SAFE branch.

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Pursuant to the SAFE Circular 13, PRC residents or entities can register with qualified banks instead of SAFE or its local branch in connection with their establishment of an SPV.

An amendment to registration or subsequent filing with qualified banks by such PRC resident is also required if there is a material change with respect to the capital of the offshore company, such as any change of basic information (including change of such PRC residents, change of name and operation term of the SPV), increases or decreases in investment amount, transfers or exchanges of shares, or mergers or divisions. Failure to comply with the registration procedures set forth in SAFE Circular 37 and SAFE Circular 13, misrepresent on or failure to disclose controllers of foreign-invested enterprise that is established through round-trip investment, may result in bans on the foreign exchange activities of the relevant onshore company, including the payment of dividends and other distributions to its offshore parent or affiliates, and may also subject relevant PRC residents to penalties under the Foreign Exchange Administration Regulations of the PRC.

E. Taxation.

The following is a general summary of certain material British Virgin Islands and U.S. federal income tax considerations. The discussion is not intended to be, nor should it be construed as, legal or tax advice to any existing or prospective shareholder. The discussion is based on laws and relevant interpretations thereof in effect as of the date hereof, all of which are subject to change or different interpretations, possibly with retroactive effect. The discussion does not address United States state or local tax laws, or tax laws of jurisdictions other than the British Virgin Islands and the United States.

Taxation in British Virgin Islands Taxation

The British Virgin Islands, or BVI, does not impose a tax on dividends paid by us to holders of our ordinary or preferred shares, nor does the BVI levy any capital gains or income taxes on us.

A holder of our ordinary or preferred shares who is not a resident of the BVI is exempt from the BVI income tax on dividends paid with respect to the ordinary or preferred shares. Holders of ordinary or preferred shares are not subject to the BVI income tax on gains realized on the sale or disposition of the ordinary or preferred shares.

Our ordinary and preferred shares are not subject to transfer taxes, stamp duties or similar charges in the BVI. However, as a business company, we are required to pay the BVI government an annual license fee based on the number of shares we are authorized to issue.

There is no income tax treaty or convention currently in effect between the United States and the BVI.

Taxation in China

We are a holding company incorporated in the BVI, which indirectly holds our equity interests in our PRC operating subsidiaries. The EIT Law and its implementation rules, both of which became effective as of January 1, 2008, provide that a PRC enterprise is subject to a standard income tax rate of 25%, and China-sourced income of foreign enterprises, such as dividends paid by a PRC subsidiary to its overseas parent, will normally be subject to PRC withholding tax at a rate of 10%, unless there are applicable treaties between the overseas parent’s jurisdiction of incorporation and China to reduce such rate.

According to the Notice Regarding Interpretation and Recognition of Beneficial Owners under Tax Treaties, the term “beneficial owner” refers to a person who has the right to own and dispose of the income and the rights or properties generated from the said income. The “beneficial owner” may be an individual, a company or any other organization which is usually engaged in substantial business operations. A conduit company is not a “beneficial owner.” The term “conduit company” refers to a company which is usually established for purposes of dodging or reducing taxes, and transferring or accumulating profits. Such a company is only registered in the country of domicile to satisfy the organizational form as required by law, but it does not engage in such substantial business operations as manufacturing, distribution and management.

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Under the EIT Law, an enterprise established outside of China with “de facto management bodies” within China is considered a resident enterprise and will normally be subject to an EIT of 25% on its global income. The implementing rules define the term “de facto management bodies” as “an establishment that exercises, in substance, overall management and control over the production, business, personnel, accounting, etc., of a Chinese enterprise.”

It remains unclear whether the PRC tax authorities would require or permit our overseas registered entities to be treated as PRC resident enterprises. We do not currently consider our company to be a PRC resident enterprise. However, if the PRC tax authorities determine that we are a “resident enterprise” for PRC enterprise income tax purposes, a number of unfavorable PRC tax consequences could follow. First, we may be subject to the enterprise income tax at a rate of 25% on our worldwide taxable income as well as PRC enterprise income tax reporting obligations. In our case, this would mean that income such as interest on offering proceeds and non-China source income would be subject to PRC enterprise income tax at a rate of 25%. Second, although under the EIT Law and its implementing rules dividends paid to us from our PRC subsidiaries would qualify as “tax-exempt income,” we cannot guarantee that such dividends will not be subject to a 10% withholding tax, as the PRC foreign exchange control authorities, which enforce the withholding tax, have not yet issued guidance with respect to the processing of outbound remittances to entities that are treated as resident enterprises for PRC enterprise income tax purposes. Finally, it is possible that future guidance issued with respect to the new “resident enterprise” classification could result in a situation in which a 10% withholding tax is imposed on dividends we pay to our non-PRC shareholders and with respect to gains derived by our non-PRC shareholders from transferring our shares.

United States Federal Income Taxation

This discussion describes the material U.S. federal income tax consequences of the purchase, ownership and disposition of our ordinary shares. This discussion does not address any aspect of U.S. federal gift or estate tax, or the state, local or foreign tax consequences of an investment in our ordinary shares. This discussion applies to you only if you hold and beneficially own our ordinary shares as capital assets for tax purposes. This discussion does not apply to you if you are a member of a class of holders subject to special rules, such as:

· dealers in securities or currencies;

· traders in securities that elect to use a mark-to-market method of accounting for securities holdings;

· banks or other financial institutions;

· insurance companies;

· tax-exempt organizations;

· partnerships and other entities treated as partnerships for U.S. federal income tax purposes or persons holding ordinary shares through any such entities;

· persons that hold ordinary shares as part of a hedge, straddle, constructive sale, conversion transaction or other integrated investment;

· U.S. Holders (as defined below) whose functional currency for tax purposes is not the U.S. dollar;

· persons liable for alternative minimum tax; or

· persons who actually or constructively own 10% or more of the total combined voting power of all classes of our shares (including ordinary shares) entitled to vote.

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This discussion is based on the U.S. Internal Revenue Code of 1986, as amended, which we refer to in this discussion as the Code, its legislative history, existing and proposed regulations promulgated there under, published rulings and court decisions, all as currently in effect. These laws are subject to change, possibly on a retroactive basis. In addition, this discussion relies on our assumptions regarding the value of our shares and the nature of our business over time.

You should consult your own tax advisor concerning the particular U.S. federal income tax consequences to you of the purchase, ownership and disposition of our ordinary shares, as well as the consequences to you arising under the laws of any other taxing jurisdiction.

For purposes of the U.S. federal income tax discussion below, you are a “U.S. Holder” if you beneficially own ordinary shares and are:

· a citizen or resident of the United States for U.S. federal income tax purposes;

· a corporation, or other entity taxable as a corporation, that was created or organized in or under the laws of the United States or any political subdivision thereof;

· an estate the income of which is subject to U.S. federal income tax regardless of its source; or

· a trust if (a) a court within the United States is able to exercise primary supervision over its administration and one or more U.S. persons have the authority to control all substantial decisions of the trust, or (b) the trust has a valid election in effect to be treated as a U.S. person.  

If you are not a U.S. person, please refer to the discussion below under “Non-U.S. Holders.”

For U.S. federal income tax purposes, income earned through a foreign or domestic partnership or other flow-through entity is attributed to its owners. Accordingly, if a partnership or other flow-through entity holds ordinary shares, the tax treatment of the holder will generally depend on the status of the partner or other owner and the activities of the partnership or other flow-through entity.

U.S. Holders

Dividends on ordinary shares

Subject to the “Passive Foreign Investment Company” discussion below, if we make distributions and you are a U.S. Holder, the gross amount of any distributions you receive on your ordinary shares will generally be treated as dividend income if the distributions are made from our current or accumulated earnings and profits, calculated according to U.S. federal income tax principles. Dividends will generally be subject to U.S. federal income tax as ordinary income on the day you actually or constructively receive such income. However, if you are an individual and have held your ordinary shares for a sufficient period of time, dividend distributions on our ordinary shares will generally constitute qualified dividend income taxed at a preferential rate as long as our ordinary shares continue to be readily tradable on the Nasdaq Global Select Market and certain other conditions apply. You should consult your own tax adviser as to the rate of tax that will apply to you with respect to dividend distributions, if any, you receive from us.

We do not intend to calculate our earnings and profits according to U.S. tax accounting principles. Accordingly, distributions on our ordinary shares, if any, will generally be taxed to you as dividend distributions for U.S. tax purposes. Even if you are a corporation, you will not be entitled to claim a dividends-received deduction with respect to distributions you receive from us. Dividends generally will constitute foreign source passive income for U.S. foreign tax credit limitation purposes.

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Sales and other dispositions of ordinary shares

Subject to the “Passive Foreign Investment Company” discussion below, when you sell or otherwise dispose of ordinary shares, you will generally recognize capital gain or loss in an amount equal to the difference between the amount realized on the sale or other disposition and your adjusted tax basis in the ordinary shares, both as determined in U.S. dollars. Your adjusted tax basis will generally equal the amount you paid for the ordinary shares. Any gain or loss you recognize will be long-term capital gain or loss if your holding period in our ordinary shares is more than one year at the time of disposition. If you are an individual, any such long-term capital gain will be taxed at preferential rates. Your ability to deduct capital losses will be subject to various limitations.

Passive Foreign Investment Company

If we were a PFIC, in any taxable year in which you hold our ordinary shares, as a U.S. Holder, you would generally be subject to adverse U.S. tax consequences, in the form of increased tax liabilities and special U.S. tax reporting requirements.

We will be classified as a PFIC in any taxable year if either: (1) the average percentage value of our gross assets during the taxable year that produce passive income or are held for the production of passive income is at least 50% of the value of our total gross assets or (2) 75% or more of our gross income for the taxable year is passive income (such as certain dividends, interest or royalties). For purposes of the first test: (1) any cash, cash equivalents, and cash invested in short-term, interest-bearing debt instruments or bank deposits that is readily convertible into cash, will generally count as producing passive income or held for the production of passive income and (2) the average value of our gross assets is calculated based on our market capitalization. We will be treated as owning our proportionate share of the assets and earning our proportionate share of the income of any other corporation in which we own, directly or indirectly, 25% or more (by value) of the stock.

We believe that we were not a PFIC for the taxable year 2018. However, there can be no assurance that we will not be a PFIC for that taxable year and/or later taxable years, as PFIC status is re-tested each year and depends on the facts in such year. For example, we would be a PFIC for the taxable year 2017 if the sum of our average market capitalization, which is our share price multiplied by the total number of our outstanding shares, and our liabilities over that taxable year was not more than twice the value of our cash, cash equivalents, and other assets producing passive income or held for production of passive income. We could also be a PFIC for any taxable year if the gross income that we and our subsidiaries earn from passive investments is substantial in comparison with the gross income from our business operations.

If we were a PFIC, you would generally be subject to additional taxes and interest charges on certain “excess distributions” we make and on any gain realized on the disposition or deemed disposition of your ordinary shares, regardless of whether we continue to be a PFIC in the year in which you receive an “excess distribution” or dispose of or are deemed to dispose of your ordinary shares. Distributions in respect of your ordinary shares during a taxable year would generally constitute “excess distributions” if, in the aggregate, they exceed 125% of the average amount of distributions in respect of your ordinary shares over the three preceding taxable years or, if shorter, the portion of your holding period before such taxable year.

To compute the tax on “excess distributions” or any gain, (1) the “excess distribution” or the gain would be allocated ratably to each day in your holding period, (2) the amount allocated to the current year and any tax year before we became a PFIC would be taxed as ordinary income in the current year, (3) the amount allocated to other taxable years would be taxable at the highest applicable marginal rate in effect for that year, and (4) an interest charge at the rate for underpayment of taxes for any period described under (3) above would be imposed with respect to any portion of the “excess distribution” or gain that is allocated to such period. In addition, if we were a PFIC, no distribution that you receive from us would qualify for taxation at the preferential rate discussed in the “Dividends on ordinary shares” section above.

If we were a PFIC in any year, and if you are a U.S. Holder, you would be required to make an annual return on IRS Form 8621 regarding your ordinary shares. However, we do not intend to generate, or share with you, information that you might need to properly complete IRS Form 8621. You should consult with your own tax adviser regarding reporting requirements with regard to your ordinary shares.

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If we were a PFIC in any year, you would generally be able to avoid the “excess distribution” rules described above by making a timely so-called “mark-to-market” election with respect to your ordinary shares provided our ordinary shares are “marketable.” Our ordinary shares will be “marketable” as long as they remain regularly traded on the Nasdaq Global Select Market. If you made this election in a timely fashion, you would generally recognize as ordinary income or ordinary loss the difference between the fair market value of your ordinary shares on the first day of any taxable year and their value on the last day of that taxable year. Any ordinary income resulting from this election would generally be taxed as ordinary income rates and would not be eligible for the reduced rate of tax applicable to qualified dividend income. Any ordinary losses would be limited to the extent of the net amount of previously included income as a result of the mark-to-market election, if any. Your basis in the ordinary shares would be adjusted to reflect any such income or loss. You should consult with your own tax adviser regarding potential advantages and disadvantages to you of making a “mark-to-market” election with respect to your ordinary shares. Separately, if we were a PFIC in any year, you would be able to avoid the “excess distribution” rules by making a timely election to treat us as a so-called “Qualified Electing Fund”, or QEF. You would then generally be required to include in gross income for any taxable year (1) as ordinary income, your pro rata share of our ordinary earnings for the taxable year, and (2) as long-term capital gain, your pro rata share of our net capital gain for the taxable year. However, we do not intend to provide you with the information you would need to make or maintain a QEF election and you will, therefore, not be able to make or maintain such an election with respect to your ordinary shares.

Non-U.S. Holders

If you beneficially own ordinary shares and are not a U.S. Holder for U.S. federal income tax purposes, or a Non-U.S. Holder, you generally will not be subject to U.S. federal income tax or withholding on dividends received from us with respect to ordinary shares unless that income is considered effectively connected with your conduct of a U.S. trade or business and, if an applicable income tax treaty so requires, as a condition for you to be subject to U.S. federal income tax with respect to income from your ordinary shares, such dividends are attributable to a permanent establishment that you maintain in the United States. You generally will not be subject to U.S. federal income tax, including withholding, on any gain realized upon the sale or exchange of ordinary shares, unless:

· that gain is effectively connected with the conduct of a U.S. trade or business and, if an applicable income tax treaty so requires as a condition for you to be subject to U.S. federal income tax with respect to income from your ordinary shares, such gain is attributable to a permanent establishment that you maintain in the United States; or

· you are a nonresident alien individual and are present in the United States for at least 183 days in the taxable year of the sale or other disposition and either (1) your gain is attributable to an office or other fixed place of business that you maintain in the United States or (2) you have a tax home in the United States.

If you are engaged in a U.S. trade or business, unless an applicable tax treaty provides otherwise, the income from your ordinary shares, including dividends and the gain from the disposition of ordinary shares, that is effectively connected with the conduct of that trade or business will generally be subject to the rules applicable to U.S. Holders discussed above. In addition, if you are a corporation, you may be subject to an additional branch profits tax at a rate of 30% or any lower rate under an applicable tax treaty.

U.S. information reporting and backup withholding rules

In general, dividend payments with respect to the ordinary shares and the proceeds received on the sale or other disposition of those ordinary shares may be subject to information reporting to the IRS and to backup withholding (currently imposed at a rate of 28%). Backup withholding will not apply, however, if you (1) are a corporation or come within certain other exempt categories and, when required, can demonstrate that fact or (2) provide a taxpayer identification number, to certify as to no loss of exemption from backup withholding and otherwise comply with the applicable backup withholding rules. To establish your status as an exempt person, you will generally be required to provide certification on IRS Form W-9, W-8BEN or W-8ECI, as applicable. Any amounts withheld from payments to you under the backup withholding rules will be allowed as a refund or a credit against your U.S. federal income tax liability, provide that you furnish the required information to the IRS.

HOLDERS OF OUR ORDINARY SHARES SHOULD CONSULT WITH THEIR OWN TAX ADVISORS REGARDING THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES RESULTING FROM PURCHASING, HOLDING OR DISPOSING OF THE ORDINARY SHARES, INCLUDING THE APPLICABILITY AND EFFECT OF THE TAX LAWS OF ANY STATE, LOCAL OR FOREIGN JURISDICTION AND INCLUDING ESTATE, GIFT, AND INHERITANCE LAWS.

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F. Dividends and paying agents.

Not applicable.

G. Statement by experts.

Not applicable.

H. Documents on display.

We have filed this Annual Report on Form 20-F with the SEC under the Securities Exchange Act of 1934, as amended, or the Exchange Act. Statements made in this Annual Report as to the contents of any document referred to are not necessarily complete. With respect to each such document filed as an exhibit to this Annual Report, reference is made to the exhibit for a more complete description of the matter involved, and each such statement shall be deemed qualified in its entirety by such reference.

We are subject to the informational requirements of the Exchange Act as a foreign private issuer and file reports and other information with the SEC. Reports and other information filed by us with the SEC, including this Annual Report on Form 20-F, may be inspected and copied at the public reference room of the SEC at 450 Fifth Street N.W. Washington D.C. 20549.

You can also obtain copies of this Annual Report on Form 20-F by mail from the Public Reference Section of the SEC, 450 Fifth Street, N.W., Washington D.C. 20549, at prescribed rates. Additionally, copies of this material may be obtained from the SEC’s Internet site at http://www.sec.gov. The SEC’s telephone number is 1-800-SEC-0330.

I. Subsidiaries information.

See Item 4. “Information on the Company, Subpart C – Organizational Structure.”

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest rate risk

Our significant interest-bearing financial liabilities are bank borrowings. Current portion of long-term borrowings account for 100% of total borrowings as of September 30, 2018. Our interest rate risk arises primarily from long-term borrowings. During the year ended September 30, 2018, all of our long-term borrowings were issued at variable rates, hence exposing us to cash flow interest rate risk which is partially offset by cash held at variable rates.

Our exposure to market rate risk for changes in interest rates also relates to the interest income generated by excess cash invested in short term money market accounts and certificates of deposit. We have not used derivative financial instruments in our investment portfolio. Interest earning instruments carry a degree of interest rate risk. We have not been exposed nor do we anticipate being exposed to material risks due to changes in interest rates. However, our future interest income may fall short of expectations due to changes in interest rates.

Foreign currency risk

Substantially all our revenues and expenses are denominated in Renminbi and a substantial portion of our cash is kept in Renminbi, but a portion of our cash is also kept in U.S. dollars. Although we believe that, in general, our exposure to foreign exchange risks should be limited, the value of our shares will be affected by the foreign exchange rate between U.S. dollars and Renminbi. For example, to the extent that we need to convert U.S. dollars into Renminbi for our operational needs and the Renminbi appreciate against the U.S. dollar at that time, our financial position and the price of our shares may be adversely affected. Conversely, if we decide to convert our Renminbi into U.S. dollars for the purpose of declaring dividends on our shares or otherwise and the U.S. dollar appreciates against the Renminbi, the U.S. dollar equivalent of our earnings in China would be reduced.

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We have recorded RMB0.5 million (US$0.1 million) of foreign exchange gain in our net income for the twelve months ended September 30, 2018, due to fluctuations in the currency exchange rate. The PRC government may further readjust the current rate at which Renminbi-U.S. dollar exchanges are exchanged, as well as re-evaluate its policy of using a fixed-rate regime to a basket of currencies govern foreign currency transactions, although the PRC government has not committed itself to take any such action currently. Since we have not engaged in any hedging activities, we may experience economic loss as a result of any foreign currency exchange rate fluctuations.

Inflation

In recent years, China has not experienced significant inflation, and thus inflation has not had a significant effect on our business during the past three years. According to the China Statistical Bureau, China’s overall national inflation rate, as represented by the general consumer price index, was approximately 1.9%, 1.5% and 3.13%in the fiscal year ended September 30, 2016, 2017 and 2018, respectively. Sustained or increased inflation in China could have an adverse impact on China’s economy, which could affect demand for our products or services or increase our cost of services or operating expenses. As we have not previously operated during a period of significant inflation, we cannot predict with confidence the effect that such inflation may have on our business.  

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not Applicable.

PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

Not Applicable.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

The rights of securities holders have not been materially changed during the period covered by this Annual Report.

ITEM 15. CONTROLS AND PROCEDURES

(a)          Disclosure Controls and Procedures: As of September 30, 2018 (the “Evaluation Date”), the Company conducted an evaluation (under the supervision and participation of the Company’s management including the Chief Executive Officer and the Chief Financial Officer, pursuant to Rule 13a-15 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) of the effectiveness of the design and operation of the Company's disclosure controls and procedures. We concluded that the Company’s disclosure controls and procedures as of September 30, 2018 were ineffective as management has identified a material weakness which is detailed in the accompanying Item 15(b), Report of Origin’s Management on Internal Control over Financial Reporting.

(b)          Report of Origin’s Management on Internal Control over Financial Reporting: Origin’s Board of Directors and management are responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control system is designed to provide reasonable assurance to the Company’s management and Board of Directors regarding the reliability of financial reporting and the preparation and fair presentation of its published consolidated financial statements. 

All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective may not provide or detect misstatements and can only provide reasonable assurances with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

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Origin’s management assessed the effectiveness of the Company’s internal control over financial reporting as of September 30, 2018. In making this assessment, it used the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on the evaluation under these criteria, the management identified a material weakness in the Company’s internal control over financial statement closing process, and as a result, management concluded that the Company’s internal control over financial reporting was not effective as of September 30, 2018.

Management is aware of the following material weakness in internal control over financial reporting:

Lack of sufficient qualified financial reporting and accounting personnel with an appropriate level of expertise to properly address complex accounting issues under U.S. GAAP, and to prepare and review our consolidated financial statements and related disclosures to fulfill U.S. GAAP and Securities and Exchange Commission financial reporting requirements on a timely basis, resulted from staff turnover during the fiscal year 2018. During the course of the audit for fiscal year 2018, BDO China Shu Lun Pan Certified Public Accountants LLP, our independent registered public accounting firm, has corrected the misstatements relating to accounts and disclosures, in aggregate, material to the consolidated financial statements for the year ended September 30, 2018.

Management has plans to address these identified issues by seeking to expand its accounting staff to address the issues related to internal controls over financial reporting, under the leadership of the new Chief Financial Officer. Additionally, under the leadership of the new Chief Financial Officer, the existing controls and procedures will be reviewed and steps will be taken to return the financial reporting to its former efficiencies using the reviewed controls and procedures. There is no assurance, however, that the Company will have a full complement of accounting personnel to provide for a complete level of risk management for a public company given the restrictions on capital and the smaller size of the Company operations. Management will monitor its controls and procedures periodically to evaluate this situation and report to the registered public accounting firm to the Company about this condition.

(c)           Report of Independent Registered Public Accounting Firm

This annual report does not include an attestation report of the company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm.

ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT.

The board of directors believes that Ms. Fei Wang, a member of our Audit Committee, meets the criteria for an “audit committee financial expert” as established by the SEC and is an independent director.

Ms. Wang will not be deemed an “expert” for any purpose, including, without limitation, for purposes of Section 11 of the Securities Act of 1933, as amended, as a result of being designated or identified as an audit committee financial expert. The designation or identification of Ms. Wang as an audit committee financial expert does not impose on him any duties, obligations or liability that are greater than the duties, obligations and liability imposed on him as a member of our Audit Committee and board of directors in the absence of such designation or identification. The designation or identification of Ms. Wang as an audit committee financial expert does not affect the duties, obligations or liability of any other member of our Audit Committee or board of directors, and Ms. Wang is determined to be independent director.

ITEM 16B. CODE OF ETHICS.

On January 18, 2007, our board of directors adopted a code of ethics for senior executive and financial officers, including our chief executive officer and our principal financial officer (i) to promote the honest and ethical conduct of our senior executive and financial officers, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships, (ii) to promote full, fair, accurate, timely and understandable disclosure in periodic reports required to be filed with or submitted to the SEC and in other public communications by us; (iii) to promote compliance with all applicable laws, rules and regulations that apply to us and our senior executive and financial officers; (iv) to deter wrongdoing; and (v) to promote prompt internal reporting of breaches of, and accountability for adherence to, this code. A copy of the code of ethics is filed as an exhibit to this Annual Report by incorporation by reference.

70

On January 18, 2007, our board of directors also adopted a code of conduct for our employees, including directors and officers. The purpose of this code of conduct is to provide a summary of certain of our key policies and procedures and to help ensure lawful and ethical conduct. A copy of the code of conduct is filed as an exhibit to this Annual Report by incorporation by reference.

ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

(a) Audit Fees.

The aggregate fees billed for professional services rendered by BDO China Shu Lun Pan Certified Public Accountants LLP in connection with the audit of the consolidated financial statements for the fiscal year ended September 30, 2018, and for the audits of internal controls over financial reporting and the consolidated financial statements as of and for the fiscal years ended September 30, 2017 and 2018 were RMB2.0 million and RMB1.3 million (US$0.2 million), respectively.

(b) Audit - Related Fees.

The aggregate fees billed for professional services rendered by BDO China Shu Lun Pan Certified Public Accountants LLP for the performance of agreed-upon procedures on the quarterly financial statements during the year ended September 30, 2017 and 2018 were RMB0.19 million and RMBnil (US$nil), respectively. We also incurred fees of RMB0.53 million during the year ended September 30, 2017 to BDO China Shu Lun Pan Certified Public Accountants LLP for their consent to incorporation by reference to the prior years’ auditors’ reports in our Registration Statement on Form F-3 and agreed-upon procedures on the financial information in the proxy statement for the use at the extraordinary general meeting of shareholders held on April 13, 2017.

(c) Tax Fees.

We did not enter into any engagement during the fiscal years ended September 30, 2017 or 2018 for professional services rendered by our principal accountant for tax compliance, tax advice or tax planning.

(d) All Other Fees.

No fees were billed in either of the last two fiscal years for products and services provided by our principal accountant, other than the services reported in paragraphs (a) through (b) of this Item 16C for the fiscal year ended September 30, 2017 and 2018.

(e) Audit Committee Pre-Approval Policies and Procedures.

Our Audit Committee pre-approves all auditing services and permitted non-audit services to be performed for us by our independent auditor, including the fees and terms thereof (subject to the de minimums exceptions for non-audit services described in Section 10A(i)(l)(B) of the Exchange Act that are approved by our Audit Committee prior to the completion of the audit).

(f) Not applicable.

71

ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES. 

We have been granted an exemption from the applicable listing standards for the Audit Committee of our board of directors. See Item 6, Subpart C – Summary of Significant Differences in Corporate Governance Procedures for an explanation of the exemptions from the listing standards of The Nasdaq Stock Market listing standards that apply to the company as a foreign private issuer.

ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS. 

None.

ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT.

Not Applicable.

ITEM 16G. CORPORATE GOVERNANCE.

As a foreign private issuer (“FPI”) whose securities are listed on the Nasdaq Global Market, we are permitted to follow certain home country corporate governance practices instead of the requirements of the Nasdaq Marketplace Rules (the “Nasdaq Rules”) pursuant to Nasdaq Rule 5615, which provides for an exemption from compliance with the Nasdaq Rule 5600 Series. We have provided to Nasdaq the necessary documentation to afford the Company these exemptions. See Item 6, Subpart C – Summary of Significant Differences in Corporate Governance Procedures for purposes of Rule 5615 of the Nasdaq Marketplace Rules.

PART III

ITEM 17. FINANCIAL STATEMENTS 

We have provided financial statements pursuant to Item 18.

ITEM 18. FINANCIAL STATEMENTS

The following financial statements are filed as part of this annual report on Form 20-F.

ITEM 19. EXHIBITS

Index to Exhibits

Exhibit
Number	Description
1.1	Memorandum and Articles of Association of Origin Agritech Limited re-registered under the new Business Companies Act of the British Virgin Islands as of July 10, 2006 (Incorporated by reference to Exhibit 1.1 of our Annual Report 20-F (file no. 000-51576) filed with the Securities and Exchange Commission on July 14, 2006.
4.1	2005 Performance Equity Plan (Incorporated by reference to Annex D of the proxy statement/prospectus included in our Registration Statement S-4/A (file no. 333-124709) filed with the Securities and Exchange Commission on September 27, 2005).
4.2	2009 Performance Equity Plan (Incorporated by reference to Exhibit 4.1 of our Registration Statement on Form S-8 (file no. 333-166226) filed with the Securities and Exchange Commission on April 22, 2010).
4.3	Technical Service Agreement between Origin Biotechnology and Beijing Origin (Incorporated by reference to Exhibit 10.14 of our Registration Statement S-4/A (file no. 333-124709) filed with the Securities and Exchange Commission on August 22, 2005).

72

4.4	Technical Service Agreement between Origin Biotechnology and Henan Origin (Incorporated by reference to Exhibit 10.15 of our Registration Statement S-4/A (file no. 333-124709) filed with the Securities and Exchange Commission on August 22, 2005).
4.5	Form of Stock Consignment Agreement (Incorporated by reference to Exhibit 10.17 of our Registration Statement S-4/A (file no. 333-124709) filed with the Securities and Exchange Commission on August 22, 2005).
4.6	Technology Transfer Agreement between Henan Agriculture University and Beijing Origin (YuYu22) (Incorporated by reference to Exhibit 10.27 of our Registration Statement S-4/A (file no. 333-124709) filed with the Securities and Exchange Commission on August 22, 2005).
4.7	Joint Development agreement with Corn Research Institute of Li County (1st Agreement) (Incorporated by reference to Exhibit 10.28 of our Registration Statement S-4/A (file no. 333-124709) filed with the Securities and Exchange Commission on August 22, 2005).
4.8	Joint Development Agreement with Corn Research Institute of Li County (2nd Agreement) (Incorporated by reference to Exhibit 10.29 of our Registration Statement S-4/A (file no. 333-124709) filed with the Securities and Exchange Commission on September 16, 2005).
4.9	Equity Transfer Agreement between Beijing Origin and Jilin Academy of Agriculture Science dated as of December 6, 2005 (Incorporated by reference to Exhibit 4.17 of our Annual Report 20-F (file no. 000-51576) filed with the Securities and Exchange Commission on July 14, 2006).
4.10	Equity Transfer Agreement between Beijing Origin and China National Center for Biotechnology Development dated as of December 28, 2004 (Incorporated by reference to Exhibit 4.18 of our Annual Report 20-F (file no. 000-51576 ) filed with the Securities and Exchange Commission on July 14, 2006)
4.11	New Corn Seed Liyu 35 Joint Development Agreement between Beijing Origin and Shijiazhuang Liyu Technology Development Co., Ltd. dated as of March 30, 2006 (Incorporated by reference to Exhibit 4.20 of our Annual Report 20-F (file no. 000-51576 ) filed with the Securities and Exchange Commission on July 14, 2006).
4.12	Joint Development Agreement between Beijing Origin and Corn Research Institute of Li County dated January 31, 2002 (Incorporated by reference to Exhibit 4.21 of our Annual Report 20-F (file no. 000-51576) filed with the Securities and Exchange Commission on July 14, 2006).

4.13	Joint Development Agreement between Beijing Origin and Corn Research Institute of Li County dated January 9, 2003 (Incorporated by reference to Exhibit 4.22 of our Annual Report 20-F (file no. 000-51576) filed with the Securities and Exchange Commission on July 14, 2006).
4.14	2014 Performance Equity Plan (Incorporated by reference to Exhibit 4.16 of our Annual Report 20-F (file no. 000-51576) filed with the Securities and Exchange Commission on January 12, 2015),
4.15*	Investment Agreement between the Registrant and Longhan Investment Management, Co., Ltd.
8.1*	List of Subsidiaries
11.1	Code of Ethics (Incorporated by reference to Exhibit 11.1 of our Annual Report 20-F (file no. 000-51576) filed with the Securities and Exchange Commission on February 15, 2007).
11.2	Code of Conduct (Incorporated by reference to Exhibit 11.2 of our Annual Report 20-F (file no. 000-51576) filed with the Securities and Exchange Commission on February 15, 2007).

73

12.1*	CEO Certification Pursuant to Rule 13a-14(a) (17 CFR 240.13a-14(a)) (17 CFR 240.13a-14(a)) or Rule 15d-1(a) (17 CFR 240.15d-14(a))
12.2*	CFO Certification Pursuant to Rule 13a-14(a) (17 CFR 240.13a-14(a)) or Rule 15d-1(a) (17 CFR 240.15d-14(a))
13.1*	CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
13.2*	CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
15.1*	Consent of BDO China Shu Lun Pan Certified Public Accountants LLP to incorporation of its report on the Registrant’s consolidated financial statements for fiscal years ended 2016, 2017 and 2018 into Registrant's Registration Statements on Form S-8 (#333-202947, #333-166226 and #333-145865)
101.INS*	XBRL Instance Document.
101.SCH*	XBRL Taxonomy Extension Schema Document.
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document.

* Filed herewith.

74

SIGNATURE

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this Annual Report on its behalf.

Date: June 3, 2019	ORIGIN AGRITECH LIMITED
	/S/ Gengchen Han
	Name:	Gengchen Han
	Title:	Chief Executive Officer

75

ORIGIN AGRITECH LIMITED

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

CONTENTS	PAGE
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	F - 2
CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 2017 AND 2018	F - 3
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME FOR THE YEARS ENDED SEPTEMBER 30, 2016, 2017 AND 2018	F - 4
CONSOLIDATED STATEMENTS OF EQUITY FOR THE YEARS ENDED SEPTEMBER 30, 2016, 2017 AND 2018	F - 5
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED SEPTEMBER 30, 2016, 2017 AND 2018	F - 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	F - 8

F-1

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of

Origin Agritech Limited

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Origin Agritech Limited and subsidiaries and variable interest entities (the “Company”) as of September 30, 2017 and 2018, the related consolidated statements of income and comprehensive income, equity, and cash flows for each of the three years in the period ended September 30, 2018, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at September 30, 2017 and 2018, and the results of their operations and their cash flows for each of the three years in the period ended September 30, 2018, in conformity with accounting principles generally accepted in the United States of America.

Going Concern Uncertainty

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ BDO China Shu Lun Pan Certified Public Accountants LLP

We have served as the Company's auditor since 2011.

Shenzhen, The People’s Republic of China

June 3, 2019

F-2

ORIGIN AGRITECH LIMITED

CONSOLIDATED BALANCE SHEETS

(In thousands, except number of share and per share data)

	2017			2018			2018
	RMB'000			RMB'000			US$'000
ASSETS
Current assets:
Cash and cash equivalents		3,245			1,990			289
Due from related parties (note 3)		55,940			129,506			18,826
Accounts receivable		24			-			-
Advances to suppliers (note 5)		5,298			1,188			173
Inventories (note 6)		23,226			81,947			11,912
Other current assets (note 7)		1,326			247			33
Total current assets		89,059			214,878			31,233
Land use rights, net (note 8)		19,108			16,564			2,408
Plant and equipment, net (note 9)		177,317			172,748			25,112
Long-term investment (note 10)		18,721			16,347			2,376
Acquired intangible assets, net (note 11)		15,739			8,362			1,216
Other assets (note 12)		4,196			1,202			175
Total assets (including amounts of the consolidated VIEs without recourse to the Company of RMB312,578 and RMB423,533 as of September 30, 2017 and 2018, respectively)		324,140			430,101			62,520
LIABILITIES AND EQUITY
Current liabilities:
Short-term borrowings (note 13)		15,000			-			-
Current portion of long-term borrowings (note 13)		35,504			78,235			11,373
Accounts payable		1,454			7,955			1,156
Due to growers		6,535			7,984			1,161
Due to related parties (note 3)		11,592			293,732			42,699
Advances from customers		1,866			6,338			921
Notes payable (note 14)		8,335			-			-
Other payables and accrued expenses (note 15)		31,178			37,927			5,513
Current liabilities of discontinued operations (note 4)		22,640			-			-
Total current liabilities		134,104			432,171			62,823
Long-term borrowing (note 13)		56,769			-			-
Other long-term liability (note 16)		20,468			21,278			3,093
Total liabilities (including amounts of the consolidated VIEs without recourse to the Company of RMB200,687 and RMB450,585 as of September 30, 2017 and 2018, respectively)		211,341			453,449			65,916
Commitments and contingencies (note 23)
Shareholders’ equity:
Preferred stock(no par value; 1,000,000 shares authorized, none issued)		-			-			-
Common stock (no par value; 60,000,000 shares authorized, 2,937,430 and 3,261,153 shares issued as of September 30, 2017 and 2018; 2,859,668 and 3,196,244 shares outstanding  as of September 30, 2017 and 2018, respectively)*		-			-			-
Additional paid-in capital		411,981			428,311			62,262
Accumulated deficit		(258,060	)		(411,723	)		(59,850	)
Treasury stock at cost (77,762 and 64,909 shares as of September 30, 2017 and 2018, respectively)* (note 18)		(22,791	)		(19,163	)		(2,786	)
Accumulated other comprehensive loss		(18,821	)		(22,136	)		(3,220	)
Total Origin Agritech Limited shareholders’ equity		112,309			(24,711	)		(3,594	)
Non-controlling interests		490			1,363			198
Total equity		112,799			(23,348	)		(3,396	)
Total liabilities and equity		324,140			430,101			62,520

* Retrospectively restated for effect of reverse stock split

The accompanying notes are an integral part of these consolidated financial statements.

F-3

ORIGIN AGRITECH LIMITED

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(In thousands, except number of share and per share data)

	Year ended September 30,
	2016			2017			2018			2018
	RMB'000			RMB'000			RMB'000			US$'000
Revenues		481			870			12,927			1,879
Cost of revenues		-			(678	)		(7,047	)		(1,024	)
Gross profit		481			192			5,880			855
Operating expenses
Selling and marketing		-			-			(411	)		(60	)
General and administrative		(32,974	)		(36,094	)		(32,147	)		(4,673	)
Research and development		(41,272	)		(38,682	)		(27,132	)		(3,944	)
Other income, net		8,265			5,028			18,291			2,659
Total operating expenses, net		(65,981	)		(69,748	)		(41,399	)		(6,018	)
Loss from continuing operations		(65,500	)		(69,556	)		(35,519	)		(5,163	)
Interest expense		(7,607	)		(9,006	)		(22,787	)		(3,312	)
Interest income		69			1,427			6			1
Impairment loss		-			(44,706	)		(3,807	)		(553	)
Loss on termination of business disposal		-			-			(90,683	)		(13,182	)
Loss before income taxes from continuing operations		(73,038	)		(121,841	)		(152,790	)		(22,209	)
Income tax (expense) benefits from continuing operations (note 20)
Current		-			-			-			-
Deferred		-			-			-			-
Income tax (expenses) benefit from continuing operations		-			-			-			-
Net loss from continuing operations		(73,038	)		(121,841	)		(152,790	)		(22,209	)
Discontinued Operations:
(Loss) income from discontinued operations, net of taxes (note 4)		(3,795	)		18,862			-			-
Loss on disposal of commercial seed business, net of taxes (note 4)		-			(3,282	)		-			-
Net (loss) income from discontinued operations		(3,795	)		15,580			-			-
Net loss		(76,833	)		(106,261	)		(152,790	)		(22,209	)
Less: Net (loss) income attributable to non-controlling interests		(11,255	)		(30,587	)		873			127
Net loss attributable to Origin Agritech Limited		(65,578	)		(75,674	)		(153,663	)		(22,336	)
Other comprehensive loss
Net loss		(76,833	)		(106,261	)		(152,790	)		(22,209	)
Foreign currency translation difference		(4,124	)		(7,644	)		(3,315	)		(482	)
Comprehensive loss		(80,957	)		(113,905	)		(156,105	)		(22,691	)
Less: Comprehensive (loss) income attributable to non-controlling interests		(11,255	)		(30,587	)		873			127
Comprehensive loss attributable to Origin Agritech Limited		(69,702	)		(83,318	)		(156,978	)		(22,818	)
Basic and diluted net income (loss) per share (note 21)
Continuing operations		(22.56	)		(32.20	)		(50.18	)		(7.29	)
Discontinued operations		(1.20	)		5.25			-			-
Basic and diluted net loss per share attributable to Origin Agritech Limited		(23.76	)		(26.95	)		(50.18	)		(7.29	)
Shares used in calculating basic and diluted net income (loss) per share*		2,759,834			2,808,293			3,061,979			3,061,979

* Retrospectively restated for effect of reverse stock split

The accompanying notes are an integral part of these consolidated financial statements.

F-4

ORIGIN AGRITECH LIMITED

CONSOLIDATED STATEMENTS OF EQUITY

(In thousands, except number of share and per share data)

		Equity attributable to Origin Agritech Limited
		Common stock					Additional Paid-in Capital			Accumulated  Deficit			Accumulated Other Comprehensive Loss			Treasury Stock			Non- controlling Interests			Total Equity
		Shares*			Amount
					RMB		RMB			RMB			RMB			RMB			RMB			RMB
Balance as of September 30, 2015			2,755,334			-		402,500			(116,808	)		(7,053	)		(37,445	)		49,584			290,778
Net loss for the year			-			-		-			(65,578	)		-			-			(11,255	)		(76,833	)
Issuance of restricted share			6,000			-		-			-			-			-			-			-
Share-based compensation expense			-			-		8,796			-			-			-			-			8,796
Translation adjustments			-			-		-			-			(4,124	)		-			-			(4,124	)
Balance as of September 30, 2016			2,761,334			-		411,296			(182,386	)		(11,177	)		(37,445	)		38,329			218,617
Net loss for the year			-			-					(75,674	)		-			-			(30,587	)		(106,261	)
Sale of treasury stock			50,000			-		(8,539	)		-			-			14,654			-			6,115
Exercise of share option			5,500			-		543			-			-			-			-			543
Share-based compensation expense			13,000			-		5,404			-			-			-			-			5,404
Issuance of common shares			29,834			-		2,885			-			-			-			-			2,885
Business disposal			-			-		392			-			-			-			(7,252	)		(6,860	)
Translation adjustments			-			-		-			-			(7,644	)		-			-			(7,644	)
Balance as of September 30, 2017			2,859,668			-		411,981			(258,060	)		(18,821	)		(22,791	)		490			112,799
Net loss for the year			-			-		-			(153,663	)		-			-			873			(152,790	)
Retire and cancellation of common stock			(200	)		-		-			-			-			-			-			-
Share-based compensation expense			40,454			-		685			-			-			3,628			-			4,313
Issuance of common shares			296,322			-		15,645			-			-			-			-			15,645
Translation adjustments			-			-					-			(3,315	)		-			-			(3,315	)
Balance as of September 30, 2018			3,196,244			-		428,311			(411,723	)		(22,136	)		(19,163	)		1,363			(23,348	)
In US$ @	6.8792					-		62,262			(59,850	)		(3,220	)		(2,786	)		198			(3,396	)

* Retrospectively restated for effect of reverse stock split

The accompanying notes are an integral part of these consolidated financial statements.

F-5

ORIGIN AGRITECH LIMITED

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Year ended September 30,
	2016			2017			2018			2018
	RMB			RMB			RMB			US$
Operating activities:
Net loss		(76,833	)		(106,261	)		(152,790	)		(22,209	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		31,222			27,687			16,452			2,392
Loss/(gain) on disposal of plant and equipment		257			327			(5,299	)		(770	)
Gain on disposal of land use right		-			-			(1,505	)		(219	)
Loss on termination of business disposal		-			-			90,683			13,182
Loss on disposal of subsidiaries and assets		-			3,282			-			-
Allowance for doubtful account		242			-			2,105			306
Recovery on receivables		-			(712	)		-			-
Impairment on intangible assets		-			-			1,433			208
Impairment on long-term equity investment		-			-			2,374			345
Impairment on plant and equipment		-			25,873			-			-
Changes in provision for inventories		20,502			18,833			(13,601	)		(1,977	)
Non-cash interest expense (interest accretion)		-			3,227			16,757			2,436
Shares issued upon sign off of Equity Purchase Agreement   (note 19)		-			1,039			-			-
Share-based compensation expense		8,796			5,404			4,313			627
Changes in operating assets and liabilities:
Accounts receivable		1,318			36			24			3
Due from related parties		-			-			55,940			8,132
Advances to growers		(876	)		15,318			-			-
Advances to suppliers		3,121			(126	)		2,062			300
Inventories		50,974			(21,533	)		13,064			1,899
Income tax recoverable		-			49			-			-
Other current assets		40			(4,153	)		1,084			158
Other assets		436			(1,914	)		(6	)		(1	)
Accounts payable		(15	)		4,114			(950	)		(138	)
Due to growers		2,589			21,114			1,449			211
Due to related parties		58,291			61,903			(50,077	)		(7,279	)
Advances from customers		(55,703	)		(157,407	)		4,018			584
Income tax payable		(37	)		-			-			-
Deferred revenues		(4,240	)		(7,008	)		-			-
Other long-term liabilities		7,568			66			810			118
Other payables and accrued expenses		253			(9,325)			1,615			235
Net cash provided by (used in) operating activities		47,905			(120,167)			(10,045)			(1,457)

F-6

ORIGIN AGRITECH LIMITED

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Year ended September 30,
	2016			2017			2018			2018
	RMB			RMB			RMB			US$
Investing activities:
Proceeds from disposal of commercial seed business, net of cash disposed (note 4)		10,000			33,165			33,600			4,884
Purchase of plant and equipment		(15,714	)		(2,624	)		(2,982	)		(433	)
Proceeds from disposal of plant and equipment and land use right		483			265			16,872			2,453
Purchase of land use rights		-			(1,267	)		-			-
Purchase of intangible assets		(1,250	)		-			-			-
Cash from termination of second closing of disposal of commercial seed business (note 4)		-			-			101			15
Net cash (used in) provided by investing activities		(6,481	)		29,539			47,591			6,919
Financing activities:
Restricted cash		(901	)		21,181			-			-
Proceeds from short-term borrowings		195,000			15,000			19,000			2,762
Proceeds from issuance of convertible promissory note		-			8,628			-			-
Proceeds from exercise of stock options		-			543			-			-
Proceeds from issuance of treasury stocks		-			6,115			-			-
Repayment of short-term borrowings		(225,000	)		(90,000	)		(34,000	)		(4,942	)
Proceeds from long-term borrowings		6,085			120,000
Repayment of long-term borrowings		(24,000	)		(34,459	)		(20,376	)		(2,962	)
Net cash provided by (used in) financing activities		(48,816	)		47,008			(35,376	)		(5,142	)
Net (decrease) increase in cash and cash equivalents		(7,392	)		(43,620	)		2,170			320
Cash and cash equivalents, beginning of year		66,025			54,509			3,245			472
Effect of exchange rate changes on cash and cash equivalents		(4,124	)		(7,644	)		(3,425	)		(503	)
Cash and cash equivalents, end of the year		54,509			3,245			1,990			289
Supplemental disclosures of cash flow information:
Income taxes paid		1,436			1,282			-			-
Interest paid, net of interest capitalized		14,251			14,486			4,861			707
Supplemental disclosure of non-cash financing activities:
Issuance of commitment shares related to notes payable		-			1,847			-			-
Conversion of convertible promissory note		-			-			15,644			2,274

The accompanying notes are an integral part of these consolidated financial statements. 

F-7

ORIGIN AGRITECH LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2016, 2017 AND 2018

(In thousands, except number of share, per share data and unless otherwise stated)

1. ORGANIZATION AND PRINCIPAL ACTIVITIES

Origin Agritech Limited (“Agritech”), incorporated under the laws of the British Virgin Islands, and its subsidiaries and variable interest entities are referred to in this report as "we", "us", "our", or "the Company". We are principally engaged in hybrid crop seed development, production and distribution business.

On September 26, 2016, we entered into a Master Transaction Agreement (the “Master Agreement”) with Beijing Shihui Agricultural Development Co., Ltd. ( “Beijing Shihui” or the “Buyer”, a related party being controlled by close family members of the Company’s Chairman), formerly known as Beijing Shihui Agricultural Ltd., under which the Buyer agreed to purchase the corn seed production and distribution assets, the office building in Beijing, China, and generally the business of commercial corn seed production and sales now operated by the Company. On July 31, 2017, we completed the sale of 100% equity ownership interest in Changchun Origin Seed Technology Development Limited (“Changchun Origin”), 98.58% equity ownership interest in Denong Zhengcheng Seed Limited (“Denong”), 100% equity ownership interest in Linze Origin Seed Limited and Linze Branch of Beijing Origin Seed Limited (“Linze Origin”). On August 31, 2017, we transferred the control of Zhengzhou Branch of Beijing Origin Seed Limited (“Zhengzhou Branch”) to Beijing Shihui pursuant to a Management Agreement.

On September 21, 2018, the Company and certain subsidiaries of the Company entered into a Termination Agreement (“Termination Agreement”) with Beijing Shihui to terminate that certain Master Agreement, dated as of September 26, 2016, by and among the Company, Beijing Shihui, and certain subsidiaries of the Company. Pursuant to the Termination Agreement, the Company and Beijing Shihui agreed to terminate the Master Agreement and not to pursue the second closing contemplated under the Master Agreement. As a result of the Termination Agreement, the Company will not transfer certain assets, including the headquarters building of the Company located in Beijing, PRC and certain other assets, to Beijing Shihui, meanwhile, the transfer of control of Zhengzhou Branch was rewound as a result of termination of the Management Agreement on September 21, 2018. For additional information, see note 4 - Discontinued Operations.

F-8

ORIGIN AGRITECH LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2016, 2017 AND 2018

(In thousands, except number of share, per share data and unless otherwise stated)

As of September 30, 2018, the Company’s subsidiaries and variable interest entities included in continuing operations consisted of the following:

	Date of	Place of	Percentage
	Incorporation	Incorporation	of			Principal
Name	or Establishment	or Establishment	Ownership			Activity
Subsidiaries:
State Harvest Holdings Limited(“State Harvest”)	October 6, 2004	British Virgin Islands		100	%	Investment Holding
Beijing Origin State Harvest Biotechnology Limited (“BioTech”)	December 1, 2004	People’s Republic of China (“PRC”)		100	%	Hybrid seed technology development
Origin Agritech USA LLC (“Origin USA”)	August 12, 2016	United States of America (“USA”)		100	%	Hybrid seed  technology development
Beijing State Harvest Zhongying Network Technology Limited  (“Zhongying Network”)	April 27, 2018	PRC		100	%	Selling agricultural seed products, other agricultural inputs, foods, household products, and other consumer products on e-commerce platform
Variable interest entity:
Beijing Origin Seed Limited (note (i)) (“Beijing Origin”)	December 26, 1997	PRC		-		Hybrid crop seed development, production and distribution
Subsidiaries held by Beijing Origin:
Henan Origin Cotton Technology Development Limited (note (i)) (“Henan Cotton”)	March 2, 2001	PRC		92.04	%	Hybrid crop seed development, production and distribution
Xinjiang Originbo Seed Company Limited (note (i)) (“Xinjiang Origin”)	July 13, 2011	PRC		51	%	Hybrid crop seed development, production and distribution
Henan Aoyu Zhongye Limited (note (i)) (“Aoyu Zhongye”)	July 16, 2018	PRC		51	%	Agricultural seed products distribution through e-commune network

Note (i): Beijing Origin Seed Limited, Henan Origin Cotton Technology Development Limited, Xinjiang Originbo Seed Company Limited, Zhengzhou Branch of Beijing Origin Seed Limited and Aoyu Zhongye are collectively referred to as “Beijing Origin”.

F-9

ORIGIN AGRITECH LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2016, 2017 AND 2018

(In thousands, except number of share, per share data and unless otherwise stated)

Reorganization of State Harvest prior to the share exchange transaction with Chardan China Acquisition Corp. (“Chardan”)

On December 1, 2004, State Harvest established BioTech, a wholly-owned foreign enterprise (“WOFE”) under the laws of the PRC with an operating period of 20 years.

Under PRC law, foreign entities are not currently permitted to own more than 49% of a seed production company. In order to address those restrictions, State Harvest conducts substantially all of its business through contractual agreements with its variable interest entity (“VIE”), Beijing Origin. These agreements are summarized in the following paragraphs.

Stock Consignment Agreements

As discussed above in “Foreign Ownership Restrictions,” under Chinese law, foreign ownership of businesses engaged in the breeding of new varieties, development, production, marketing, distribution and sale of hybrid food crop seeds is limited to 49% pursuant to the Regulation on the Approval and Registration of Foreign Investment Enterprises in Agricultural Seed Industry and The Foreign Investment Industrial Guidance Catalogue. State Harvest, as a non-Chinese corporation, may not directly own more than 49% of any of the PRC Operating Companies. However, Chinese law does not forbid the owner of stock to consign rights associated with the stock, as long as the owner does not transfer title to the stock. To gain control over the PRC Operating Companies, State Harvest entered into a series of stock consignment agreements with shareholders of those companies.

State Harvest has been assigned 97.96% voting rights by the shareholders of Beijing Origin through a consignment agreement which includes the following terms: (1) The shares of Beijing Origin cannot be transferred without the approval of State Harvest; (2) State Harvest has the right to appoint all directors and senior management personnel of Beijing Origin and (3) The shareholder rights including voting rights require the transfer of the shares of Beijing Origin to State Harvest or any party designated by State Harvest within three years upon the removal of the PRC legal restriction.

Technical Service Agreements

Beijing Origin entered into Technical Service Agreements with BioTech dated December 25, 2004. Under these agreements, BioTech shall provide, with its own technical research resource and team, technical services for the production and distribution of agricultural seeds during the period of the agreements. In return, Beijing Origin is required to pay BioTech service fee calculated according to the weight of corn, rice and cotton seeds sold by the Beijing Origin.

Through the contractual agreements described above, State Harvest is deemed the sole beneficiary of Beijing Origin resulting in Beijing Origin being deemed a subsidiary of State Harvest under the requirements of Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) 810-10-05. The agreements described above provided for effective control of Beijing Origin to be transferred to State Harvest at December 25, 2004. Neither State Harvest nor BioTech had any operating activity prior to entering into the consignment agreements with Beijing Origin. In substance, State Harvest has substantially all the same shareholders of Beijing Origin. This transaction has been accounted for on a basis similar to reorganization between entities under common control. Accordingly, State Harvest’s consolidated financial statements are prepared by including the consolidated financial statements of Beijing Origin through December 24, 2004, and subsequently the Company’s consolidated financial statements include the financial statements of State Harvest, its majority owned subsidiary and Beijing Origin through the date of the Share Exchange Transaction.

F-10

ORIGIN AGRITECH LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2016, 2017 AND 2018

(In thousands, except number of share, per share data and unless otherwise stated)

Risks in relation to the VIE structure

Four of our PRC operating subsidiaries are controlled subsidiaries through stock consignment agreements rather than by direct ownership of shares, the terms of which may have to be enforced, which would require us to incur extra costs, create uncertainty as to ownership of the operating businesses involved and risk the possible loss of rights. There is the risk, however, that a consigning shareholder will not fulfill its obligations under the stock consignment agreement. In that event, we may need to resort to the PRC courts to have our rights under the applicable agreement enforced. Such enforcement will cause us to incur legal expenses. In addition, while a case is pending there will be uncertainty regarding our rights as to the three PRC operating subsidiaries involved. In addition, a PRC court may decide not to enforce the agreements in whole or in part. To the extent these agreements are neither observed nor enforced as intended, the PRC operating subsidiaries will not be controlled by us as intended, which will affect our enterprise value and restrict our ability to obtain the income and other rights of ownership associated with the consigned stock. It may also prevent the consolidation of our financial statements with the PRC operating subsidiaries, which would reduce the reported earnings of the consolidated companies. The uncertainty of ownership may also adversely affect the market value of our ordinary shares.

Whether or not a stock consignment agreement is terminated depends on the consensus of our Board and the consignees. Any such termination could result in a possible loss of certain rights or assets held by us without receiving fair value in return. The stock consignment agreements relating to our control of the stock of our PRC operating subsidiaries may be terminated after three years upon mutual agreement between us and the consignees. Holding this amount of stock will allow these officers to control or greatly influence the selection of directors and matters submitted to a vote of our shareholders, including voting to terminate the stock consignment agreements.

There are corporate protections in place designed to protect our interests, such as an independent Board of Directors, an audit committee comprised of independent directors that must approve insider transactions, a code of conduct requiring fair dealing with the Company, and the British Virgin Islands statutory provision that a disposition of more than 50% of the assets of a company must be approved by a majority of the shareholders. Moreover, if consigned stock is transferred to us as provided in the stock consignment agreements when the restrictions under PRC law are lifted, that stock will no longer be subject to the stock consignment agreements, and the termination of the stock consignment agreements would then have no effect on the ownership of that stock. However, if the stock consignment agreements are terminated, then we would lose our rights with respect to the consigned stock and the profits from the issuing corporation. Such a loss would impair the value of the Company and would reduce our ability to generate revenues.

The Company has aggregated the financial information of Beijing Origin and its subsidiaries in the table below. The aggregated carrying amount of assets and liabilities of Beijing Origin and its subsidiaries after elimination of intercompany transactions and balances consolidated in the Company’s consolidated balance sheets as of September 30, 2017 and 2018 are as follows: 

F-11

ORIGIN AGRITECH LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2016, 2017 AND 2018

(In thousands, except number of share, per share data and unless otherwise stated)

Risks in relation to the VIE structure

	September 30,
	2017		2018		2018
	RMB		RMB		US$
ASSETS
Current Assets
Cash and cash equivalents		2,848		1,826		265
Due from related party		33,300		129,506		18,826
Accounts receivable		24		-		-
Advances to suppliers		5,293		1,188		173
Inventories		41,914		81,903		11,906
Other current assets		1,306		213		31
Total current assets		84,685		214,636		31,201
Land use rights, net		19,108		16,564		2,408
Plant and equipment, net		177,282		172,760		25,113
Equity investments		18,721		16,347		2,376
Acquired intangible assets, net		8,585		2,024		294
Other assets		4,196		1,202		175
Total assets		312,577		423,533		61,567
LIABILITIES
Current liabilities
Short-term borrowings		15,000		-		-
Current portion of long-term borrowings		35,504		78,235		11,373
Accounts payable		1,451		7,952		1,156
Due to growers		6,535		7,984		1,161
Due to related parties		10,000		291,882		42,430
Advances from customers		1,866		5,959		866
Other payables and accrued expenses		30,454		37,295		5,421
Current liabilities of discontinued operations		22,640		-		-
Total current liabilities		123,450		429,307		62,407
Long-term borrowings		56,769		-		-
Other long-term liability		20,468		21,278		3,093
Total liabilities		200,687		450,585		65,500

As of September 30, 2017 and 2018, consolidated assets of RMB42,978 and RMB37,415, respectively, are collateral for the VIE’s obligations. These consolidated assets consisted of land use right of RMB5,258, and RMB2,177 and plant and equipment of RMB37,720 and RMB35,238 as of September 30, 2017 and 2018, respectively.

The consolidated revenues of the Company generated from the VIE and its subsidiaries for the year ended September 30, 2016 and 2017 are 99.86% and 100.00% respectively, which are reported in discontinued operations. The consolidated revenues of the Company generated from the VIE and its subsidiaries for the year ended September 30, 2018 is 99.27%, of the total revenues, which RMB12,833 is reported in continuing operations. The VIE and its subsidiaries also account for 96.43% and 98.47% of the total assets of the Company as at September 30, 2017 and 2018, respectively.

F-12

ORIGIN AGRITECH LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2016, 2017 AND 2018

(In thousands, except number of share, per share data and unless otherwise stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of consolidation

The consolidated financial statements of the Company are prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”); include the assets, liabilities, revenues, expenses and cash flows of all subsidiaries and variable interest entities. Intercompany balances, transactions and cash flows are eliminated on consolidation.

Reverse Stock Split

On June 26, 2018, the Company’s Shareholders and the Board of Directors approved a reverse stock split pursuant to which all classes of our issued and outstanding shares of common stock at the close of business on such date were combined and reconstituted into a smaller number of shares of common stock in a ratio of 1 share of common stock for every 10 shares of common stock (“1-for-10 reverse stock split”). The 1-for-10 reverse stock split was effective as of close of business on July 10, 2018 and the Company’s stock began trading on a split-adjusted basis on July 11, 2018.

On the exchange date, the reverse stock split reduced the number of outstanding shares to approximately 2.7 million ordinary shares, subject to additional shares being issued for fractional shares and preservation of round lots. Proportional adjustments have been made to the conversion and exercise prices of the Company’s outstanding common stock, treasury stock, warrants, restricted stock awards, and stock options, and to the number of shares issued and issuable under the Company’s Stock Incentive Plan. Upon the effectiveness of the 1-for-10 reverse stock split, each ten shares of the Company’s issued common stock were automatically combined and converted into one issued share of common stock, no par value. The Company did not issue any fractional shares in connection with the reverse stock split. Instead, fractional share interests were rounded up to the next largest whole share. The reverse split also preserved round lots of 100 shares, meaning that if the reverse split resulted in a shareholder holding less than 100 shares, the Company would issue, at no cost, additional shares to increase the holding to a full 100 shares. The reverse stock split does not modify the rights or preferences of the common stock. The number of authorized shares of the Company’s common stock remained at 60 million shares and no par value.

The accompanying consolidated financial statements and footnotes have been retroactively adjusted to reflect the effects of the 1-for-10 reverse stock split.

F-13

ORIGIN AGRITECH LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2016, 2017 AND 2018

(In thousands, except number of share, per share data and unless otherwise stated)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Liquidity and Going Concern

The Company incurred net losses of RMB76,833, RMB106,261 and RMB152,790 in the years ended September 30, 2016, 2017 and 2018, respectively. Working capital deficit was RMB45,045 and RMB217,293 as of September 30, 2017 and 2018, respectively. Accumulated deficit was RMB258,060 and RMB411,723 as of September 30, 2017 and 2018, respectively. We are currently seeking to restructure the terms of our liabilities by raising funds to pay off liabilities. Our ability to continue as a going concern is depend upon obtaining the necessary financing or negotiating the terms of the existing borrowing to meet our current and future liquidity need.

On October 16, 2018, the Company entered into a Share Subscription Agreement with Longhan Investment Management, Co., Ltd. (“Longhan”) to sell 1,397,680 shares of the Company’s common stock for an aggregate purchase price of US$7,743,147. On January 4, 2019, the Company entered into a Financing Support Agreement with Tiger Capital Fund SPC (“Tiger Fund”) and Longhan. This agreement allows Tiger Fund to join Longhan to invest in Origin under the Share Subscription Agreement dated as of October 16, 2018 by and between Longhan and the Company. Under the Share Subscription Agreement and the Financing Support Agreement, Longhan and Tiger Fund purchased 1,397,680 shares of the Company’s common stock for an aggregate purchase price of US$7,743,147 as of the date of this report.

On May 17, 2019, the Company entered into a Cooperation Framework Agreement with Beijing Changping Technology Innodevelop Group (BC-TID), an entity owned by the government of Changping District of Beijing City. Under this agreement, BC-TID and Origin will form a new entity, which 51% and 49% of equity interests would be owned by BC-TID and the Company, respectively. Based on the agreement, Beijing Origin will contribute the headquarters building in Beijing and certain of its seed technology assets related to genetically modified seeds to the new entity. BC-TID will fund the joint venture with a total of RMB204 million in cash. Also agreed under this agreement, the new entity will pay off the bank loan of RMB78 million, which is collateralized by the Company’s headquarters building in Beijing, upon receiving the RMB204 million investment from BC-TID. The transaction is subject to the satisfaction or waiver of several conditions set forth in the agreement.

As of September 30, 2018, the amount due to Beijing Shihui, Zhangye Shihui Agricultural Development Co. Ltd. (“Zhangye Shihui”), Xinjiang Ginbo Seeds Center, Linze Origin Seeds Limited and Dr. Han Gengchen, the Chairman and Chief Executive Director of the Company, amounted to RMB137,811, RMB10,000, RMB10,000, RMB123,579 and RMB9,692, respectively. These related parties agreed that they shall not request the Company to repay outstanding balances until the Company are in a position to repay.

F-14

ORIGIN AGRITECH LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2016, 2017 AND 2018

(In thousands, except number of share, per share data and unless otherwise stated)

Besides the expected cash inflows from the aforementioned existing agreements, the Company is also seeking funds from other resources including but not limited to licensing its cord seed traits to its customers, applying for government grants for research and development activities, pursuing other capital investment from investors and selling certain company assets. The Company consistently reviews its working capital requirements and has also taken steps to reduce expenses. The Company has closed down the office of Origin USA and cut down the related personnel and administrative costs. The Company is also currently working with certain vendors and creditors to extend repayment terms.

Despite the Company’s effort to obtain additional funding and reduce operating costs, there is no assurance that the Company’s plans and actions will be successful. In addition, there can be no assurance that in the event additional sources of funds are needed they will be available on acceptable terms, if at all. The Company’s consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liquidation of liabilities during the normal course of operations.

Convenience translation into United States dollars

The consolidated financial statements are presented in Renminbi. The translation of Renminbi amounts into United States dollar amounts has been made for the convenience of the reader and has been made at the exchange rate quoted by the middle rate by the State Administration of Foreign Exchange in China on September 30, 2018 of RMB6.8792 to US $1.00. Such translation amounts should not be construed as representations that the Renminbi amounts could be readily converted into United States dollar amounts at that rate or any other rate.

Use of estimates

The preparation of the consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are adjusted to reflect actual experience when necessary. Significant accounting estimates reflected in the Company’s consolidated financial statements include inventory valuation, account receivable valuation, useful lives of plant and equipment and acquired intangible assets, the valuation allowance for deferred income tax assets, valuation of long-lived assets and share-based compensation expense. Actual results could differ from those estimates.

Cash and cash equivalents

Cash and cash equivalents consist of cash on hand, cash accounts, interest bearing savings accounts, time certificates of deposit and debt securities with a maturities of three months or less when purchased.

Inventories

Inventories are stated at the lower of cost, determined by weighted-average method, or net realizable value. Work-in-progress and finished goods inventories consist of raw materials, direct labor and overhead associated with the manufacturing process. The Company’s commercial seed inventories are reported in discontinued operations. Parent seed represents the seeds that are used for research and development activities.

The Company periodically performs an analysis of inventory to determine obsolete or slow-moving inventory and determine if its cost exceeds the estimated market value. Write down of potentially obsolete or slow-moving inventory are recorded based on management’s analysis of inventory levels.

F-15

ORIGIN AGRITECH LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2016, 2017 AND 2018

(In thousands, except number of share, per share data and unless otherwise stated)

Land use rights, net

Land use rights are recorded at cost less accumulated amortization. Amortization is provided over the term of the land use right agreements on a straight-line basis for the beneficial period.

Plant and equipment, net

Plant and equipment are recorded at cost less accumulated depreciation and amortization. Maintenance and repairs are charged to expense as incurred. Depreciation is calculated on a straight-line basis over the following estimated useful lives:

Plant and building	20-40 years
Machinery and equipment	10-15 years
Furniture and office equipment	5-8 years
Motor vehicles	5-10 years
Leasehold improvements	Shorter of the useful lives or the lease term

The Company constructs certain of its facilities. In addition to costs under construction contracts, external costs directly related to the construction of such facilities, including duty and tariff, and equipment installation and shipping costs, are capitalized. Depreciation is recorded at the time assets are placed in service.

Leases

Leases are classified at the inception date as either a capital lease or an operating lease. For the lessee, a lease is a capital lease if any of the following conditions exist: a) ownership is transferred to the lessee by the end of the lease term, b) there is a bargain purchase option, c) the lease term is at least 75% of the property’s estimated remaining economic life or d) the present value of the minimum lease payments at the beginning of the lease term is 90% or more of the fair value of the leased property to the lessor at the inception date. A capital lease is accounted for as if there was an acquisition of an asset and an incurrence of an obligation at the inception of the lease. All other leases are accounted for as operating leases. The Company has no capital leases for any of the periods presented.

Acquired intangible assets, net

Acquired intangible assets primarily consist of purchased technology rights and distribution network and are stated at cost less accumulated amortization. Amortization is calculated on a straight-line basis over the estimated useful lives of these assets and recorded in operating expenses. Amortization is calculated on a straight-line basis over the following estimated useful lives for the main acquired intangible assets:

Technology rights for licensed seeds	3-20 years
Distribution network	6-14 years
Trademark	Indefinite

Trademarks, which have indefinite lives are not amortized but are reviewed for impairment at least annually, at year end date, or earlier upon the occurrence of certain triggering events. The Company has performed an impairment analysis on the acquired intangible assets in Beijing Origin and recorded an impairment provision of RMB1,433 during the year ended September 30, 2018.

F-16

ORIGIN AGRITECH LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2016, 2017 AND 2018

(In thousands, except number of share, per share data and unless otherwise stated)

Equity investments

Equity method investment is accounted for using the equity method whereby they are initially recognized at cost and thereafter, their carrying amount are adjusted for the Company’s share of the post-acquisition change in the net assets of equity method investments less impairment losses, if any. The dividend received was accounted for as a reduction in equity investments.

Cost method investment is stated at cost less impairment loss. The Company recorded an impairment loss of RMB2,374 on its cost method investment during the year ended September 30, 2018.

Valuation of long-lived asset

The Company reviews the carrying value of long-lived assets to be held and used, including other intangible assets subject to amortization, when events and circumstances warrants such a review. The carrying value of a long-lived asset is considered impaired when the anticipated undiscounted cash flow from such asset is separately identifiable and is less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair market value of the long-lived asset and intangible assets. Fair market value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. Losses on long-lived assets and intangible assets to be disposed are determined in a similar manner, except that fair market values are reduced for the cost to dispose. The Company has performed an impairment analysis on the plant and equipment in Xinjiang Origin and recorded an impairment loss of RMB25,873 during the year ended September 30, 2017, and the impairment loss was reported in continuing operations. No impairment was recorded during the year ended September 30, 2018.

Revenue recognition

The Company derives its revenues primarily from the sale of various branded conventional seeds and branded seeds with biotechnology traits.

Revenue is recognized when pervasive evidence of an arrangement exists, products have been delivered, the price is fixed or determinable, collectability is reasonably assured and the right of return has expired. The Company generally determines the final selling price after a period the goods are delivered to the customers. Accordingly, the Company defers revenues recognition until the selling price has been finalized with the customers. The estimated amounts of revenues billed in excess of revenues recognized are recorded as deferred revenues.

F-17

ORIGIN AGRITECH LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2016, 2017 AND 2018

(In thousands, except number of share, per share data and unless otherwise stated)

Government subsidies

A government subsidy is not recognized until there is reasonable assurance that: (a) the enterprise will comply with the conditions attached to the grant; and (b) the grant will be received.

When the Company received the government subsidies but the conditions attached to the grants have not been fulfilled, such government subsidies are deferred and recorded under other payables and accrued expenses, and other long-term liability. The reclassification of short-term or long-term liabilities is depended on the management’s expectation of when the conditions attached to the grant can be fulfilled.

The Company received several financial supports from various levels of the government. At fiscal years ended 2017 and 2018, the Company received government subsidies of RMB2,660 and RMB9,193, respectively for R&D and others. Government subsidies recognized as other income in the statement of income for the years ended September 30, 2016, 2017 and 2018, were RMB3,688, RMB1,407 and RMB5,516, respectively.

Cost of revenues

Cost of revenues consists of expenses directly related to sales, including the purchase prices and development costs for seeds and, during the fiscal years ended September 30, 2016, 2017 and 2018, agricultural chemical products, depreciation and amortization, impairment of inventory, shipping and handling costs, salary and compensation, supplies, license fees, and rent.

Research and development costs

Research and development costs relating to the development of new products and processes, including significant improvements and refinements to existing products, are expensed as incurred.

Advertising costs

Advertising costs are expensed when incurred and included in selling and marketing expenses. For the years ended September 30, 2016, 2017 and 2018, advertising costs were RMB3,237, RMB521 and RMBnil, respectively.

Shipping and handling cost

The Company includes shipping and handling costs as either cost of goods sold or selling and administrative expenses depending on the nature of the expenses. Shipping and handling costs which relate to transportation of products to customers’ locations is charged to selling and marketing expenses and shipping and handling which relate to the transportation of goods to factories from suppliers and from one factory to another is charged to cost of revenues.

For the years ended September 30, 2016, 2017 and 2018, shipping and handling cost included in selling and marketing expenses were RMB2,055, RMB1,604, and RMB400, respectively.

F-18

ORIGIN AGRITECH LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2016, 2017 AND 2018

(In thousands, except number of share, per share data and unless otherwise stated)

Borrowing cost

Borrowing costs attributable directly to the acquisition, construction or production of qualifying assets which require a substantial period of time to be ready for their intended use or sale, are capitalized as part of the cost of those assets. Income earned on temporary investments of specific borrowings pending their expenditure on those assets is deducted from borrowing costs capitalized. All other borrowing costs are recognized in interest expenses in the statement of income and comprehensive income in the period in which they are incurred.

Allowance for doubtful account

The Company regularly monitors and assesses the risk of not collecting amounts owed to the Company by customers. This evaluation is based upon a variety of factors including: an analysis of amounts current and past due along with relevant history and facts particular to the customer. Based on the result of this analysis, the Company records an allowance for doubtful accounts.

Income taxes

Deferred income taxes are recognized for the future tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts in the consolidated financial statements, net of operating loss carry forwards and credits. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Current income taxes are provided for in accordance with the laws of the relevant tax authorities.

The Company adopted FASB ASC 740-10. The Company’s policy on classification of all interest and penalties related to unrecognized tax benefits, if any, as a component of income tax provisions.

Foreign currency translation

The functional currency of the Company excluding Agritech, Origin USA and State Harvest is Renminbi. Monetary assets and liabilities denominated in currencies other than Renminbi are translated into Renminbi at the rates of exchange ruling at the balance sheet date. Transactions in currencies other than Renminbi are converted into Renminbi at the applicable rates of exchange prevailing the transactions occurred. Transaction gains and losses are recognized in the consolidated statements of income and comprehensive income.

The functional currency of Agritech, Origin USA and State Harvest are maintained in United State dollars. Assets and liabilities are translated at the exchange rates at the balance sheet date, equity accounts are translated at historical exchange rates and revenues, expenses, gains and losses are translated using the average rate for the period. Translation adjustments are reported as cumulative translation adjustments and are shown as a separate component of other comprehensive (loss)/income. The Company has chosen Renminbi as its reporting currency.

Comprehensive income (loss)

Comprehensive income (loss) is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. Comprehensive income (loss) for the years has been disclosed within the consolidated statements of income and comprehensive income for presentational purpose of the disclosure of comprehensive income (loss) attributable to Agritech and the non-controlling interests respectively.

F-19

ORIGIN AGRITECH LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2016, 2017 AND 2018

(In thousands, except number of share, per share data and unless otherwise stated)

Income (loss) per share

Basic income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the years. Diluted income (loss) per share gives effect to all dilutive potential common shares outstanding during the years. The weighted average number of common shares outstanding is adjusted to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued. In computing the dilutive effect of potential common shares, the average stock price for the period is used in determining the number of treasury shares assumed to be purchased with the proceeds from the exercise of options.

Share-based compensation

The Company adopts FASB ASC 718-10. ASC 718-10 requires that share-based payment transactions with employees, such as share options, be measured based on the grant-date fair value of the equity instrument issued and recognized as compensation expense over the requisite service period, with a corresponding addition to equity. Under this method, compensation cost related to employee share options or similar equity instruments is measured at the grant date based on the fair value of the award and is recognized over the period during which an employee is required to provide service in exchange for the award, which generally is the vesting period.

Fair value measurement

The Company adopted FASB ASC 820-10, and which defines fair value, establishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements. ASC 820-10 does not require any new fair value measurements, but provides guidance on how to measure fair value by providing a fair value hierarchy used to classify the source of the information.

ASC 820-10 establishes a three-level valuation hierarchy of valuation techniques based on observable and unobservable inputs, which may be used to measure fair value and include the following:

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Classification within the hierarchy is determined based on the lowest level of input that is significant to the fair value measurement.

F-20

ORIGIN AGRITECH LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2016, 2017 AND 2018

(In thousands, except number of share, per share data and unless otherwise stated)

Discontinued Operations

The Company reports operating results for discontinued operations separately from continuing operations to distinguish the financial impact of disposal transactions from ongoing operations. Through September 30, 2018, the Company reported discontinued operations when the operations and cash flows of a component of the Company had been eliminated or intended to be eliminated from ongoing operations. For a component to be disposed of by sale, financial results were classified as discontinued only when held for sale criteria were met. For a component to be disposed of other than by sale, financial results were not classified as discontinued until abandonment, distribution, or exchange occurred, depending on the manner of disposal. In the annual report for the year ended September 30, 2016 and 2017, the operating results of the seed production and distribution entities and assets mainly including Changchun Origin, Denong, Linze Origin, Zhengzhou Branch and office building in Beijing, PRC are presented as discontinued operations. The office building in Beijing, PRC was previously planned to be sold to Beijing Shihui. However, the Company changed the original plan and decided not to sell this part of assets. On September 21, 2018, the Company and certain subsidiaries of the Company entered into a Termination Agreement. Pursuant to this agreement, the Company will not transfer the above-mentioned office building in Beijing to Beijing Shihui.

As the office building in Beijing no longer meets the held-for-sale criteria, this part of assets has been reclassified as held and used and the related operation results were reclassified to continuing operations for all periods presented in this report. See note 4 for details.

F-21

ORIGIN AGRITECH LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2016, 2017 AND 2018

(In thousands, except number of share, per share data and unless otherwise stated)

Recently issued accounting pronouncements

· In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The amendments in this update require all equity investments to be measured at fair value with changes in the fair value recognized through net income (other than those accounted for under equity method of accounting or those that result in consolidation of the investee).The amendments in this update also require an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. In addition the amendments in this update eliminate the requirement for to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet for public entities. For public business entities, the amendments in ASU No. 2016-01 are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Except for the early application guidance discussed in ASU No. 2016-01, early adoption of the amendments in this update is not permitted. The Company does not expect the adoption of ASU No. 2016-01 will have a material impact on its consolidated financial statements.

· In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). In July 2018, the FASB also issued ASU 2018-10 Codification Improvements to Topic 842, Leases and ASU 2018-11 Leases (Topic 842) Targeted Improvements.  The amendments in this update will increase the transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The amendments are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years for public business entities. Early application of the amendments is permitted, and may be applied through a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements with certain practical expedients available.  An entity may apply the new leases standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company is currently evaluating the effect of this standard on its consolidated financial statements.

F-22

ORIGIN AGRITECH LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2016, 2017 AND 2018

(In thousands, except number of share, per share data and unless otherwise stated)

· In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.  Financial Instruments—Credit Losses (Topic 326) amends guideline on reporting credit losses for assets held at amortized cost basis and available-for-sale debt securities.  For assets held at amortized cost basis, Topic 326 eliminates the probable initial recognition threshold in current GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected. For available-for-sale debt securities, credit losses should be measured in a manner similar to current GAAP, however Topic 326 will require that credit losses be presented as an allowance rather than as a write-down.  ASU No. 2016-13 affects entities holding financial assets and net investment in leases that are not accounted for at fair value through net income. The amendments affect loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. The amendments in this ASU will be effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.  The Company is currently evaluating the impact of the adoption of ASU No. 2016-13 on its consolidated financial statements.

· In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which addresses the following eight specific cash flow issues: Debt prepayment or debt extinguishment costs; settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies (including bank-owned life insurance policies; distributions received from equity method investees; beneficial interests in securitization transactions; and separately identifiable cash flows and application of the predominance principle. The amendments in this ASU are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company does not expect the adoption of ASU No. 2016-15 will have a material impact on its consolidated financial statements.

· In May 2017, the FASB issued ASU 2017-09-Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting. The requirement provides guidance on determining which changes to the terms and conditions of share-based payment awards require an entity to apply modification accounting under Topic 718. For public business entities, this ASU should be effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2017. The Company does not expect the adoption of ASU No. 2017-09 will have a material impact on its consolidated financial statements.

F-23

ORIGIN AGRITECH LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2016, 2017 AND 2018

(In thousands, except number of share, per share data and unless otherwise stated)

· In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”). This ASU is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers: Principal versus Agent Considerations (Reporting Gross versus Net), which is effective upon adoption of ASU 2014-09. This ASU clarifies the implementation guidance in ASU 2014-09 on principal versus agent considerations. These ASUs are effective for annual reporting periods beginning after December 15, 2017 and interim periods within those annual periods. The Company will adopt ASU 2014-09, and its related clarifying ASUs, as of October 1, 2018. The Company anticipates adopting the standard using the modified retrospective transition approach. Under this approach, the new standard would apply to all new contracts initiated on or after October 1, 2018. For existing contracts that have remaining obligations as of October 1, 2018, any difference between the recognition criteria in these ASUs and the Company’s current revenue recognition practices would be recognized using a cumulative effect adjustment to the opening balance of retained earnings. Our revenues are generally recognized upon delivery to the customer, which is when we control transfers to the customer. The majority of the Company’s customer contracts, which may be in the form of purchase orders, contracts or purchase agreements, contain performance obligations for delivery of agreed upon goods. Delivery of all performance obligations contained within a contract with a customer typically occurs at the same time. The Company has also determined that it will make accounting policy elections to 1) treat shipping and handling activities that occur after the customer obtains control of the goods as fulfillment costs and 2) exclude sales (and similar) taxes from the measurement of the transaction price. We have no open contracts as of September 30, 2018, there will be no cumulative effect of applying the new standards. Based on the revenue streams for year ended September 30, 2018, we do not expect the adoption of these ASUs to have a material impact on our consolidated financial statements.

· In August 2018, the FASB issued ASU 2018-13, Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in this standard will remove, modify and add certain disclosures under ASC Topic 820, Fair Value Measurement, with the objective of improving disclosure effectiveness. For public business entities, this ASU should be effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2019. The transition requirements are dependent upon each amendment within this update and will be applied either prospectively or retrospectively. The Company does not expect ASU 2018-13 to have a material impact to the Company’s consolidated financial statements.

The Company believes that other recent accounting pronouncement updates will not have a material effect on the Company’s consolidated financial statements.

F-24

ORIGIN AGRITECH LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2016, 2017 AND 2018

(In thousands, except number of share, per share data and unless otherwise stated)

3. RELATED PARTY BALANCES AND TRANSACTIONS

(1) Related party relationships

Name of related parties	Relationship
Beijing Shihui	Being owned by close family members of the Company's Chairman
Zhangye Shihui	Being owned by close family members of the Company's Chairman
Xinjiang Ginbo Seeds Center	Being the non-controlling interest of Xinjiang Origin
Jilin Jinong Hi-tech Development Shares Co.,Ltd.("Jinong")	Being long-term investment of the Company (note 10)
Henan Agricultural University	Being the non-controlling interest of Beijing Origin
Linze Origin Seeds Ltd	Being owned by close family members of the Company's Chairman
De Nong Zheng Cheng Seed Limited	Being owned by close family members of the Company's Chairman
Beijing Origin Zhengzhou Branch("Zhengzhou Branch")	Being controlled by close family members of the Company's Chairman from August 16, 2017 to September 21, 2018

(1) Due from related parties

	September 30,
	2017		2018
	RMB		RMB
Beijing Shihui (i)		55,940		-
De Nong Zheng Cheng Seed Limited		-		129,506
		55,940		129,506

Note (i): Balance due from Shihui as of September 30, 207 mainly consisted of receivables of RMB38,200 related to disposal of the commercial seed business and working capital loan of RMB17,740.

F-25

ORIGIN AGRITECH LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2016, 2017 AND 2018

(In thousands, except number of share, per share data and unless otherwise stated)

(2) Due to related parties

	September 30,
	2017		2018
	RMB		RMB
Beijing Shihui		-		137,811
Zhangye Shihui		-		10,000
Linze Origin Seeds Limited		-		123,579
Henan Agriculture University		-		1,000
Xinjiang Ginbo Seeds Center (i)		10,000		10,000
Companies controlled by the Company’s directors		1,576		1,634
The Company’s Chairman		-		9,692
Ex-shareholders		16		16
		11,592		293,732

Note (i): Xinjiang Origin has received a cash advance of RMB10,000 from Xinjiang Ginbo Seeds Center during the year ended September 30, 2016, which is unsecured, interest-free and repayable on demand.

(3) Transactions with related parties

(a) Sales to

	Year ended September 30,
	2016		2017		2018
	RMB		RMB		RMB
Linze Origin Seeds Limited		-		-		45
Zhengzhou Branch		-		-		7,803
		-		-		7,848

(b) Technology usage fees charged by

	Year ended September 30,
	2016		2017		2018
	RMB		RMB		RMB
Henan Agriculture University		1,000		-		-

The above amounts related to technology usage fees paid to certain related party for the exclusive right to use certain seed technologies.

F-26

ORIGIN AGRITECH LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2016, 2017 AND 2018

(In thousands, except number of share, per share data and unless otherwise stated)

(c) Rental income received from

	Year ended September 30,
	2016		2017		2018
	RMB		RMB		RMB
Beijing Shihui		250		-		-

(d) Service income received from

	Year ended September 30,
	2016		2017		2018
	RMB		RMB		RMB
Beijing Shihui		-		396		-

(e) Service fee charged by

	Year ended September 30,
	2016		2017		2018
	RMB		RMB		RMB
Beijing Shihui		-		600		-

(f) License usage fees charged to

	Year ended September 30,
	2016		2017		2018
	RMB		RMB		RMB
Beijing Shihui		-		-		1,575

(g) Guarantee
The Company guaranteed a loan of RMB11,850 taken by Beijing Shihui from July 24, 2018 to July 23, 2019.

F-27

ORIGIN AGRITECH LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2016, 2017 AND 2018

(In thousands, except number of share, per share data and unless otherwise stated)

(h) Termination of assets sold to and a subsidiary acquired from a related party

As further described in note 4, on September 26, 2016, the Company entered into a Master Agreement to sell its proprietary China-based commercial corn seed production and distribution business for RMB400,000 to Beijing Shihui. On August 16, 2017, the Company entered into a supplemental agreement to the Master Agreement to increase the total consideration to RMB421,000 and modify the payment terms.

On September 21, 2018, the Company and certain subsidiaries of the Company entered into a Termination Agreement with Beijing Shihui to terminate that certain Master Agreement, dated as of September 26, 2016, by and among the Company, Beijing Shihui, and certain subsidiaries of the Company. Pursuant to the Termination Agreement, the Company and Beijing Shihui agreed to terminate the Master Agreement and not to pursue the second closing contemplated under the Master Agreement. As a result of the Termination Agreement, the Company will not transfer certain assets, including the headquarters building of the Company located in Beijing, PRC and certain other assets, to Beijing Shihui, meanwhile, the transfer of control of Zhengzhou Branch was rewound as a result of termination of the Management Agreement on September 21, 2018.

4. DISCONTINUED OPERATIONS

On September 26, 2016, the Company entered into a Master Agreement with Beijing Shihui, under which the Buyer agreed to purchase the corn seed production and distribution assets, the office building in Beijing, China, and generally the business of commercial corn seed production and sales operated by the Company. On August 16, 2017, the Company entered into a Supplemental Agreement to the Master Agreement, pursuant to which, the aggregate purchase price was increased from RMB400,000 to RMB421,000 and certain payment arrangement provisions were amended.

The overall transaction is conducted in two steps. The first step is the sale of the equity held by Beijing Origin of each of the Denong, Changchun Origin and Linze Origin companies, and the second step is the sale of a company holding the assets of Zhengzhou Branch and the office building in Beijing, PRC. The second step requires Beijing Origin to effect a restructuring to form an entity to own the current office building located in Beijing, China and certain other assets (together the “Zhengzhou Branch Assets”), which entity is sold to the Buyer so as to transfer the building and assets to the Buyer.

When the first step is completed (the “First Closing”), the Buyer should give Beijing Origin a total consideration of RMB221,000, consisting of cash payment of RMB79,000 and bank loans reduction of RMB142,000, for the 98.58% equity ownership interest in Denong, 100% equity ownership interest in Changchun Origin and 100% equity ownership interest in Linze Origin (together the “VIE Subsidiaries”). The First Closing is conditioned (among other things) on Beijing Origin acquiring the current minority percentage ownership of Changchun Origin that is held by the Company’s Chairman, so as to deliver to the Buyer 100% of the equity ownership of Changchun Origin. The minority interest of Denong should continue to be held by two third parties and should not be sold to the Buyer. When the second step is completed (the “Second Closing”), the Buyer should give Beijing Origin a total consideration of RMB200,000, payable in cash after offsetting the then outstanding payables to the Buyer up to RMB150,000, for the 100% ownership interest in an entity formed by Beijing Origin as part of its reorganization to hold the Zhengzhou Branch Assets.

F-28

ORIGIN AGRITECH LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2016, 2017 AND 2018

(In thousands, except number of share, per share data and unless otherwise stated)

On July 31, 2017, the Company completed the First Closing and sold the VIE subsidiaries. On August 31, 2017, the Company transferred the control of Zhengzhou Branch to Beijing Shihui pursuant to a Management Agreement and the net assets in Zhengzhou Branch intended to be sold at the Second Closing are considered disposed. Of the total purchase price of RMB421,000, RMB347,085 was allocated to the aforementioned disposed entities and assets and RMB73,915 was allocated to the office building in Beijing, China. As of September 30, 2017, (1) total cash consideration of RMB45,400 inclusive of the RMB10,000 deposits was received, (2) principal amount of the bank loans amounted to RMB142,000 in the VIE subsidiaries was offset against the purchase price, (3) outstanding payables of RMB121,485 by Zhengzhou Branch to Buyer was offset against the purchase price. During the year ended September 30, 2017, we recognized a loss of RMB3,282 on the sale of commercial corn seed production and sales business operated by the Company. The loss is reported in discontinued operations in the consolidated statements of operations and comprehensive income.

On September 21, 2018, the Company and certain subsidiaries of the Company entered into a Termination Agreement (“Termination Agreement”) with Beijing Shihui to terminate that certain Master Agreement, dated as of September 26, 2016, by and among the Company, Beijing Shihui, and certain subsidiaries of the Company. Pursuant to the Termination Agreement, the Company and Beijing Shihui agreed to terminate the Master Agreement and not to pursue the second closing contemplated under the Master Agreement. As a result of the Termination Agreement, the Company will not transfer certain assets, including the headquarters building of the Company located in Beijing, PRC and certain other assets, to Beijing Shihui, meanwhile, the transfer of control of Zhengzhou Branch was rewound as a result of termination of the Management Agreement on September 21, 2018.

The Company reports operating results for discontinued operations separately from continuing operations to distinguish the financial impact of disposal transactions from ongoing operations. Through September 30, 2018, the Company reported discontinued operations when the operations and cash flows of a component of the Company had been eliminated or intended to be eliminated from ongoing operations. For a component to be disposed of by sale, financial results were classified as discontinued only when held for sale criteria were met. For a component to be disposed of other than by sale, financial results were not classified as discontinued until abandonment, distribution, or exchange occurred, depending on the manner of disposal. In the annual report for the year ended September 30, 2016 and 2017, the operating results of the seed production and distribution entities and assets mainly including Changchun Origin, Denong, Linze Origin, Zhengzhou Branch and office building in Beijing, PRC are presented as discontinued operations. The office building in Beijing, PRC was previously planned to be sold to Beijing Shihui. However, the Company changed the original plan and decided not to sell this part of assets. On September 21, 2018, the Company and certain subsidiaries of the Company entered into a Termination Agreement. Pursuant to this agreement, the Company will not transfer the above-mentioned office building in Beijing to Beijing Shihui.

As the above-mentioned office building in Beijing no longer meets the held-for-sale criteria, this part of assets has been reclassified as held and used and the related operation results were reclassified to continuing operations for all periods presented in this report.

The effect in the results of discontinued operations due to the aforesaid reclassification are summarized as follows:

F-29

ORIGIN AGRITECH LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2016, 2017 AND 2018

(In thousands, except number of share, per share data and unless otherwise stated)

Results of operations reclassified from discontinued operations to continued operations for the fiscal years 2016 and 2017:

	Year ended September 30,
	2016			2017
	RMB			RMB
Revenues		-			871
Cost of revenues		-			(679	)
Gross profit		-			192
Operating expenses
General and administrative		(1,188	)		(1,188	)
Total operating expenses, net		(1,188	)		(1,188	)
Impairment loss		-			(44,706	)
Loss before income taxes		(1,188	)		(45,702	)
Net Loss		(1,188	)		(45,702	)

Assets and liabilities reclassified from discontinued operations to continued operations:

	September 30,
	2017
	RMB
Assets
Accounts receivable		24
Inventories		22,003
Total current assets		22,027
Land use rights, net		5,258
Plant and equipment, net		32,484
Non-current assets		37,742
Total assets		59,769
Liabilities
Due to growers		6,535
Advances from customers		1,866
Total liabilities		8,401

The assets and liabilities of the entities that were sold and to be sold have been reclassified as “assets of discontinued operations” and “liabilities of discontinued operations” within current and non-current assets and liabilities, respectively, on the consolidated balance sheets as of September 30, 2017. The results of operations of the entities or assets that were sold and to be sold have been reclassified to “net income (loss) from discontinued operations” in the consolidated statements of income and comprehensive income for the years ended September 30, 2016 and 2017.

F-30

ORIGIN AGRITECH LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2016, 2017 AND 2018

(In thousands, except number of share, per share data and unless otherwise stated)

Results of discontinued operations are summarized as follows:

	Year ended September 30,
	2016			2017			2018		2018
	RMB			RMB			RMB		US$
Revenues		334,770			234,952			-		-
Cost of revenues		(259,253	)		(171,501	)		-		-
Gross profit		75,517			63,451			-		-
Operating expenses
Selling and marketing		(38,079	)		(21,149	)		-		-
General and administrative		(29,185	)		(16,414	)		-		-
Research and development		(2,760	)		(659	)		-		-
Other (expense) income, net		(1,301	)		360			-		-
Total operating expenses, net		(71,325	)		(37,862	)		-		-
Income from discontinued operations		4,192			25,589			-		-
Interest expense		(6,644	)		(5,480	)		-		-
Interest income		93			34			-		-
Impairment on plant and equipment and inventories		-			-			-		-
(Loss) income before income taxes from discontinued operations		(2,359	)		20,143			-		-
Income tax expense from discontinued operations
Current		(1,436	)		(1,281	)		-		-
Deferred		-			-			-		-
Income tax expenses from discontinued operations		(1,436	)		(1,281	)		-		-
Loss on disposal of commercial seed business		-			(3,282	)		-		-
Net (loss) income from discontinued operations		(3,795	)		15,580			-		-
Less: Net (loss) income attributable to non-controlling interests		(481	)		821			-		-
Net income (loss) from discontinued operations attributable to Origin Agritech Ltd.		(3,314	)		14,759			-		-

F-31

ORIGIN AGRITECH LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2016, 2017 AND 2018

(In thousands, except number of share, per share data and unless otherwise stated)

Liabilities from discontinued operations are summarized as follows:

	September 30,
	2017		2018		2018
	RMB		RMB		US$
Liabilities of discontinued operations
Due to related parties		22,640		-		-
Total liabilities of discontinued operations		22,640		-		-

The Company has combined cash flows from discontinued operations with cash flows from continuing operations within the operating, investing and financing categories within the consolidated statement of cash flows. Cash and non-cash items for certain operating and investing activities related to discontinued operations for the years ended September 30, 2016, 2017 and 2018 are as follows: 

	Year Ended September 30
	2016		2017		2018		2018
	RMB		RMB		RMB		US$
Depreciation and amortization		11,295		11,295		-		-
Asset impairment		26,941		-		-		-
Capital expenditures		2,510		-		-		-

Related party transactions that are reported in discontinued operations are as follows:

(1) Due to related parties

	Year ended September 30,
	2017		2018
	RMB		RMB
Beijing Shihui		22,640		-

F-32

ORIGIN AGRITECH LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2016, 2017 AND 2018

(In thousands, except number of share, per share data and unless otherwise stated)

(2) Sales to related parties

	Year ended September 30,
	2016		2017		2018
	RMB		RMB		RMB
Beijing Shihui		102,234		183,487		-

5. ADVANCES TO SUPPLIERS

Advances to suppliers consist of the following:

	September 30,
	2017		2018
	RMB		RMB
Prepayments for advertisement		2,206		-
Prepayments for testing fee		719		140
Deposits for research and development fee		207		207
Prepayments for professional fee		200		-
Others		1,966		841
		5,298		1,188

6. INVENTORIES

Inventories consist of the following:

	September 30,
	2017			2018
	RMB			RMB
Low value supplies		925			2,063
Parent seeds		298			81
Work in progress		40,836			85,035
Provision		(18,833	)		(5,232	)
		23,226			81,947

No inventories have been pledged as collateral for bank loans as of September 30, 2017 and 2018. Provision made for inventories for the years ended September 30, 2017, 2018 were RMB18,833 and RMBnil, respectively. Written-off of provision for inventories for the years ended September 30, 2018 were RMB13,601.

F-33

ORIGIN AGRITECH LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2016, 2017 AND 2018

(In thousands, except number of share, per share data and unless otherwise stated)

7. OTHER CURRENT ASSETS

Other current assets consist of the following:

	September 30,
	2017		2018
	RMB		RMB
Advances to staff for business use		1,249		119
Deposits for rental		3		7
Others		74		121
		1,326		247

8. LAND USE RIGHTS, NET

Land use rights, net consist of the following:

	September 30,
	2017			2018
	RMB			RMB
Land use rights		24,757			22,275
Accumulated amortization		(5,649	)		(5,711	)
Land use rights, net		19,108			16,564

Land use rights have been pledged as collateral for bank loans as of September 30, 2017 and 2018 were RMB5,258 and RMB2,177, respectively. Amortization expenses for the years ended September 30, 2016, 2017 and 2018 were RMB701, RMB701 and RMB668, respectively.

F-34

ORIGIN AGRITECH LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2016, 2017 AND 2018

(In thousands, except number of share, per share data and unless otherwise stated)

9. PLANT AND EQUIPMENT, NET

Plant and equipment, net consist of the following:

	September 30,
	2017			2018
	RMB			RMB
Plant and building		171,799			162,507
Machinery and equipment		92,470			101,543
Furniture and office equipment		12,392			12,367
Motor vehicles		4,777			3,591
Total		281,438			280,008
Accumulated depreciation		(79,759	)		(85,600	)
Accumulated impairment		(25,873	)		(25,873	)
Construction in progress		1,511			4,213
Plant and equipment, net		177,317			172,748

Included in plant and building with net values of RMB37,720 and RMB35,238 have been pledged for bank loans as of September 30, 2017 and September 30, 2018.

The depreciation expenses for the years ended September 30, 2016, 2017 and 2018 were RMB8,805, RMB13,305, and RMB9,840, respectively.

Construction in progress mainly refers to the new seed incubation facilities under construction.

10. LONG TERM INVESTMENTS

Equity investments consist of the following:

	September 30,
	2017		2018
	RMB		RMB
Cost method investment		18,721		18,721
Impairment on cost method investment		-		(2,374	)
Cost method investment		18,721		16,347

In previous years, the Company owned 23% equity interest in Jinong and accounted for equity method investment. In 2012, one shareholder of Jinong increased its investment in Jinong’s shares, thereby the equity interests held by the Company were reduced to 17.94% and the Company is considered to no longer have a significant influence on Jinong. Therefore, the investment in Jinong was accounted for the cost method investment as of September 30, 2017 and 2018. The Company recorded an impairment loss of RMBnil, RMBnil and RMB2,374 on its cost method investment for the years ended September 30, 2016, 2017 and 2018, respectively.

F-35

ORIGIN AGRITECH LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2016, 2017 AND 2018

(In thousands, except number of share, per share data and unless otherwise stated)

11. ACQUIRED INTANGIBLE ASSETS, NET

Acquired intangible assets, net consist of the following:

	September 30,
	2017			2018
	RMB			RMB
Technology rights for licensed seeds		75,899			75,899
Others		4,739			4,739
		80,638			80,638
Accumulated amortization		(61,862	)		(67,806	)
Impairment provision		(3,037	)		(4,470	)
Acquired intangible assets, net		15,739			8,362

Amortization expenses for the years ended September 30, 2016, 2017 and 2018 were RMB6,637, RMB6,153 and RMB5,944, respectively. RMBnil and RMBnil and RMB1,433 were charged for the years ended September 30, 2016, 2017 and 2018, respectively.

Amortization expense on these intangible assets for each of the next five years is as follows:

Year ending September 30,	RMB
2019		2,034
2020		1,058
2021		832
2022		795
2023		782
Total		5,501

The Company enters into technology transfer and usage agreements with strategic partners and pays up-front fees for the exclusive rights to certain seed technologies. Technology rights are amortized over an average usage period of 3 to 20 years and are charged to general and administrative expenses.

12. OTHER ASSETS

Other assets consist of the following:

	September 30,
	2017		2018
	RMB		RMB
Prepaid lease		1,196		1,202
Guarantee fund for long-term borrowing		3,000		-
		4,196		1,202

F-36

ORIGIN AGRITECH LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2016, 2017 AND 2018

(In thousands, except number of share, per share data and unless otherwise stated)

13. BORROWINGS

Borrowings consisted of the following:

	September 30,
	2017		2018
	RMB		RMB
Borrowing from Bank of Communications under Zhengzhou Branch, originally due on May 18, 2017 and extended to November 18, 2017 with annual interest rate of 5.87% and 6.41% at September 30, 2016 and 2017, respectively, secured by Zhengzhou Branch’s plant and equipment and is guaranteed by the Chairman of the Company, fully repaid on January 8, 2018		15,000		-
Short-term borrowings		15,000		-
Borrowing from Shanghai Pudong Development Bank under Beijing Origin, due on December 8, 2017 with annual interest rate of 6.18%, guaranteed by the Company’s chairman, fully paid on December 27, 2017		20,000		-
Borrowing from Beijing Agriculture Finance Leasing, LLC.(“BAFL”) under Beijing Origin, payable on installment, due on December 29 , 2020 with annual interest rate of 6%, secured by Beijing’s properties and land use right *		72,273		78,235
Long-term borrowings		92,273		78,235
Current portion of long-term borrowings		35,504		78,235
Non-current portion of long-term borrowings		56,769		-

* Beijing Origin did not make any principal payments for the borrowing. Beijing Origin entered into negotiations with BAFL regarding modification of payment schedule. As of the date of this report, there is no formed agreements signed regarding modification of payment schedule. As of September 30, 2018, the Company reclassified the borrowing as current liability in consolidated balance sheets result from the default.

Interest expense related to borrowings amounted to RMB7,607, RMB8,760 and RMB15,370 for the years ended September 30, 2016, 2017 and 2018, respectively.  

F-37

ORIGIN AGRITECH LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2016, 2017 AND 2018

(In thousands, except number of share, per share data and unless otherwise stated)

14. NOTES PAYABLE

On July 5, 2017, the Company issued a convertible promissory note (the “Loan Note”) to L2 Capital, LLC (“L2”) in the aggregate principal amount of up to a maximum amount of RMB15,562 (US$2,345), which will be available in five tranches. Each tranche is available to be withdrawn when the specified milestone is achieved. The Loan Note bears interest at 8% per annum and has an original issue discount of approximately 13%. In connection with each draw down of the Loan Note, the Company should issue its common stocks, for an aggregate maximum of 293,087 shares (“Commitment Shares”). The Loan Note matures six months from the date of each draw down, and the principal is repaid with a premium ranging from 115% to 130%, depending on the date of repayment. The default repayment premium is 40%. The maturities may be extended for two-week periods upon the prepayment of a percentage portion of the principal then due. The Loan Note must also be repaid in full upon a qualified offering of in excess of US$2,000. The Loan Note is secured by all the assets of the Company located in the United States. As of September 30, 2017, the Company has completed Tranche 1 and Tranche 2 withdrawals with cash proceeds of RMB8,628 (US$1,300) and issued 189,644 shares for Commitment Shares. The aggregate principal of Tranche 1 and Tranche 2 amounted to RMB10,068 (US$1,517).

The Loan Note is convertible to common stock at any time on or after an event of default as defined in the Loan Note agreement at a conversion price equaled to the lowest trading price of the common stock during the 15 trading days prior to the conversion. The holder’s conversion right commenced January 5, 2018, and continued until the Loan Note was paid in full. Through September 30, 2018, the holder has converted an aggregate of US2,388 due under the terms of the Loan Note into an aggregate of 2,963,220 ordinary shares.

The Company evaluated FASB ASC 480-10, Distinguishing Liabilities from Equity to determine the appropriate classification of the Loan Note. The Loan Note will be settled with a variable number of common stocks the monetary value of which is based solely or predominantly on a fixed monetary amount known at inception, and therefore is accounted for as liabilities in accordance with FASB ASC 480-10, no further analysis for FASB ASC 815, Derivatives and Hedging was required. The Company measured the Loan Note initially at fair value, which is accreted up to the amounts expected to be settled (either cash expected to be paid or common stocks expected to be converted) based on the Company’s analysis. At the inception, the Company considered the principal, interests and penalty (default repayment premium) amounts will be very likely to be settled in full by the conversion of common stocks at the maturity of the Loan Note due to the Company’s working capital deficiency situation (note 2), the fair value of the Loan Note is therefore determined and accounted for at the maximum amounts of principal, interest and default repayment premium under the effective interest method. The related debt issuance costs including the original issuance discount, the legal fees and the Commitment Shares are reported in the balance sheet as a direct deduction from the fair value of the Loan Note.

As of September 30, 2018, total amount due on the Loan Note is fully converted into shares of common stock.

The Loan Note was measured subsequently at fair value with changes in fair value recognized in earnings. No changes in fair value was recognized as of September 30, 2018. As of September 30, 2017 and 2018, the balance of Loan Note was RMB8,335 and RMBnil, respectively.

F-38

ORIGIN AGRITECH LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2016, 2017 AND 2018

(In thousands, except number of share, per share data and unless otherwise stated)

15. OTHER PAYABLES AND ACCRUED EXPENSES

Other payables and accrued expenses consist of:

	September 30,
	2017		2018
	RMB		RMB
Payable for purchase of plant and equipment		69		470
Payable for purchase of construction-in-progress		5,346		7,989
Professional fee payable		6,741		8,578
Salaries and bonus payable		8,537		9,272
Accrued interest		390		390
Deposits from others		652		665
Payable for labor union, housing fund and education expenses		488		1,399
Deferred government subsidies		4,782		7,649
Others		4,173		1,515
		31,178		37,927

16. OTHER LONG-TERM LIABILITY

During the fiscal year 2011, the Company received government subsidies from the local PRC government for plant and equipment projects of RMB14.00 million and land use right of RMB10.90 million; in fiscal year 2016, the Company received government subsidies from the local PRC government for equipment projects of RMB8.63 million. In fiscal year 2017, the Company received government subsidies from the local PRC government for equipment projects of RMB4.04 million (US$0.6 million). In fiscal year 2018, the Company received government subsidies from the local PRC government for equipment projects of RMB3.7 million (US$0.5 million). The non-current portion of such government subsidies are recorded as long-term liability for, which will be amortized over the estimated useful lives related to the plant and equipment and land use right.

17. STOCK-BASED COMPENSATION

On November 8, 2005, the Company adopted the 2005 Performance Equity Plan (the “2005 Plan”) which allows the Company to offer a variety of incentive awards to employees to acquire up to 150,000 ordinary shares under the 2005 Plan. On April 22, 2010, the Company adopted the 2009 Performance Equity Plan (the “2009 Plan”) and is authorized to issue equity based awards for up to 150,000 ordinary shares to the Company’s employees and senior managements. On December 22, 2014 the Company adopted the 2014 Performance Equity Plan, under which we are able to issue equity awards with the right to acquire up to 500,000 ordinary shares to our directors, officers, employees, individual consultants and advisors. The main purpose of the plan is to provide an existing structure and renewable benefit plan for senior management and directors and others providing services to the company. In addition to current equity awards to the directors and officers, we plan to expand our equity awards to a broader range of employees in order to align our employee incentives towards the stock performance. The main purpose of the two plans is to provide an existing structure and renewable benefit plan for senior management and directors, employees and consultants.

F-39

ORIGIN AGRITECH LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2016, 2017 AND 2018

(In thousands, except number of share, per share data and unless otherwise stated)

Under the terms of the 2005 Plan on January 4, 2010 the Company granted its employees options to purchase 12,500 ordinary shares at the price of US$122.3 (“Tranche 5”). Under the terms of the 2009 Plan, on January 3, 2011, the Company granted its employees options to purchase 12,000 ordinary shares at the price of US$108.4 (“Tranche 6”); and on January 3, 2012, the Company granted its employees options to purchase 36,500 ordinary shares at the price of US$25.5 (“Tranche 7”), and on January 2, 2013, the Company granted its employees options to purchase 36,000 ordinary shares at the price of US$14.4 (“Tranche 8”) Subject to the modifications discussed below, and on January 2, 2014, the Company granted its employees options to purchase 35,000 ordinary shares at the price of US$12.7 (“Tranche 9”).

Under the terms of the 2014 Plan, on January 2, 2015 the Company granted its employees options to purchase 19,500 ordinary shares at the price of US$14.8 (“Tranche 10”), on January 4, 2016 the Company granted its employees options to purchase 18,500 ordinary shares at the price of US$13.8 (“Tranche 11”), on April 19, 2016 the Company granted its employees options to purchase 60,000 ordinary shares at the price of US$20.5 (“Tranche 12”), on May 16, 2016 the Company granted its employees options to purchase 20,000 ordinary shares at the price of US$16.5 (“Tranche 13”),on August 3, 2016 the Company granted its employees options to purchase 20,000 ordinary shares at the price of US$20.0 (“Tranche 14”), on January 3, 2017 the Company granted its employees options to purchase 18,000 ordinary shares at the price of US$20.7 (“Tranche 15”), on October 2, 2017 the Company granted its employees options to purchase 2,500 ordinary shares at the price of US$16.5 (“Tranche 16”), on December 22, 2017 the Company granted its employees options to purchase 8,800 ordinary shares at the price of US$8.0 (“Tranche 17”), on January 2, 2018 the Company granted its employees options to purchase 29,000 ordinary shares at the price of US$9.1 (“Tranche 18”), on March 1, 2018 the Company granted its employees options to purchase 20,000 ordinary shares at the price of US$8.2 (“Tranche 19”).

All the options have an expiration date that is 5 to 10 years from the date of grant and vest immediately or over a period of 1 to 5 years. 70,000 and 70,000 options under the 2009 Plan, and 151,000 and 211,300 options under the 2014 Plan were outstanding as of September 30, 2017 and 2018, respectively.

After the adjusted awards, all the option awards have an exercise price of US$8.0 to US$20.7 and expire 5 to 10 years from the date of grant and vest immediately or over a period of 1 to 10 years.

On December 22, 2014, January 2, 2016 and December 28, 2016, the compensation committee of the Board of Directors approved the substitution of restricted stock for outstanding grants under Tranche 5, 6&7 respectively, that no longer offer the kind of incentive opportunity originally sought for valued employees given the fall in the market price of the ordinary shares during recent years. The revised terms of the stock options were accounted for as a modification in accordance with ASC 718-20. For the purpose of determining the amount of any incremental share-based compensation cost that may have resulted from the modification of the exercise prices, the Company compared the fair value of modified awards and that of the original awards, determined that RMB616, RMB542 and RMB982 respectively, of the modifications required the recognition of additional share-based payment expense, respectively.

For the options outstanding at September 30, 2017 and 2018, the weighted average remaining contractual lives are 4.9 and 4.17 years, respectively.

The Company recorded share-based compensation expense for share options of RMB8,796, RMB3,016 and RMB4,313 for the years ended September 30, 2016, 2017 and 2018 respectively. As of September 30, 2017 and 2018, there were RMB690 and RMB1,228 of total unrecognized compensation expense related to non-vested share-based compensation arrangement under the 2014 Plan. The unrecognized compensation expense is expected to be recognized over a weighted-average period of 0.48 year.

F-40

ORIGIN AGRITECH LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2016, 2017 AND 2018

(In thousands, except number of share, per share data and unless otherwise stated)

Under the terms of the 2009 Plan, on December 28, 2017 the Company granted 33,000 restricted shares to its management at an aggregate value of US$287,100, based on the stock closing price of US$8.7 at December 28, 2017. The vesting period of these shares was five-days from grant date, which was January 3, 2018.

Under the term of the 2014 Plan, on March 1, 2018, June 1, 2018 and September 1, 2018 the Company granted total of 22,500 restricted shares to its management at an aggregate value of US$167,925, based on the stock closing price of US$8.6, US$7.2 and US$6.6 at March 1, 2018, June 1, 2018 and September 1, 2018, respectively. The vesting period of these shares was 1 year from the grant date, which is March 1, 2019, June 1, 2019 and September 1, 2019, respectively.

The Company recorded share-based compensation expense for restricted shares of RMBnil, RMBnil and RMB2,272 for the years ended September 30, 2016, 2017 and 2018 respectively. As of September 30, 2017 and 2018, there were RMBnil and RMB709 of total unrecognized compensation expense related to non-vested restricted shares compensation arrangement under the 2009 Plan and 2014 Plan. The unrecognized compensation expense is expected to be recognized over a weighted-average period of 0.71 year.

F-41

ORIGIN AGRITECH LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2016, 2017 AND 2018

(In thousands, except number of share, per share data and unless otherwise stated)

A summary of the share option activity under the 2005, 2009 and 2014 Plans is as follows:

	Tranche			Tranche			Tranche		Tranche		Tranche			Tranche		Tranche		Tranche		Tranche		Tranche		Tranche		Tranche		Tranche
	7			8			9		10		11			12		13		14		15		16		17		18		19
Grant date	January 3,			January 2,			January 2,		January 2,		January 4,			April 19,		May 16,		August 3,		January 3,		October 2,		December 22,		January 2,		March 1,
	2012			2013			2014		2015		2016			2016		2016		2016		2017		2017		2017		2018		2018
Options outstanding as of September 30, 2016		13,500			35,500			34,500		19,500		18,500			60,000		20,000		20,000		-		-		-		-		-
Number of options granted		-			-			-		-		-			-		-		-		18,000		-		-		-		-
Options exercised		(500	)		-			-		-		(5,000	)		-		-		-		-		-		-		-		-
Options cancelled/expired		(13,000	)		-			-		-		-			-		-		-		-		-		-		-		-
Outstanding as of September 30, 2017		-			35,500			34,500		19,500		13,500			60,000		20,000		20,000		18,000		-		-		-		-
Number of options granted		-			-			-		-		-			-		-		-		-		2,500		8,800		29,000		20,000
Options exercised		-			-			-		-		-			-		-		-		-		-		-		-		-
Options cancelled/expired		-			(35,500	)		-		-		-			-		-		-		-		-		-		-		-
Outstanding as of September 30, 2018		-			-			34,500		19,500		13,500			60,000		20,000		20,000		18,000		2,500		8,800		29,000		20,000
Options vested and exercisable
At September 30, 2017		-			35,500			34,500		19,500		13,500			60,000		20,000		20,000		18,000		-		-		-		-
At September 30, 2018		-			-			34,500		19,500		13,500			60,000		20,000		20,000		18,000		2,500		8,800		29,000		20,000
Weighted average fair value at the grant date (US$)		14.5			7.6			6.5		7.5		9.0			15.4		12.4		14.4		4.0		7.7		4.4		5.1		5.1

The fair value of each option granted is estimated on the date of grant using the Black-Scholes Option Pricing Model:

	Tranche			Tranche			Tranche			Tranche			Tranche			Tranche			Tranche			Tranche			Tranche			Tranche			Tranche			Tranche			Tranche
	7			8			9			10			11			12			13			14			15			16			17			18			19
Exercise price (US$)		25.5			14.4			12.7			14.8			13.8			20.5			16.5			20.0			20.7			16.5			8.0			9.1			8.2
Average risk-free interest rate		0.4	%		0.37	%		0.76	%		1.07	%		1.73	%		1.79	%		1.75	%		1.55	%		1.94	%		1.94	%		2.26	%		2.25	%		2.58	%
Expected option life (year)		3			3			3			3			5			10			10			10			5			5			5			5			5
Volatility rate		90.3	%		86.32	%		79.2	%		79.67	%		80.72	%		69.27	%		69.92	%		65.37	%		63.87	%		52.40	%		63.2	%		64.6	%		68.2	%
Dividend yield		-			-			-			-			-			-			-			-			-			-			-			-			-

The aggregate intrinsic value as of September 30, 2017 and 2018 is US$265 and US$nil, respectively

F-42

ORIGIN AGRITECH LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2016, 2017 AND 2018

(In thousands, except number of share, per share data and unless otherwise stated)

18. TREASURY STOCK

During the year ended September 30, 2007, the Company repurchased 49,885 common stock of the Company with a total cost of RMB29,377 under the approval of the Board of Directors. In February 2013, the board of directors approved a share repurchase program for open market and negotiated transactions for a 12 month period in the amount of US$5 million, under which 61,139 and 16,738 shares with a total cost of RMB6,286 and RMB1,782 were bought in the Nasdaq market during the year ended September 30, 2013 and 2014, respectively, in compliance with U.S. securities laws. The Company recorded the entire purchase price of the treasury stock as a reduction of equity.

During the year ended September 30, 2017, the Company sold 50,000 shares of treasury stock with a total cost of RMB14,654 for a total sale price of RMB6,115. During the year ended September 30, 2018, the Company granted 12,853 shares of treasury stock to its employee under stock-based compensation.

19. EQUITY LINE

On July 5, 2017, the Company entered into an equity purchase agreement (the “Equity Purchase Agreement”) with L2 Capital, LLC. Upon the terms and subject to the conditions thereof, the selling stockholder is committed to purchase that number of ordinary shares of the Company (the “Purchase Shares”) equal to an aggregate market price of up to US$4,500 (the “Total Commitment Amount”). From time to time, commencing on the date on which a registration statement registering the ordinary shares to be purchased becomes effective, the Company may, in its sole discretion, provide the selling stockholder with a put notice (each a “Put Notice”) to purchase a specified number of the Purchase Shares (each a “Put Amount Requested”), subject to the limitations and conditions stated in the Equity Purchase Agreement. Upon delivery of a Put Notice, the Company must deliver the Put Amount Requested as a Deposit Withdrawal at Custodian so as to deliver the ordinary shares being sold to the selling stockholder within two trading days. There are certain equity conditions that the Company must meet to be able to deliver a Put Notice, including being in compliance with the terms of the aforementioned Loan Note and the Equity Purchase Agreement, a Put Amount Request cannot exceed the full committed amount under the Equity line, a Put Amount Request cannot exceed 9.99% of the outstanding ordinary shares, the continued listing and trading of the ordinary shares, and the registration statement of which this prospectus is a part, is effective and the information therein is current.

The Put Amount Requested pursuant to any single Put Notice is limited to a maximum of 150% of the average trading volume of the ordinary shares as traded on Nasdaq or other exchange on which the ordinary shares are listed, and not less than US$25 in value. A subsequent put may only be made 10 trading days after the earlier put. The equity line may be terminated at any time, subject to a short notice period.

The actual amount of proceeds the Company receives pursuant to each Put Notice (each, the “Put Amount”) is to be determined by multiplying the Put Amount Requested by the applicable purchase price. The purchase price for each of the Purchase Shares equals to 94% of the lowest market price of the Company’s ordinary shares on Nasdaq for any trading day during the 5 trading days immediately after the date of the respective Put Notice.

F-43

ORIGIN AGRITECH LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2016, 2017 AND 2018

(In thousands, except number of share, per share data and unless otherwise stated)

20. INCOME TAXES

Agritech and its subsidiary, State Harvest are incorporated in the British Virgin Islands and are exempted from the income tax under the laws of the British Virgin Islands. State Harvest’s subsidiary and State Harvest’s variable interest entity, Beijing Origin and its majority owned subsidiaries (together, the “PRC entities”) were incorporated in the PRC and governed by the PRC laws.

The applicable tax rate of the PRC Enterprise Income Tax (“EIT”) was changed from 33% to 25% on January 1, 2008, according to the Corporate Income Tax Law. The preferential tax rate previously enjoyed by the PRC entities is gradually transitioned to the new standard rate of 25% over a five-year transitional period. In addition, article 28 of the new tax law stated that the income tax rate of a “high technology” company (high-tech status) is to remain at 15%.

Preferential tax treatment of Beijing Origin as “high technology” company (High-tech Status) from October 28, 2017 to October 27, 2020 has been granted by the relevant tax authorities. Beijing Origin is entitled to a preferential tax rate of 15% which is subject to annual review. As a result of these preferential tax treatments, the reduced tax rates applicable to Beijing Origin Seed Limited for 2016, 2017 and 2018 are 15%. Xinjiang Origin is entitled to a preferential tax of 2 years exemption and 3 years of half EIT from January 1, 2012 to December 31, 2016 in accordance with Cai Shui [2011] No. 53 and Cai Shui [2011] No. 60 issued by the PRC State Administration of Taxation and Xin Cai Fa Shui [2011] No. 51 issued by the Xinjiang Local Taxation Bureau. Xinjiang Origin is currently in the status of 25% for the year ended September 30, 2018.

Had all the above tax holidays and concessions not been available, the tax charges would have been (decreased)/increased by RMB(5,609), RMB4,274 and RMBnil and the basic net loss on per share would have been (decreased)/increased by RMB(0.25), RMB0.18 and RMBnil for the years ended September 30, 2016, 2017 and 2018, respectively. The diluted net loss per share for the years ended September 30, 2016, 2017 and 2018 would have been (decreased)/increased by RMB(0.25), RMB0.18 and RMBnil, respectively.

The Company’s liability for income taxes includes the liability for unrecognized tax benefits, interest and penalties which relate to tax years still subject to review by taxing authorities. Audit periods remain open for review until the statute of limitations has passed. The completion of review or the expiration of the statute of limitations for a given audit period could result in an adjustment to the Company’s liability for income taxes. Any such adjustment could be material to the Company’s results of operations for any given quarterly or annual period based, in part, upon the results of operations for the given period. Until September 30, 2018, the management considered that the Company had no uncertain tax positions affected its consolidated financial position. The Company’s uncertain tax positions are related to tax years that remain subject to examination by the relevant tax authorities and the major one is the China tax authority. The open tax years for examinations in China are 5 years.

F-44

ORIGIN AGRITECH LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2016, 2017 AND 2018

(In thousands, except number of share, per share data and unless otherwise stated)

The principal components of the deferred income tax assets are as follows:

	September 30,
	2017			2018
	RMB			RMB
Non-current deferred tax assets:
Net operating loss carry forward		39,578			94,750
Impairment on inventory		5,626			1,822
Impairment on long-term equity investment		-			356
Others		(20,252	)		4,644
Non-current deferred income tax assets		24,952			101,572
Valuation allowances		(24,952	)		(101,572	)
Net non-current deferred income tax assets		-			-

The Company did not have any significant temporary differences relating to deferred tax liabilities as of September 30, 2017 and 2018.

A significant portion of the deferred tax assets recognized relates to net operating loss and credit carry forwards. The Company operates through the PRC entities and the valuation allowance is considered on each individual basis.

F-45

ORIGIN AGRITECH LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2016, 2017 AND 2018

(In thousands, except number of share, per share data and unless otherwise stated)

The net operating loss attributable to those PRC entities can only be carried forward for five to ten years. The operating loss in the United States before December 31, 2017 can be carried forward for 20 years to offset future taxable profit. As of September 30, 2018, the Company's total net operating loss carry forwards of RMB579,677, out of which, RMB63,506 would expire from calendar year ending 2018 through 2021, RMB516,171 can be carried forward from calendar year ending 2022 and after.

Reconciliation between total income tax expenses and the amount computed by applying the statutory income tax rate to income before taxes is as follows:

	Year ended September 30,
	2016			2017			2018
		%			%			%
Statutory rate		25			25			25
Effect of preferential tax treatment		(8	)		3			(3	)
Effect of different tax jurisdiction		(6	)		-			-
Change in valuation allowance		(2	)		(27	)		(26	)
Over provision in prior year		(9	)		(1	)		4
Effective income tax rate		-			-			-

F-46

ORIGIN AGRITECH LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2016, 2017 AND 2018

(In thousands, except number of share, per share data and unless otherwise stated)

21. INCOME/(LOSS) PER SHARE

The following table sets forth the computation of basic and diluted loss per share for the years indicated:

	Year ended September 30,
	2016			2017			2018
	RMB			RMB			RMB
Numerator:
Net loss from continuing operations attributable to Origin Agritech Limited		(62,264	)		(90,433	)		(153,663	)
Net income (loss) from discontinued operations attributable to Origin Agritech Limited		(3,314	)		14,759			-
Net loss attributable to Origin Agritech Limited		(65,578	)		(75,674	)		(153,663	)
Denominator:
Average common stock outstanding - basic		2,759,834			2,808,293			3,061,979
Dilutive effect of share options		-			-			-
Diluted shares		2,759,834			2,808,293			3,061,979
Basic and Diluted Per Share Data:
Basic and diluted loss per share attributable to Origin Agritech Limited:
Continuing operations		(22.56	)		(32.20	)		(50.18	)
Discontinued operations		(1.20	)		5.25			-
		(23.76	)		(26.95	)		(50.18	)

For the year ended September 30, 2016, 2017 and 2018, the effect of the outstanding options was anti-dilutive.

22. EMPLOYEE BENEFIT PLAN AND PROFIT APPROPRIATION

Full time employees of the PRC entities participate in a government mandated multi-employer defined contribution plan pursuant to which certain pension benefits, medical care, unemployment insurance, employee housing fund and other welfare benefits are provided to employees. Chinese labor regulations require the Company to accrue for these benefits based on certain percentages of the employees’ salaries. The total provisions for such employee benefits were RMB7,875, RMB7,241 and RMB4,615 for the years ended September 30, 2016, 2017 and 2018 respectively.

F-47

ORIGIN AGRITECH LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2016, 2017 AND 2018

(In thousands, except number of share, per share data and unless otherwise stated)

Pursuant to the laws applicable to the PRC, domestic PRC entities must make appropriations from after-tax profit to non-distributable reserves funds including: (i) the statutory surplus reserve and; (ii) the statutory public welfare fund. Subject to the limits of 50% of the entity’s registered capital, the statutory surplus reserve fund requires annual appropriations of 10% of after-tax profit (as determined under accounting principles generally accepted in the PRC (“PRC GAAP”) at each year-end). The Company’s wholly foreign owned subsidiary, BioTech, however subject to the law applicable to foreign invested enterprises in the PRC, was required annual appropriation of the general reserve fund, no less than 10% of after-tax profit (as determined under PRC GAAP at each year-end). These reserve funds can only be used for specific purposes of enterprise expansion and staff welfare and are not distributable as cash dividends. No appropriation has been made for the years ended September 30, 2016, 2017 and 2018. There was no after-tax profit recorded in the PRC statutory accounts for 2017 and 2018. On the other hand, the amount set aside as of September 30, 2017 and 2018 were RMB20,848 and RMB20,848.

23. COMMITMENTS AND CONTINGENCIES

(a) Capital commitments

As of September 30, 2017 and 2018, capital commitments for the purchase of long-term assets are as follows:

	September 30,
	2017		2018
	RMB		RMB
Equipment		2,702		-
		2,702		-

(b) Operating lease

The Company leased certain land use rights for seed development and office premises under non-cancellable leases. Rental expenses under operating leases for the years ended September 30, 2016, 2017 and 2018 were RMB2,314, RMB2,908 and RMB3,859, respectively.

As of September 30, 2018, the Company was obligated under operating leases requiring minimum rental as follows:

Year ending September 30,	RMB
2019		905
2020		548
2021		516
2022		500
2023		422
Thereafter		3,793
		6,684

F-48

ORIGIN AGRITECH LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2016, 2017 AND 2018

(In thousands, except number of share, per share data and unless otherwise stated)

(c) Legal proceeding

There are legal proceedings against Linze Origin Seed Limited and Beijing Origin involving unsettled purchase orders to suppliers of Linze Origin Seed Limited. Pursuant to court order and mediations, the total compensation of these proceedings amounted to RMB23.7 million plus interests which primarily shall be settled by Linze Origin Seed Limited, and Beijing Origin shall be jointly and severally liable for these claims.

With respect to the legal proceedings and claims described above, such claims primarily shall be settled by Linze Origin Seed Limited and the Company's liability, if any, with respect to such claims, is uncertain. At present, the Company is unable to estimate a reasonably possible range of loss, if any, that may result from such litigation. If an unfavorable outcome were to occur in the litigation described above, the impact could be material to the Company's business, financial condition, or results of operations.

24. FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of cash and cash equivalents, restricted cash, accounts receivable, accounts payable and borrowings are reasonable estimates of their fair value. All the financial instruments are for trade purposes. No level 2 or 3 fair value assessment has been made.

25. OPERATING RISK

Concentrations of credit risk

Financial instruments that subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents. The Company maintains its cash and cash equivalents with high-quality institutions. Generally these deposits may be redeemed upon demand and therefore bear minimal risk.

Interest risk

The interest rate and term of repayment of other borrowing is 6.0%, which are fixed at the inception of the borrowing. Other financial assets and liabilities do not have material interest rate risk.

Liquidity risk

We believe our working capital is sufficient to meet our present requirements. We may, however, require additional cash due to changing business conditions or other future developments, including any investments or acquisitions we may decide to pursue. In the long-term, we intend to rely primarily on cash flow from operations and additional borrowings from banks to meet our anticipated cash needs. If our anticipated cash flow is insufficient to meet our requirements, we may also seek to sell additional equity, debt or equity-linked securities.

Country risk

The Company has significant investments in the PRC. The operating results of the Company may be adversely affected by changes in the political and social conditions in the PRC and by changes in Chinese government policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods taxation, among other things. There can be no assurance; however, those changes in political and other conditions will not result in any adverse impact.

F-49

ORIGIN AGRITECH LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2016, 2017 AND 2018

(In thousands, except number of share, per share data and unless otherwise stated)

26. SUBSEQUENT EVENTS

The Company has entered into share subscription agreement with Longhan and Tiger Fund, and sold 1,397,680 shares of the Company’s common stock for an aggregate consideration of US$7,743,147. Also, the Company entered into a Cooperation Framework Agreement with BC-TID. For additional information, see note 2 - Liquidity and Going Concern.

27. CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY

The condensed financial statements of Origin Agritech Limited (the “parent company”) have been prepared in accordance with accounting principles generally accepted in the United States of America. Under the PRC laws and regulations, the Company’s PRC subsidiaries are restricted in their ability to transfer certain of their net assets to the parent company in the form of dividend payments, loans or advances. The amounts restricted include paid-in capital, capital surplus and statutory reserves, as determined pursuant to PRC generally accepted accounting principles, totaling RMB84,517 and RMB84,517 as of September 30, 2017 and 2018, respectively.

The following represents condensed unconsolidated financial information of the parent company only:

CONDENSED BALANCE SHEET

	September 30
	2017			2018			2018
	RMB			RMB			US$
ASSETS (LIABILITIES)
Current assets (liabilities)
Cash and cash equivalents		17			47			7
Other receivables		3			4			1
Due from inter-companies		109,321			132,842			19,311
Due to related parties		(1,576	)		(1,634	)		(240	)
Total current assets (liabilities)		107,765			131,259			19,079
Investment in unconsolidated subsidiaries		4,544			(155,970	)		(22,673	)
Total assets (liabilities)		112,309			(24,711	)		(3,594	)
AND EQUITY
Total stockholders’ equity		112,309			(24,711	)		(3,594	)

F-50

ORIGIN AGRITECH LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2016, 2017 AND 2018

(In thousands, except number of share, per share data and unless otherwise stated)

CONDENSED STATEMENT OF INCOME AND COMPREHENSIVE INCOME

	Year ended September 30,
	2016			2017			2018			2018
	RMB			RMB			RMB			US$
Revenues		204			-			-			-
Operating expenses
General and administrative		(16,035	)		(3,016	)		(5,147	)		(748	)
Loss from operations		(15,831	)		(3,016	)		(5,147	)		(748	)
Equity method loss		(49,009	)		(72,491	)		(148,514	)		(21,589	)
Interest expense		(738	)		(167	)		(2	)		-
Loss before income taxes		(65,578	)		(75,674	)		(153,663	)		(22,337	)
Income tax expense		-			-			-			-
Net loss		(65,578	)		(75,674	)		(153,663	)		(22,337	)
Other comprehensive loss
Foreign currency translation difference		(4,124	)		(7,644	)		(3,315	)		(482	)
Total comprehensive loss		(69,702	)		(83,318	)		(156,978	)		(22,819	)

CONDENSED STATEMENT OF CASH FLOWS

	Year ended September 30,
	2016			2017			2018			2018
	RMB			RMB			RMB			US$
Net cash provided by (used in) operating activities		(20,009	)		20,456			3,345			486
Net cash provided by (used in) financing activities		14,881			(13,376	)		-			-
Net increase (decrease) in cash and cash equivalents		(5,128	)		7,080			3,345			486
Cash and cash equivalents, beginning of year		341			581			17			2
Effect of exchange rate changes on cash and cash equivalents		5,368			(7,644	)		(3,315	)		(482	)
Cash and cash equivalents, end of year		581			17			47			6

BASIS OF PRESENTATION

The condensed financial information has been prepared using the same accounting policies as set out in the Company’s consolidated financial statements except that the parent company has used equity method to account for its investments in subsidiaries.

F-51

EX-4.15

Exhibit 4.15

EXECUTION VERSION

SHARE SUBSCRIPTION AGREEMENT

by and between

ORIGIN AGRITECH LIMITED

and

LONG HAN INVESTMENT MANAGEMENT CO., LTD.

(隆瀚投资管理有限公司)

Dated as of October 16, 2018

TABLE OF CONTENTS

ARTICLE I DEFINITIONS		1
Section 1.01.	Defined Terms	1
Section 1.02.	Interpretation and Rules of Construction	6
ARTICLE II PURCHASE AND SALE		7
Section 2.01.	Purchase and Sale	7
Section 2.02.	Closing	7
Section 2.03.	Closing Deliveries by the Company	8
Section 2.04.	Closing Deliveries by the Investor	8
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY		8
Section 3.01.	Organization and Qualification	8
Section 3.02.	Corporate Authorization	9
Section 3.03.	Valid Issuance of the Purchased Shares	9
Section 3.04.	Capitalization	9
Section 3.05.	Non-contravention	10
Section 3.06.	Governmental Consents and Approvals	10
Section 3.07.	No Actions	10
Section 3.08.	Compliance with Law; Permits	10
Section 3.09.	Subsidiaries	11
Section 3.10.	SEC Reports	11
Section 3.11.	Financial Statements	12
Section 3.12.	Taxes	13
Section 3.13.	Brokers	14
Section 3.14.	No Additional Representations	14
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE INVESTOR		14
Section 4.01.	Corporate Status	14
Section 4.02.	Corporate Authorization	14
Section 4.03.	Non-contravention	14
Section 4.04.	Governmental Consents and Approvals	15
Section 4.05.	Purchase for Own Account; Economic Risk	15
Section 4.06.	Private Placement; Non-U.S. Person	15
Section 4.07.	Brokers	16
Section 4.08.	No Additional Representations	16
ARTICLE V ADDITIONAL AGREEMENTS		16
Section 5.01.	Further Assurance	16
ARTICLE VI CONDITIONS TO CLOSING		16
Section 6.01.	Conditions in connection with the Closing	16
ARTICLE VII INDEMNIFICATION		17
Section 7.01.	Survival of Representations and Warranties	17
Section 7.02.	Indemnification	18
Section 7.03.	Limits on Indemnification	18
Section 7.04.	Third-Party Claims	19
Section 7.05.	Exclusive Remedy	19

i

ARTICLE VIII TERMINATION		19
Section 8.01.	Termination	19
Section 8.02.	Effect of Termination	19
ARTICLE IX MISCELLANEOUS		20
Section 9.01.	Notices	20
Section 9.02.	Public Announcements; Confidentiality	21
Section 9.03.	Amendment	21
Section 9.04.	Taxes and Expenses	21
Section 9.05.	Assignment	22
Section 9.06.	No Third-Party Beneficiaries	22
Section 9.07.	Governing Law; Arbitration	22
Section 9.08.	Entire Agreement	22
Section 9.09.	Severability	23
Section 9.10.	Counterparts	23
Section 9.11.	Specific Performance	23
Exhibit
Exhibit A	Form of Investor Rights Agreement

ii

THIS SHARE SUBCRIPTION AGREEMENT, dated as of October 16, 2018 (this “Agreement”), is by and between Origin Agritech Limited, a business company incorporated under the laws of the British Virgin Islands (the “Company”), and Long Han Investment Management Co., Ltd. (隆瀚投资管理有限公司), a company incorporated under the laws of the People’s Republic of China (the “Investor”). The Company and the Investor are referred to in this Agreement collectively as the “Parties” and individually as a “Party.”

RECITALS

WHEREAS, on the terms and subject to the conditions set forth in this Agreement and pursuant to applicable Laws, the Company desires to issue and sell to the Investor and the Investor desires to subscribe for and purchase from the Company, securities of the Company as set forth in this Agreement; and

WHEREAS, the Company has duly authorized and approved the execution and delivery of this Agreement and the Investor Rights Agreement and the consummation of the transactions contemplated hereby and thereby (the “Transactions”).

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, the Parties to this Agreement hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01. Defined Terms. For the purposes of this Agreement, the following terms shall have the following meanings:

“Action” means any claim, action, suit, arbitration, inquiry, litigation, proceeding or investigation by or before any Governmental Authority.

“Affiliate” means, with respect to any specified Person, any other Person that controls, is controlled by, or is under common control with such specified Person. As used herein, the term “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or to cause the direction of the management and policies of a Person, whether through the ownership of voting securities, as trustee or executor, by contract or otherwise.

“Agreement” shall have the meaning ascribed to this term in the preamble to this Agreement.

“Bankruptcy and Equity Exception” shall have the meaning ascribed to this term in Section 3.02.

“Board” means the Board of Directors of the Company.

“Business Day” means any day that is not a Saturday, a Sunday or other day on which commercial banks are required or authorized by Law to be closed in the city of Beijing, Hong Kong or New York.

“Closing” shall have the meaning ascribed to this term in Section 2.02.

“Closing Date” shall have the meaning ascribed to this term in Section 2.02.

“Company” shall have the meaning ascribed to this term in the preamble to this Agreement.

“Company SEC Reports” shall have the meaning ascribed to this term in Section 3.10 (a).

“Contract” means any legally binding contract, agreement, arrangement, note, bond, indenture, mortgage, indenture, lease, sublease, license, permit, concession, franchise, plan or other instrument, right or obligation.

“Equity Purchase Agreement” means the Equity Purchase Agreement, dated as of July 5, 2017, by and between the Company and L2 Capital, LLC, including any amendment, renewal, replacement, or successor agreement and any future agreement that confers similar rights.

“Exchange Act” means the United States Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“Fundamental Reps” means the representations and warranties of the Company contained in Section 3.01, Section 3.02, Section 3.03, Section 3.04(a), and Section 3.05.

“GAAP” means the generally accepted accounting principles as applied in the United States.

“Group” or “Group Companies” means the Company and its Subsidiaries.

“Governmental Authority” means any federal, national, foreign, supranational, state, provincial, local or other governmental, regulatory or administrative authority, agency or commission or any court, tribunal, or judicial or arbitral body.

“Governmental Order” means any order, writ, judgment, injunction, decree, stipulation, determination or award of any Governmental Authority.

“HKIAC” shall have the meaning ascribed to this term in Section 9.08(b).

“HKIAC Rules” shall have the meaning ascribed to this term in Section 9.08(b).

“Indemnified Party” shall have the meaning ascribed to this term in Section 7.02.

“Injunction” shall have the meaning ascribed to this term in Section 6.01(a).

2

“Intellectual Property” means (a) inventions and discoveries, whether patentable or not, in any jurisdiction, including United States, non-United States and international patents, patent applications (including divisions, continuations, continuations in part and renewal applications) and statutory invention registrations, and any renewals, extensions or reissues thereof, in any jurisdiction (b) trademarks, service marks, brand names, certification marks, trade dress, domain names, logos, trade names, corporate names and other source identifiers, the goodwill associated with the foregoing and registrations and applications for registration thereof including any extension, modification or renewal of any such registration or application, (c) copyrightable works, copyrights, and registrations and applications for registration thereof, (d) confidential and proprietary information, including trade secrets and know-how, (e) rights of privacy, publicity and endorsement, and (f) any similar intellectual property or proprietary rights.

“Investor” shall have the meaning ascribed to this term in the preamble to this Agreement.

“Investor Rights Agreement” means that certain Investor Rights Agreement to be entered into by and between the Company and the Investor, substantially in the form attached hereto as Exhibit A.

“Knowledge” means, with respect to the Company, the knowledge of the directors and senior executive officers of the Company after reasonable inquiry.

“Law” means any federal, national, foreign, supranational, state, provincial, local or similar statute, law, treaty, ordinance, regulation, rule, code, order, requirement or rule of law (including common law) or any Governmental Order.

“Lien” means any security interest, pledge, hypothecation, mortgage, lien, license, claim, charge, title retention, right to acquire, option, levy, proxy, right of first refusal, and any other encumbrance or condition of any kind, including any restriction on the use, voting, transfer, receipt of income or other exercise of any attributes of ownership.

“Losses” means losses, damages, liabilities, deficiencies, Actions, judgments, interest, awards, penalties, fines, costs and expenses of whatever kind, including reasonable attorneys’ fees and the cost of enforcing any right to indemnification hereunder; provided, that “Losses” shall not include punitive damages, except in the case of fraud or to the extent actually awarded to any Person by any Governmental Authority.

3

“Material Adverse Effect” means any fact, event, circumstance, change, development or effect (any such item, an “Effect”) that, individually or in the aggregate with all other Effects, has or would reasonably be expected to (a) have a material adverse effect on the business, assets, financial condition or results of operations of the Group Companies, taken as a whole or (b) prevent or materially delay the consummation of the Transactions by the Company or otherwise be materially adverse to the ability of the Company to perform its obligations under this Agreement; provided, however, solely with respect to clause (a) above, that in no event shall any Effect to the extent arising out of or resulting from any of the following, either alone or in combination, constitute, or be taken into account in determining whether there has been a Material Adverse Effect: (i) changes in general business, economic or political conditions or changes in financial, credit or securities markets in general; (ii) changes in GAAP or regulatory or accounting requirements after the date hereof; (iii) changes in applicable Laws after the date hereof that are binding on any Group Company; (iv) effects resulting from the consummation of the Transactions, or the public announcement of this Agreement or the identity of the Parties, including any losses of customers or employees, or any disruption in or loss of suppliers, distributors, providers or similar parties with whom any Group Company has any relationship, and the initiation of shareholder litigation or other legal proceeding related to this Agreement or the Transactions; (v) acts of God, natural disasters, epidemics, declarations of war, acts of sabotage or terrorism, or outbreak or escalation of hostilities; (vi) changes in the market price or trading volume of the Shares (it being understood that the facts or occurrences giving rise to or contributing to such changes in this clause (vi) may be taken into account in determining whether a Material Adverse Effect has occurred); (vii) actions or omissions of any Group Company that are expressly required by this Agreement or with the written consent or at the written request of the Investor; (viii) changes, effects or circumstances affecting the industries or markets in which any Group Company operates; or (ix) the failure by any Group Company to meet any internal or industry estimates, expectations, forecasts, projections or budgets for any period (it being understood that the facts or occurrences giving rise to or contributing to such failure may be taken into account in determining whether a Material Adverse Effect has occurred); provided, that any Effects set forth in clauses (i), (ii), (iii), (v) and (viii) above may be taken into account in determining whether a Material Adverse Effect has occurred if and to the extent such Effects individually or in the aggregate have a materially disproportionate impact on the Group Companies, taken as a whole, relative to the other participants in the industries in which the Group Companies conduct their businesses.

“NASDAQ” means The NASDAQ Stock Market LLC.

“Organizational Documents” means, with respect to an entity, its certificate of incorporation, articles of incorporation, by-laws, articles of association, memorandum of association, certificate of trust, trust agreement, partnership agreement, limited partnership agreement, certificate of formation, limited liability company agreement or operating agreement, as applicable.

“Party” shall have the meaning ascribed to this term in the preamble to this Agreement.

“Permit” means any permit, license, franchise, approval, registration, filing, qualification, variance, certificate, certification, consent of any Governmental Authority.

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“Permitted Liens” means (a) statutory Liens for Taxes and other governmental charges and assessments not yet due or payable, (b) Liens of carriers, warehousemen, mechanics, materialmen and other like Liens arising in the ordinary course of business, (c) easements, rights of way, encroachments, zoning ordinances and other similar encumbrances affecting real property, (d) statutory Liens in favor of lessors arising in connection with any leased property, and (e) Liens arising under securities or blue sky Laws.

“Person” means any individual, partnership, firm, corporation, limited liability company, association, trust, unincorporated organization, Governmental Authority or other entity.

“PRC” means the People’s Republic of China, but solely for the purposes of this Agreement, excluding the Hong Kong Special Administrative Region, the Macau Special Administrative Region and Taiwan.

“Preferred Shares” means preferred shares of nil par value per share in the capital of the Company.

“Promissory Note” means the Promissory Note, dated as of July 5, 2017, by and between the Company and L2 Capital, LLC, including any amendment, renewal, replacement, or successor agreement and any future agreement that confers similar rights.

“Purchase Price” shall have the meaning ascribed to this term in Section 2.01.

“Purchase Price Per Share” shall have the meaning ascribed to this term in Section 2.01.

“Purchased Shares” shall have the meaning ascribed to this term in Section 2.01.

“Record Date” shall have the meaning ascribed to this term in Section 3.04(a).

“Representatives” means, with respect to any Person, such Person’s Affiliates and such Person and its Affiliates’ respective directors, officers, employees, members, partners, accountants, consultants, advisors, attorneys, agents and other representatives.

“SEC” means the United States Securities and Exchange Commission.

“Securities Act” means the United States Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

“Shares” means ordinary shares of nil par value per share in the capital of the Company.

“Significant Subsidiaries” means the Subsidiaries of the Company as defined in Article 1, Rule 1-02 of Regulation S-X under the Exchange Act.

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“Subsidiary” of any Person means any corporation, partnership, joint venture or other legal entity: (a) of which voting power to elect a majority of the board of directors or others performing similar functions with respect to such organization is held directly or indirectly by such Person or by any one or more of such Person’s Subsidiaries, (b) of which at least fifty percent (50%) of the equity interests is controlled by such Person or by any one or more of such Person’s Subsidiaries, (c) of which such Person or any Subsidiary of such Person is a general partner, or (d) whose assets and financial results are consolidated with the net earnings of such Person and are recorded on the books of such Person for financial reporting purposes in accordance with GAAP.

“Tax” means (a) any federal, national, provincial, municipal, local or taxes, duties, imposts, levies, or other like assessments in the nature of a tax, in each case, imposed by any Governmental Authority, including all net income (including enterprise income tax and individual income withholding tax), turnover (including value-added tax, business tax, and consumption tax), resource (including urban and township land use tax), special purpose (including land value-added tax, urban maintenance and construction tax, and additional education fees), property (including urban real estate tax and land use fees), documentation (including stamp duty and deed tax), filing, recording, tariffs (including import duty and import value-added tax), and other taxes, and (b) all interest, penalties (administrative, civil or criminal), or additional amounts imposed by any Governmental Authority in connection with any item described in clause (a) above.

“Tax Return” means any report, return, document, declaration or other information or filing required to be supplied to any taxing authority with respect to Taxes, including information returns or any documents with respect to or accompanying payments of estimated Taxes.

“Third-Party Claim” shall have the meaning ascribed to this term in Section 7.04.

“Transactions” shall have the meaning ascribed to this term in the recitals to this Agreement.

Section 1.02. Interpretation and Rules of Construction . Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such term. When reference is made to an Article, Section, Schedule or Exhibit, such reference is to an Article or Section of, or Schedule or Exhibit to, this Agreement unless otherwise indicated. References to clauses without a cross-reference to a Section or subsection are references to clauses within the same Section or, if more specific, subsection. References from or through any date shall mean, unless otherwise specified, from and including or through and including, respectively. The table of contents and descriptive headings contained in this Agreement are included for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement. All terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant hereto, unless otherwise defined therein. The words “hereof,” “herein” and “hereunder” and words of similar import, when used in this Agreement, refer to this Agreement as a whole and not to any particular provision of this Agreement. Any references in this Agreement to “US$” shall be to U.S. dollars. References to days mean calendar days unless otherwise specified. When used herein, the word “extent” and the phrase “to the extent” shall mean the degree to which a subject or other thing extends, and such word or phrase shall not simply mean “if.” The term “or” is not exclusive. The word “will” shall be construed to have the same meaning and effect as the word “shall.” Any agreement, instrument or statute defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement, instrument or statute as from time to time amended, modified or supplemented, including (in the case of agreements or instruments) by waiver or consent and (in the case of statutes) by succession of comparable successor statutes, only to the extent the applicable amendment, modification or supplement is also appropriately listed therein. References in this Agreement to specific laws or to specific provisions of laws shall include all rules and regulations promulgated thereunder. Each of the Parties has participated in the drafting and negotiation of this Agreement. If an ambiguity or question of intent or interpretation arises, this Agreement must be construed as if it is drafted by all the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of authorship of any of the provisions of this Agreement.

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ARTICLE II

PURCHASE AND SALE

Section 2.01. Purchase and Sale. Upon the terms and subject to the conditions of this Agreement, at the Closing, the Company shall issue and sell to the Investor, and the Investor shall subscribe for and purchase from the Company, 1,397,680 Shares (the “Purchased Shares”), at a price per Share equal to US$5.54 (the “Purchase Price Per Share”). The aggregate purchase price for all the Purchased Shares shall be US$7,743,147.20 (the “Purchase Price”). Each Purchased Share shall be free and clear of all Liens (other than any applicable transfer or voting restrictions arising under applicable securities Laws or the Investor Rights Agreement and any Liens under the Organizational Documents of the Company) and with all rights attaching on and from the Closing.

Section 2.02. Closing. Subject to the satisfaction or waiver of the conditions to the Closing set forth in Article VI, the closing of the purchase and sale of the Purchased Shares (the “Closing”) shall take place remotely via the electronic exchange of the closing documents and signatures by facsimile or email (in PDF format) at such other time and place as the Company and the Investor shall mutually agree in writing, but in no event later than 60 Business Days after the date hereof (the date on which the Closing takes place being the “Closing Date”). The Parties acknowledge and agree that all transactions occurring at the Closing shall be deemed to be taken, and all documents to be executed and delivered by the Parties at the Closing shall be deemed to have been executed and delivered, simultaneously at the Closing, and no proceedings shall be deemed taken nor any document executed or delivered until all have been taken, executed and delivered.

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Section 2.03.      Closing Deliveries by the Company.

(a)       At the Closing, the Company shall deliver or cause to be delivered to the Investor:

(i)       a certified true copy of the Register of Members of the Company as of the Closing Date reflecting the Investor’s ownership of the Purchased Shares and duly certified by the share registrar of the Company;

(ii)       a copy of the resolutions duly and validly adopted by the Board evidencing its authorization and approval of the execution and delivery of this Agreement and the Investor Rights Agreement and the consummation of the Transactions; and

(iii)       the Investor Rights Agreement, duly executed by the Company.

(b)       The Company shall deliver to the Investor a duly issued share certificate in the name of the Investor representing the Purchased Shares as soon as practicable after the Closing but in no event later than ten (10) Business Days after the Closing.

Section 2.04.      Closing Deliveries by the Investor.

(a)       At the Closing, the Investor shall deliver or cause to be delivered to the Company:

(i)       the Purchase Price by wire transfer of immediately available funds to the account specified by the Company; and 

(ii)       the Investor Rights Agreement, duly executed by the Investor.

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Except as set forth in the Company SEC Reports filed prior to the date of this Agreement (without giving effect to any amendment to any such Company SEC Report filed on or after the date hereof and excluding any risk factor disclosures contained under the heading “Risk Factors,” any disclosure of risks included in any “forward-looking statements” disclaimer or any other statements that are similarly cautionary, predictive or forward-looking in nature), the Company hereby represents and warrants to the Investor, as of the date hereof and as of the Closing Date, except if a representation or warranty is made as of a specified date, as of such date, each of the representations and warranties contained in this Article III.

Section 3.01.      Organization and Qualification. Each Group Company is a legal entity duly organized, validly existing and in good standing (to the extent the relevant jurisdiction recognizes such concept of good standing) under the Laws of the jurisdiction of its organization. Each Group Company has the requisite power and authority (corporate or otherwise) to own, lease or operate its properties and assets and to carry on its business as it is now being conducted. Each Group Company is duly qualified to do business and is in good standing (to the extent the relevant jurisdiction recognizes such concept of good standing) in each jurisdiction in which the nature of the business conducted by it or the character of the properties and assets owned, leased or operated by it makes such qualification necessary, except where the failure to be so qualified or in good standing would not, individually or in the aggregate, have a Material Adverse Effect.

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Section 3.02.      Corporate Authorization. The Company has all necessary corporate power and authority to execute and deliver this Agreement and the Investor Rights Agreement and to perform its obligations hereunder and thereunder. The execution, delivery and performance of this Agreement and Investor Rights Agreement by the Company have been duly authorized by all necessary corporate action on the part of the Company. This Agreement has been, and the Investor Rights Agreement will be, duly executed and delivered by the Company, and when executed and delivered by the Company, assuming due authorization, execution and delivery by the other parties thereto, constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as enforcement may be limited by general principles of equity, whether applied in a court of Law or a court of equity, and by applicable bankruptcy, insolvency and similar Law affecting creditors’ rights and remedies generally (the “Bankruptcy and Equity Exception”).

Section 3.03.      Valid Issuance of the Purchased Shares. The Purchased Shares, when issued in accordance with the terms and conditions of this Agreement and sold against receipt of consideration therefor, will be validly issued, fully paid and nonassessable, free and clear of any and all Liens (other than any applicable transfer or voting restrictions arising under applicable securities Laws or the Investor Rights Agreement).

Section 3.04.      Capitalization.

(a)       The Company is authorized to issue (i) 60,000,000 Shares, of which approximately 3,261,253 Shares are issued and outstanding as of August 1, 2018 (the “Record Date”) and (ii) 10,000,000 Preferred Shares, of which none are issued and outstanding as of the Record Date. As of the Record Date, the Company has also granted approximately 685,174 outstanding options to purchase Shares under the equity incentive plans of the Company and there are Shares issued and held in the treasury of the Company. All of the issued and outstanding shares of the Company have been duly authorized and validly issued and are fully paid and nonassessable.

(b)       Except as set forth in ‎Section 3.04(a) and the Shares reserved for issuance under the equity incentive plans of the Company, the Equity Purchase Agreement, the Promissory Note and the proposed issuance of the Purchased Shares pursuant to the terms herein, there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire any Shares, or contracts, commitments, understandings or arrangements by which any Group Company is or may become bound to issue additional Shares.

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Section 3.05.      Non-contravention. The execution, delivery and performance by the Company of this Agreement and the Investor Rights Agreement do not and will not (a) violate any provision of the Organizational Documents of the Company, (b) violate any Law or Governmental Order applicable to any Group Company or (c) conflict with, result in any breach of, constitute a default (or an event which with the giving of notice or lapse of time, or both, would become a default) under, require any consent under, or give to others any rights of termination, amendment, acceleration, suspension, revocation or cancellation of, any Contract to which any Group Company is a party or result in the creation of any Lien upon any of the properties or assets of any Group Company, other than, in the case of clauses (b) and (c) above, any such conflict, violation, default, termination, amendment, acceleration, suspension, revocation or cancellation that would not have, individually or in the aggregate, a Material Adverse Effect.

Section 3.06.      Governmental Consents and Approvals. The execution, delivery and performance by the Company of this Agreement and the Investor Rights Agreement do not and will not require any consent, approval, authorization or other order of, action by, filing with, or notification to, any Governmental Authority, other than any approvals or filings required in connection with or in compliance with any obligations under the Securities Act, the Exchange Act and the rules and regulations of the NASDAQ, except, in each case, where failure to obtain such consent, approval, authorization or action, or to make such filing or notification would not, individually or in the aggregate, result in a Material Adverse Effect.

Section 3.07.      No Actions. There are no Actions against any of the Group Companies pending or, to the Knowledge of the Company, threatened before any Governmental Authority which would, individually or in the aggregate, result in a Material Adverse Effect.

Section 3.08.      Compliance with Law; Permits.

(a)       Except as would not, individually or in the aggregate, have a Material Adverse Effect, the Group Companies are, and since January 1, 2013 (or the date of its formation, if later) has been in compliance with all Laws and Governmental Orders applicable to them. The Group Companies hold all material Permits necessary for the lawful conduct of their respective businesses and are in compliance in all material respects with the terms of all such Permits.

(b)       None of the Group Companies or any of their respective directors, executives or, to the Knowledge of the Company, agents has, in any material respect, (i) used any corporate funds for any illegal contributions, gifts, entertainment or other unlawful expenses relating to political activity, (ii) used any corporate funds for any direct or indirect unlawful payments to any foreign or domestic government officials or employees, (iii) violated or is violating any provision of the U.S. Foreign Corrupt Practices Act of 1977, the PRC Law on Anti-Unfair Competition promulgated on September 2, 1993, or the Interim Rules on Prevention of Commercial Bribery promulgated on November 15, 1996, or any PRC Law in relation thereto, (iv) established or maintained any fund of corporate monies or other properties not recorded on the books and records of any Group Company, (v) to the Knowledge of the Company, made any bribe, unlawful rebate, payoff, influence payment, kickback or other unlawful payment of any nature, or (vi) violated or operated in noncompliance with any applicable money laundering law, anti-terrorism law or regulation, anti-boycott regulations, export restrictions or embargo regulations. None of the Group Companies or any of their respective directors, executives or, to the Knowledge of the Company, agents is currently the target of any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department.

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Section 3.09.      Subsidiaries.

(a)       All of the outstanding shares of capital stock or voting securities of, or other ownership interests in each Significant Subsidiary have been duly authorized and validly issued, fully paid and nonassessable and are owned beneficially and of record by the Company or one of its Subsidiaries as set forth in in the Company SEC Reports, free and clear of any Liens.

(b)       There are no issued, reserved for issuance or outstanding (i) shares of capital stock or voting securities of, or other ownership interests in any Significant Subsidiary, (ii) no outstanding securities of the Company or any Significant Subsidiary convertible or exchangeable for shares of capital stock or voting securities of, or other ownership interests in any Significant Subsidiary and (iii) rights, options, warrants, calls or other similar rights, agreements or commitments that obligate the Company or any Significant Subsidiary to (A) issue, transfer or sell any shares of capital stock or voting securities of, or other ownership interests in any Significant Subsidiary or any securities convertible into or exchangeable for such shares of capital stock, voting securities or other ownership interests, (B) give any person a right to subscribe for or acquire any shares of capital stock or voting securities of, or other ownership interests in any Significant Subsidiary or (C) redeem or otherwise acquire any shares of capital stock or voting securities of, or other ownership interests in any Significant Subsidiary.

Section 3.10.      SEC Reports.

(a)       The Company has timely filed or furnished, as the case may be, all registration statements, proxy statements, reports, forms and other documents required to be filed or furnished by it with the with the SEC (all of the foregoing documents filed with or furnished to the SEC and all exhibits included therein are referred to as the “Company SEC Reports”) for the one (1) year preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such material). As of their respective effective dates (in the case of the Company SEC Reports that are registration statements filed pursuant to the requirements of the Securities Act) and as of their respective filing dates (in the case of all other Company SEC Reports), or in each case, if amended prior to the date hereof, as of the date of the last such amendment, (i) each Company SEC Report complied in all material respects with the applicable requirements of the Securities Act or the Exchange Act, and (ii) none of such Company SEC Reports contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make such statements made therein, in the light of the circumstances under which they were made, not misleading.

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(b)       The Company has established and maintains disclosure controls and procedures (as defined in Rule 13a-15 under the Exchange Act). Such disclosure controls and procedures are designed to ensure that material information relating to the Company, including its Subsidiaries, is made known to Company’s principal executive officer and principal financial officer by others within those entities, particularly during the periods in which the periodic reports required under the Exchange Act are being prepared. Such disclosure controls and procedures are effective in timely alerting the Company principal executive officer and principal financial officer to material information required to be included in the Company’s periodic and current reports required under the Exchange Act. For purposes of this Agreement, “principal executive officer” and “principal financial officer” shall have the meanings given to such terms in the Sarbanes-Oxley Act of 2002. The Company is in compliance in all material respects with the provisions of the Sarbanes-Oxley Act of 2002 that are applicable to the Company.

(c)       The Company is in compliance in all material respects with the applicable listing and corporate governance rules and regulations of NASDAQ, and has not, in the twelve (12) months preceding the date hereof, received notice from NASDAQ to the effect that the Company is not in compliance with such listing and corporate governance rules and regulations.

Section 3.11.      Financial Statements.

(a)       Each of the consolidated financial statements (including any related notes) contained or incorporated in the Company SEC Reports: (a) was prepared in accordance with GAAP applied on a consistent basis throughout the period indicated therein (except as may be indicated in such financial statements or the notes thereto and except that the unaudited financial statements may not contain all footnotes required by GAAP), and (b) fairly present in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries as of the respective dates thereof and the consolidated results of operations, cash flows and changes in shareholders’ equity of the Company and its consolidated Subsidiaries for the respective periods covered thereby in accordance with GAAP (subject, in the case of any unaudited financial statements, to normal year-end audit adjustments). No Group Company has any liabilities or obligations of any nature (absolute, accrued, contingent or otherwise), except for liabilities or obligations (i) reflected or reserved for in the consolidated balance sheet as of June 30, 2018 that is included in the Company SEC Reports, (ii) incurred after June 30, 2018 in the ordinary course of business consistent with past practice, and (iii) that would not, individually or in the aggregate, have a Material Adverse Effect.

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(b)       The Company and its Subsidiaries have established and maintained a system of internal controls over financial reporting (as defined in Rule 13a-15 under the Exchange Act) sufficient to provide reasonable assurance regarding the reliability of the Company’s financial reporting and the preparation of Company financial statements for external purposes in accordance with GAAP. The Company has disclosed, based on its most recent evaluation of internal controls prior to the date hereof, to the Company’s auditors and audit committee (i) any significant deficiencies and material weaknesses in the design or operation of internal controls which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information and (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in internal controls.

Section 3.12.     Taxes. All material Tax Returns of the Group Companies have been timely filed in accordance with applicable Laws and all such Tax Returns are true, correct, and complete in all material respects. All material Taxes (whether or not shown on a Tax Return) of the Group Companies have been timely paid. Each of the Group Companies has timely paid or withheld all material Taxes required to be paid or withheld with respect to its employees, independent contractors, creditors and other third parties and timely paid over such Taxes to the appropriate Governmental Authority. None of the Group Companies has executed any outstanding waiver of any statute of limitations or outstanding extension of the period, for the assessment or collection of any material Tax. To the Knowledge of the Company, no audit or Action of, or with respect to, any material Tax Return or material Taxes of any Group Company is currently in progress or threatened. No deficiency for any material amount of Tax has been asserted or assessed by a Governmental Authority against the Group Companies that has not been satisfied by payment, settled or withdrawn. All preferential tax treatments granted to the Group Companies have been properly approved by or filed with the competent Governmental Authorities in accordance with applicable Laws. No written claim has been made by a Governmental Authority in any jurisdiction where any Group Company has not filed Tax Return that such Person is or may be subject to Tax or any filing requirement related to Tax in that jurisdiction. None of the Group Companies is a party to or bound by, or has any obligation under, any Tax allocation agreement, Tax indemnity agreement, Tax sharing agreement or similar contract or arrangement to indemnify any other Person with respect to Taxes that will be in effect after the Closing. The charges, accruals and reserves for Taxes with respect to the Group Companies reflected on the books and records of the Group Companies are adequate to cover material Tax liabilities accruing through the end of the last period for which the Group Companies ordinarily record items on their respective books. Since the end of the last period for which the Group Companies ordinarily record items on their respective books, none of the Group Companies has engaged in any transaction, or taken any action that would materially impact any Tax asset or Tax liability of the Group Companies.

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Section 3.13.      Brokers. No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Company or any of its Subsidiaries.

Section 3.14.      No Additional Representations. The Company acknowledges that the Investor makes no express or implied representations or warranties as to any matter whatsoever except as expressly set forth in this Agreement, the Investor Rights Agreement or any certificate delivered by the Investor to the Company in accordance with the terms hereof and thereof, and that any such other representations and warranties are expressly disclaimed and that the Company does not rely on any such other representations and warranties or the accuracy or completeness thereof.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE INVESTOR

The Investor represents and warrants to the Company, as of the date hereof and as of the Closing Date, except if a representation or warranty is made as of a specified date, as of such date, each of the representations and warranties contained in this Article IV.

Section 4.01.      Corporate Status. The Investor is a legal entity duly organized, validly existing and in good standing under the Laws of the jurisdiction of its organization. The Investor has the requisite power and authority (corporate or otherwise) to own, lease or operate its properties and assets and to carry on its business as it is now being conducted. The Investor is duly qualified to do business and is in good standing (to the extent the relevant jurisdiction recognizes such concept of good standing) in each jurisdiction in which the nature of the business conducted by it or the character the properties and assets owned, leased or operated by it makes such qualification necessary in each case in all material respects.

Section 4.02.     Corporate Authorization. The Investor has all necessary corporate power and authority to execute and deliver this Agreement and the Investor Rights Agreement and to perform its obligations hereunder and thereunder. The execution, delivery and performance of this Agreement and Investor Rights Agreement by the Investor have been duly authorized by all necessary corporate action on the part of the Investor. This Agreement has been, and the Investor Rights Agreement will be, duly executed and delivered by the Investor, and when executed and delivered by the Investor, assuming due authorization, execution and delivery by the other parties thereto, constitutes a legal, valid and binding obligation of the Investor, enforceable against the Investor in accordance with its terms, subject to the Bankruptcy and Equity Exception.

Section 4.03.      Non-contravention. The execution, delivery and performance by the Investor of this Agreement and the Investor Rights Agreement do not and will not (a) violate any provision of the Organizational Documents of the Investor, (b) violate any Law or Governmental Order applicable to the Investor or (c) conflict with, result in any breach of, constitute a default (or an event which with the giving of notice or lapse of time, or both, would become a default) under, require any consent under, or give to others any rights of termination, amendment, acceleration, suspension, revocation or cancellation of, any Contract to which the Investor is a party or result in the creation of any Lien upon any of the properties or assets of the Investor, other than in the case of clauses (b) and (c) above, any such violation, conflict, breach, default, termination, amendment, acceleration, suspension, revocation or cancellation that would not, individually or in the aggregate, prevent or materially delay the performance of the Investor’s obligations under this Agreement.

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Section 4.04.      Governmental Consents and Approvals. The execution, delivery and performance by the Investor of this Agreement and the Investor Rights Agreement do not and will not require any consent, approval, authorization or other order of, action by, filing with, or notification to, any Governmental Authority, other than any approvals or filings required in connection with or in compliance with any obligations under the Securities Act and the Exchange Act, except where in each case, the failure to obtain such consent, approval, authorization, action or to make such filing or notification would not, individually or in the aggregate, prevent or materially delay the performance of the Investor’s obligations under this Agreement.

Section 4.05.     Purchase for Own Account; Economic Risk. The Investor is acquiring its Purchased Shares for investment for its own account and not with a view to the distribution thereof in violation of the Securities Act. The Investor acknowledges that it (a) can bear the economic risk of its investment in the Purchased Shares, and (b) has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Purchased Shares.

Section 4.06.     Private Placement; Non-U.S. Person. The Investor understands that (a) the Purchased Shares have not been registered under the Securities Act or any state securities Laws and (b) the Purchased Shares may not be sold unless such disposition is registered under the Securities Act and applicable state securities Laws or is exempt from registration thereunder. The Investor represents that it is not a U.S. Person and it is located outside the United States, as such terms are defined in Rule 902 of Regulation S under the Securities Act. The Investor acknowledges that the certificates representing the Purchased Shares will bear the following legend:

“THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION UNDER THE ACT OR IN A TRANSACTION WHICH, IN THE OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY, QUALIFIES AS AN EXEMPT TRANSACTION UNDER THE ACT AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER. THE SECURITIES ARE SUBJECT TO THE TRANSFER RESTRICTIONS SET FORTH IN AN INVESTOR RIGHTS AGREEMENT BY AND BETWEEN THE SHAREHOLDER AND THE COMPANY.”

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Section 4.07.      Brokers. No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Investor.

Section 4.08.      No Additional Representations. The Investor acknowledges that the Company makes no express or implied representations or warranties as to any matter whatsoever except as expressly set forth in this Agreement, the Investor Rights Agreement or any certificate delivered by the Company to the Investor in accordance with the terms hereof and thereof, and that any such other representations and warranties are expressly disclaimed and that the Investor does not rely on any such other representations and warranties or the accuracy or completeness thereof.

ARTICLE V
ADDITIONAL AGREEMENTS

Section 5.01.      Further Assurance. During the period from the execution of this Agreement to the Closing, each of the Parties agrees to do or cause to be done all things necessary or reasonably advisable under applicable Laws to consummate the Transactions on a timely basis, including using its commercially reasonable efforts to give such notices and obtain all other authorizations, consents, orders and approval of all Governmental Authorities and other third parties that may be or become necessary for its execution and delivery of, and the performance of its obligations pursuant to, this Agreement.

ARTICLE VI
CONDITIONS TO CLOSING

Section 6.01.      Conditions in connection with the Closing.

(a)       Condition to Obligations of Each Party. The obligations of each Party to consummate the Transactions shall be subject to the satisfaction or waiver (where permissible), at or prior to the Closing, of the following condition: No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Law which is then in effect (whether temporary, preliminary or permanent) and has the effect of enjoining, restraining, prohibiting or otherwise making the consummation of the Transactions illegal (an “Injunction”).

(b)       Conditions to Obligations of the Company. The obligations of the Company to consummate sale and purchase of the Purchased Shares shall be subject to the satisfaction or waiver (where permissible), at or prior to the Closing, of each of the following conditions:

(i)       The representations and warranties of the Investor contained in Article IV of this Agreement (i) that are qualified by materiality shall be true and correct in all respects, and (ii) that are not qualified by materiality, shall be true and correct in material respects, in each case of (i) and (ii), as of the date of this Agreement and as of the Closing (except for representations and warranties that expressly speak as of a specified date, in which case as of such specified date).

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(ii)       The Investor shall have performed and complied in all material respects with all agreements, covenants and conditions contained in this Agreement that are required to be performed or complied with by them at or prior to the Closing.

(c)       Conditions to Obligations of the Investor. The obligations of the Investor to consummate the sale and purchase of the Purchased Shares shall be subject to the satisfaction or waiver (where permissible), at or prior to the Closing, of each of the following conditions:

(i)       The representations and warranties of the Company contained in Article III (i) that are qualified by materiality or Material Adverse Effect, shall be true and correct in all respects, and (ii) that are not qualified by materiality or Material Adverse Effect, shall be true and correct in material respects, in each case of (i) and (ii), as of the date of this Agreement and as of the Closing (except for representations and warranties that expressly speak as of a specified date, in which case as of such specified date).

(ii)       The Company shall have performed and complied in all material respects with all agreements, covenants and conditions contained in this Agreement that are required to be performed or complied with by it at or prior to the Closing.

(iii)       No stop order or suspension of trading shall have been imposed by NASDAQ, the SEC or any other Governmental Authority with respect to public trading in the Shares.

ARTICLE VII
INDEMNIFICATION

Section 7.01.      Survival of Representations and Warranties.

(a)       The representations and warranties of the Company contained in this Agreement shall survive the Closing until one (1) year after the Closing; provided, however, that the Fundamental Reps shall survive indefinitely. The covenants and agreements of the Company set forth in this Agreement shall survive the Closing until fully discharged in accordance with their terms. The Investor’ right to indemnification with respect to the representations, warranties, covenants or agreements of the Company shall not be affected or deemed waived by reason of any investigation made at any time by or on behalf of the Investor.

(b)       Notwithstanding the foregoing, any claims asserted in good faith with reasonable specificity (to the extent known at such time) and in writing by notice from the Investor to the Company prior to the expiration date of the applicable survival period shall not thereafter be barred by the expiration of the relevant representation, warranty, covenant or agreement and such claims shall survive until finally resolved.

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Section 7.02.      Indemnification. Following the Closing, the Company shall indemnify and defend the Investor and its Representatives (each an “Indemnified Party”) against, and shall hold each of them harmless from and against, any and all Losses actually suffered or incurred by, or imposed upon, the Indemnified Parties arising out of or resulting from:

(a)       any inaccuracy or breach of any representation or warranty made by the Company under this Agreement; or

(b)       any violation or nonperformance of any covenant or agreement of the Company under this Agreement.

Section 7.03. Limits on Indemnification. The indemnification provided for in Section 7.02 shall be subject to the following limitations:

(a)       The Company shall not be liable for any claim for indemnification pursuant to Section 7.02(a) unless and until the aggregate amount of all indemnifiable Losses under Section 7.02(a) exceeds US$1 million, in which event the Company shall be required to pay or be liable for all such Losses from the first dollar. The aggregate amount of all Losses for which the Company shall be liable pursuant to Section 7.02(a) shall not exceed 30% of the aggregate amount of the Purchase Price that has been paid by the Investor.

(b)       Notwithstanding the foregoing, the limitations set forth in Section 7.03(a) shall not apply to Losses arising out of or resulting from any inaccuracy or breach of any Fundamental Reps.

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Section 7.04.      Third-Party Claims. If an Indemnified Party shall receive notice of any Action, audit, demand or assessment (each, a “Third-Party Claim”) against it or which may give rise to a claim for Loss under this Article VII, within thirty (30) calendar days of the receipt of such notice, the Indemnified Party shall give the Company, notice of such Third-Party Claim; provided, however, that the failure to provide such notice shall not release the Company from any of its obligations under this Article VII except to the extent that the Company is materially prejudiced by such failure and shall not relieve the Company from any other obligation or liability that it may have to any Indemnified Party otherwise than under this Article VII. If the Company acknowledges in writing its obligation to indemnify the Indemnified Party or Indemnified Parties hereunder against any Losses that may result from such Third-Party Claim, then the Company shall be entitled to assume and control the defense of such Third-Party Claim at its or their expense and through counsel of its or their choice if it or they give notice of such intention to do so to the Indemnified Party or Indemnified Parties, as the case may be, within fourteen (14) calendar days of the receipt of notice from any Indemnified Party of such Third-Party Claim; provided, however, that if there exists or is reasonably likely to exist a conflict of interest that would make it inappropriate in the reasonable judgment of the Indemnified Party or Indemnified Parties in its or their sole and absolute discretion for the same counsel to represent both the Indemnified Party or Indemnified Parties and the Company, then the Indemnified Party or Indemnified Parties shall be entitled to retain its or their own counsel in each jurisdiction for which the Indemnified Party determines counsel is required, at the expense of the Company. In the event that the Company exercises the right to undertake any such defense against any such Third-Party Claim as provided above, the Indemnified Party or Indemnified Parties shall cooperate with the Company in such defense and make available to the Company, at the Company’s expense, all witnesses, pertinent records, materials and information in the Indemnified Party’s possession or under the Indemnified Party’s control relating thereto as is reasonably required by the Company. Similarly, in the event any Indemnified Party is, directly or indirectly, conducting the defense against any such Third-Party Claim, the Company shall cooperate with the Indemnified Party or Indemnified Parties in such defense and make available to any Indemnified Party, at the Company’s expense, all such witnesses, records, materials and information in the Company’s possession or under the Company’s control relating thereto as is reasonably required by any Indemnified Party. No Third-Party Claim may be settled (i) by any Indemnified Party without the prior written consent of the Company (which shall not be unreasonably withheld or delayed) if the Company acknowledges in writing its or their obligation to indemnify such Indemnified Party hereunder against any Losses that may result from such Third-Party Claim or (ii) by the Company without the prior written consent of the Indemnified Party or Indemnified Parties, except, in the case of (ii) only, where settlement of such Third-Party Claim (A) includes an unconditional release of the Indemnified Party or Indemnified Parties from all liability arising out of such Action, audit, demand or assessment and (B) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any Indemnified Party.

Section 7.05.      Exclusive Remedy. Following the Closing, notwithstanding any other provision contained herein, this Article VII shall be the sole and exclusive monetary remedy of the Investor for any and all claims arising out of or resulting from this Agreement, except that no limitation or exceptions with respect to the obligations or liabilities on the Company in this Article VII shall apply to any claims arising out of or resulting from fraud or willful misconduct on the part of the Company. Nothing in this Article VII or elsewhere in this Agreement shall limit any Party’s right to specific performance or other equitable or non-monetary remedies.

ARTICLE VIII
TERMINATION

Section 8.01.      Termination. This Agreement may be terminated at any time prior to the Closing by the mutual written consent of the Company and the Investor.

Section 8.02.      Effect of Termination. In the event of termination of this Agreement pursuant to Section 8.01, this Agreement shall forthwith become void and there shall be no liability under this Agreement on the part of any Party except that nothing herein shall relieve any Party from liability for any breach of this Agreement that occurred before relevant termination and the terms of this Section 8.02 and Article IX shall survive any such termination.

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ARTICLE IX
MISCELLANEOUS

Section 9.01.      Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be deemed duly given, made or received on the date of delivery if delivered in person or by internationally recognized overnight courier service, or on the date of confirmation of receipt of transmission by facsimile (provided that confirmation of transmission is mechanically or electronically generated and kept on file by the sending Party), to the respective Parties at the following addresses (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 9.01):

(a)       If to the Company, to:

Origin Agritech Limited

No. 21 Sheng Ming Yuan Road

Changping District

Beijing 102206, China

Attention: Cindy Xin Zhou

Facsimile: +86 10 5890 7577

with a copy (which shall not constitute notice) to:

Davis Polk & Wardwell LLP

2201 China World Office 2

1 Jian Guo Men Wai Avenue

Chao Yang District

Beijing 10004, China

Attention: Howard Zhang, Esq.

Facsimile: +86 10 8567 5102

(b)       If to the Investor, to:

Long Han Investment Management Co., Ltd.

1 Chedaogou East Road

Qingdong Business Center Block C, Level 4

Haidian District

Beijing 100089, China

Attention: Shuangcheng Zhou

with a copy (which shall not constitute notice) to:

Dentons Law Firm

7th Floor, Building D, Parkview Green FangCaoDi 9

Dongdaqiao Road Chaoyang District

Beijing 100020, China

Attention: Shoushuang Li

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Section 9.02.      Public Announcements; Confidentiality.

(a)       Neither the Company nor the Investor shall issue or cause the publication of any press release or other public announcement with respect to the Transactions without the prior consent of the other Party (which consent shall not be unreasonably withheld, conditioned or delayed), except as may be required by applicable Law or the rules and regulations of the NASDAQ, in each case, as determined in the good faith judgment of the Party proposing to make such release (in which case such Party shall not issue or cause the publication of such press release or other public announcement without prior consultation with the other Party reasonably in advance of such public announcement).

(b)       For a period of eighteen (18) months following the Closing, the Investor shall, and shall cause its Affiliates and their respective Representatives to, hold in strict confidence any and all information, whether written or oral, concerning the Group Companies, except to the extent that the Investor can show that such information (a) is generally available to and known by the public through no fault of the Investor, any of its Affiliates or their respective Representatives; or (b) is lawfully acquired by the Investor, any of its Affiliates or their respective Representatives from and after the Closing from sources which are not prohibited from disclosing such information by a legal, contractual or fiduciary obligation. If the Investor or any of its Affiliates or their respective Representatives are compelled to disclose any information by judicial or administrative process or by other requirements of Law or applicable national securities exchange, the Investor shall promptly notify the Company in writing and shall disclose only that portion of such information is legally required to be disclosed, provided that the Investor shall use commercially reasonable efforts to obtain an appropriate protective order or other reasonable assurance that confidential treatment will be accorded such information.

Section 9.03.      Amendment. Any provision of this Agreement may be amended or waived prior to Closing if, but only if, such amendment or waiver is in writing and is signed, in the case of an amendment, by each Party to this Agreement or, in the case of a waiver, by each Party against whom the waiver is to be effective. No failure or delay by any Party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.

Section 9.04.      Taxes and Expenses. Each Party shall pay all of its own fees and expenses (including attorneys’ fees) incurred in connection with this Agreement and the Transactions. Except as otherwise provided in this Agreement or agree expressly among the Parties, each Party shall be solely responsible for all Taxes accruing to such Party arising from this Agreement or the Transactions under applicable Laws.

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Section 9.05.      Assignment. This Agreement and the rights and obligations of the Parties hereunder may not be assigned or delegated by the Company without the Investor’s written consent or by the Investor without the Company’s written consent, provided that the Investor may assign this Agreement and the rights and obligations of the Investor hereunder to any of its Affiliates. Any purported assignment or delegation in violation of this Section 9.05 shall be null and void.

Section 9.06.      No Third-Party Beneficiaries. Except for the provisions of Article VII relating to the Indemnified Parties, this Agreement shall be binding upon and inure solely to the benefit of the Parties and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever.

Section 9.07.      Governing Law; Arbitration.

(a)       This Agreement shall be governed by, and construed in accordance with, the Laws of the State of New York without regard to its conflicts of law principles thereof.

(b)       Any dispute, controversy or claim arising out of or relating to this Agreement or its subject matter shall be finally settled by arbitration. The place and seat of arbitration shall be Hong Kong, and the arbitration shall be administered by the Hong Kong International Arbitration Centre (the “HKIAC”) in accordance with the HKIAC Administered Arbitration Rules then in force (the “HKIAC Rules”). The number of arbitrators shall be three (3). In the event that there are more than two parties to an arbitration, one arbitrator shall be appointed by the Investor and one arbitrator shall be appointed by the Company. The third arbitrator, who shall serve as chairperson of the arbitral tribunal, shall be selected by the mutual agreement of the first two arbitrators. Any arbitrator that is not so appointed shall instead be appointed in accordance with the HKIAC Rules. The language to be used in the arbitration proceedings shall be English. The award of the arbitral tribunal shall be final, conclusive and binding upon the Parties. Judgment upon any award may be entered and enforced in any court having jurisdiction over a Party or any of its assets. For the purpose of the enforcement of an award, the Parties irrevocably and unconditionally submit to the jurisdiction of any competent court and waive any defenses to such enforcement, including any defenses based on lack of personal jurisdiction or inconvenient forum.

Section 9.08.      Entire Agreement. This Agreement, the Investor Rights Agreement and the confidentiality agreement, dated as of September 2018, by and between the Company and the Investor constitute the entire agreement between the Parties with respect to the subject matter of this Agreement and supersede all prior agreements and understandings, both oral and written, between the Parties and/or their Affiliates with respect to the subject matter of this Agreement.

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Section 9.09.      Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced under any Law or public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect for so long as the economic or legal substance of the Transactions is not affected in any manner materially adverse to any Party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Company and the Investor shall negotiate together in good faith to modify this Agreement so as to effect the original intent of the Company and the Investor as closely as possible in an acceptable manner in order that the Transactions are consummated as originally contemplated to the greatest extent possible.

Section 9.10.      Counterparts. This Agreement may be executed and delivered (including by electronic transmission in PDF format or by facsimile transmission) in one or more counterparts, and by the Parties in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.

Section 9.11.      Specific Performance. The Parties acknowledge and agree that irreparable damage would occur, no adequate remedy at law would exist and damages would be difficult to determine if any of the provisions of this Agreement are not performed in accordance with their specific terms. Accordingly, in addition to any other right or remedy to which a Party may be entitled, at law or in equity, it shall be entitled to seek enforcement of any provision of this Agreement by a decree of specific performance and to seek temporary, preliminary and permanent injunctive relief to prevent breaches or threatened breaches of any of the provisions of this Agreement, without the necessity of proving the inadequacy of money damages as a remedy and without the necessity of posting any bond or other undertaking. The Parties further agree not to assert that a remedy of specific performance is unenforceable, invalid, contrary to applicable Law or inequitable for any reason, nor to assert that a remedy of monetary damages would provide an adequate remedy for any such breach.

[Remainder of Page Intentionally Left Blank]

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

ORGIN AGRITECH LIMITED
By:	/s/ Zheng James Chen
	Name:	Zheng James Chen
	Title:	Chief Executive Officer

[Signature Page to Share Subscription Agreement]

[Signature Page to Share Subscription Agreement]

Exhibit A – Form of Investor Rights Agreement

Exhibit A

EXECUTION VERSION

INVESTOR RIGHTS AGREEMENT

THIS INVESTOR RIGHTS AGREEMENT (this “Agreement”) is made as of October 16, 2018 by and between:

(1) Origin Agritech Limited, a company incorporated under the laws of the British Virgin Islands (the “Company”); and

(2) Long Han Investment Management Co., Ltd. (隆瀚投资管理有限公司), a company incorporated under the laws of the People’s Republic of China (the “Investor”).

The parties listed above are referred to herein collectively as “Parties” and individually as a “Party.”

RECITALS

A. The Company and the Investor entered into a Share Subscription Agreement, dated as of October 16, 2018 (the “Share Subscription Agreement”), pursuant to which, among other things, the Company has agreed to issue and sell to the Investor certain Ordinary Shares; and

B. In connection with and as a closing deliverable at the Closing (as defined below) contemplated by the Share Subscription Agreement, the Company and the Investor have agreed to enter into this Agreement.

WITNESSETH

NOW, THEREFORE, in consideration of the premises set forth above, the mutual promises and covenants set forth herein and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Parties agree as follows:

1. Interpretation

1.1          Definitions. The following terms shall have the meanings ascribed to them below:

“Additional Lockup Date” shall have the meaning ascribed to this term in Section 3.1.

“Affiliate” means, with respect to any Person, any Person that controls, is controlled by, or is under common control with such Person. As used herein, the term “control” (including the terms “controlling,” “controlled by” and “under common control with”) means the possession, directly or indirectly, and individually or together with any other Person, of the power to direct or to cause the direction of the management and policies of a Person, whether through ownership of voting securities or other interests, by contract or otherwise.

“Aggregate Ownership” means, with respect to any Person, the total number of Ordinary Shares, the voting power or investment power over which is directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, held, possessed or shared (without duplication) by such Person as of the date of such calculation.

“Aggregate Ownership Percentage” means, with respect to the Investor, the quotient (expressed as a percentage) obtained by dividing (i) the Aggregate Ownership held by the Investor, by (ii) the Aggregate Ownership of all holders of Ordinary Shares.

“At-the-Market Offering” means a Registration in which securities of the Company are sold to the public through one or more investment banks or financial advisors as agent to the selling shareholder (but not as underwriter on a firm commitment basis).

“Beneficially Own” or “Beneficial Ownership” means, with respect to any securities, having “beneficial ownership” of such securities as determined pursuant to Rule 13d-3 under the Exchange Act.

“Blackout Period” means (i) any period during which directors and executive officers of the Company are not permitted to trade under the insider trading policy of the Company then in effect; provided that the foregoing restriction shall not apply with respect to the Investor if the Investor no longer has a right to designate a member of the Board pursuant to this Agreement and (ii) in the event that the Company determines in good faith that the registration would reasonably be expected to materially and adversely affect or materially interfere with any bona fide material financing of the Company or any material transaction under consideration by the Company or would require disclosure of material information that has not been disclosed to the public, a period of up to sixty (60) days (the Blackout Period described in this clause (ii) shall count as an “Unscheduled Blackout Period”). The Unscheduled Blackout Period may not occur more than twice in any period of fifteen (15) consecutive months.

“Board” or “Board of Directors” means the board of directors of the Company.

“Business Day” means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by Law to be closed in the city of Beijing, Hong Kong or New York.

“Closing” has the meaning set forth in the Share Subscription Agreement.

“Company Competitors” means the entities, enterprises and businesses listed in Schedule I hereof and any Affiliates of any such entity, enterprise or business, which list may be updated by the Board.

“Company Securities” means (i) Ordinary Shares, (ii) securities convertible into or exercisable or exchangeable for Ordinary Shares and (iii) any options, warrants or other rights to acquire Ordinary Shares, whether issued before, at or after the date hereof.

“Exchange Act” means the United States Securities Exchange Act of 1934, as amended.

“Existing Shares” means the Ordinary Shares held by the Investor or its Affiliates immediately prior to the Closing.

“Form F-3” means Form F-3 promulgated by the SEC under the Securities Act or any successor form or substantially similar form then in effect.

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“Governmental Authority” means any federal, national, foreign, supranational, state, provincial, local or other governmental, regulatory or administrative authority, agency or commission or any court, tribunal, or judicial or arbitral body.

“Governmental Order” means any writ, judgment, decree, injunction, award or similar order of any Government Authority (in each case whether preliminary or final).

“HKIAC” shall have the meaning ascribed to this term in Section 7.2.

“HKIAC Rules” shall have the meaning ascribed to this term in Section 7.2.

“Holder” means the Investor or any of its Permitted Transferees, so long as such Person holds Registrable Securities.

“Initial Investor Ownership Percentage” means the quotient (expressed as a percentage) obtained by dividing (i) the Aggregate Ownership of the Investor as of the date of such calculation, by (ii) the Aggregate Ownership of the Investor as of the Closing (as proportionally adjusted to give effect to any stock split, stock dividend, recapitalization or any similar transaction after the Closing).

“Investor Nominee” shall have the meaning ascribed to this term in Section 5.1(a).

“Law” means any federal, national, foreign, supranational, state, provincial, local or similar statute, law, treaty, ordinance, regulation, rule, code, order, requirement or rule of law (including common law) or any Governmental Order.

“Lockup Date” shall have the meaning ascribed to this term in Section 3.1.

“Lockup Shares” means collectively, the Purchased Shares and the Existing Shares.

“Loss” shall have the meaning ascribed to this term in Section 2.8.

“New Securities” means any Ordinary Shares or other voting shares of the Company and rights, options or warrants to purchase such Ordinary Shares or securities of any type whatsoever that are, or may become, convertible or exchangeable into such Ordinary Shares or other voting shares; provided that the term “New Securities” does not include (i) Company Securities issued to the employees, consultants, officers or directors of the Company or its Subsidiaries, or which have been reserved for issuance, pursuant to each of the Company’s equity based incentive plans adopted in 2005, 2009 and 2014, respectively; (ii) Ordinary Shares issued to all holders of the Company on a pro rata basis in connection with any share split, share dividend, combination, reclassification or recapitalization of the Company; or (iii) Ordinary Shares issued upon the conversion of any loan amount pursuant to the Promissory Note.

“Ordinary Shares” means shares of common stock of nil par value per share in the capital of the Company.

“Permitted Transferee” means any Affiliate of the Investor for so long as such transferee remains an Affiliate of the Investor at all times following the applicable transfer. For the avoidance of doubt, Permitted Transferee includes any entities advised or managed by the Investor or its Affiliates.

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“Person” means any individual, partnership, firm, corporation, limited liability company, association, trust, unincorporated organization, Governmental Authority or other entity.

“Piggyback Registration” shall have the meaning ascribed to this term in Section 5.1(b).

“Promissory Note” means the Promissory Note, dated as of July 5, 2017, by and between the Company and L2 Capital, LLC, including any amendment, renewal, replacement, or successor agreement and any future agreement that confers similar rights.

“Prospectus” means the prospectus included in any Registration Statement, all amendments and supplements to such prospectus, including post-effective amendments, and all other material incorporated by reference in such prospectus.

“Purchased Shares” means all the Ordinary Shares acquired by the Investor pursuant to the Share Subscription Agreement.

“Registrable Securities” means all of the Ordinary Shares acquired by the Investor pursuant to the Share Subscription Agreement; provided that any such Ordinary Shares shall cease to be Registrable Securities if (i) they have been registered and sold pursuant to an effective Registration Statement, (ii) they have been transferred by a Holder in a transaction in which the Holder’s rights under this Agreement are not, or cannot be, assigned, (iii) they may be sold pursuant to Rule 144 under the Securities Act without limitation thereunder on volume or manner of sale or (iv) they have ceased to be outstanding.

“Registration” means a registration with the SEC of the offer and sale to the public of Registrable Securities under a Registration Statement. The terms “Register,” “Registered” and “Registering” shall have a correlative meaning.

“Registration Expenses” shall mean all expenses incident to the Company’s performance of or compliance with this Agreement, including all (i) registration, qualification and filing fees; (ii) expenses incurred in connection with the preparation, printing and filing under the Securities Act of the Registration Statement, any Prospectus and any issuer free writing prospectus and the distribution thereof; (iii) the reasonable fees and expenses of the Company’s counsel and independent accountants; (iv) the fees and expenses incurred in connection with the registration or qualification and determination of eligibility for investment of the Ordinary Shares under the state blue sky laws (including the related fees and expenses of counsel); (v) the costs and charges of any transfer agent and any registrar; (vi) all expenses and application fees incurred in connection with any filing with, and clearance of an offering by, Financial Industry Regulatory Authority, Inc.; (vii) expenses incurred in connection with any “road show” presentation to potential investors; (viii) printing expenses, messenger, telephone and delivery expenses; and (ix) fees and expenses of listing any Registrable Securities on any securities exchange on which the Ordinary Shares are then listed; but in each case excluding any Selling Expenses.

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“Registration Statement” means any registration statement of the Company filed with, or to be filed with, the SEC under the rules and regulations promulgated under the Securities Act, including the related Prospectus, amendments and supplements to such registration statement, including post-effective amendments, and all exhibits and all material incorporated by reference in such registration statement.

“Replacement Nominee” shall have the meaning ascribed to this term in Section 5.1(b).

“Representatives” means, with respect to any Person, such Person’s Affiliates and such Person and its Affiliates’ respective directors, officers, employees, members, partners, accountants, consultants, advisors, attorneys, agents and other representatives.

“SEC” means the United States Securities and Exchange Commission.

“Securities Act” means the United States Securities Act of 1933, as amended.

“Selling Expenses” means (i) all underwriting discounts, selling commissions and transfer taxes applicable to the sale of Registrable Securities hereunder and (ii) any fees and expenses of legal counsel or other advisors of the Holders.

“Shelf Registration” means a Registration Statement of the Company on Form F-3 for an offering to be made on a delayed or continuous basis of Ordinary Shares pursuant to Rule 415 under the Securities Act (or similar provisions then in effect).

“Takedown Notice” shall have the meaning ascribed to this term in Section 2.1(b).

“Transfer” shall have the meaning ascribed to this term in Section 3.1.

“Underwritten Offering” means a Registration in which securities of the Company are sold to an underwriter or underwriters on a firm commitment basis for reoffering to the public.

1.2           Interpretation. For all purposes of this Agreement, except as otherwise expressly provided, (i) the terms defined in this Section 1 shall have the meanings assigned to them in this Section 1 and include the plural as well as the singular, (ii) all references in this Agreement to designated “Sections” and other subdivisions are to the designated Sections and other subdivisions of the body of this Agreement, (iii) pronouns of either gender or neuter shall include, as appropriate, the other pronoun forms, (iv) the words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Section or other subdivision, (v) all references in this Agreement to designated schedules, exhibits and annexes are to the schedules, exhibits and annexes attached to this Agreement unless explicitly stated otherwise, (vi) “or” is not exclusive, (vii) the term “including” will be deemed to be followed by “, but not limited to,” (viii) the terms “shall,” “will,” and “agrees” are mandatory, and the term “may” is permissive, and (ix) the term “day” means “calendar day.”

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2. Registration Rights.

2.1          Shelf Registration.

(a)       Shelf Registration. To the extent permitted under applicable Law, upon a written request by the Investor, the Company shall take all necessary actions as reasonably required by the Investor to prepare and file a Shelf Registration covering the offering and sale of the Registrable Securities of the Investor pursuant to Rule 415 under the Securities Act no later than the Lockup Date and the Company shall use commercially reasonable efforts to cause such Shelf Registration to become effective or declared effective by the SEC as promptly as practicable after such filing. Nothing in this Section 2 shall be construed as permitting any Transfer that is prohibited under Section 3.

  The Company shall provide such Shelf Registration (and each amendment or supplement thereto, and each request for acceleration of effectiveness thereof) to the Investor and its counsel at a reasonable time prior to its filing or other submission and shall not file or submit the same in a form to which the Investor or its counsel reasonably objects in writing within two (2) Business Days after the receipt thereof.

  The Company shall notify the Investor by facsimile or email as promptly as practicable after any such Shelf Registration becomes or is declared effective.

(b)       Shelf Takedown. After the Lockup Date (or an earlier date agreed by the Company in writing), if any Holder of Registrable Securities included on a Shelf Registration delivers a written notice to the Company specifying the kind and number of such Registrable Securities such Holder wishes to sell or distribute (the “Takedown Notice”), the Company shall take all actions reasonably requested by such Holder, including amending or supplementing such Shelf Registration, as may be necessary to enable such Registrable Securities to be sold or distributed in accordance with the intended method of distribution set forth in the Takedown Notice, including an Underwritten Offering, as expeditiously as practicable; provided, however, that (i) the Holders may not require the Company to effect a shelf takedown that is an Underwritten Offering unless the Registrable Securities to be registered exceed 20% of the total Registrable Securities as of the date of this Agreement, (ii) the Holders may not require the Company to effect more than two shelf takedowns that are Underwritten Offerings in any 12-month period, (iii) the Holders may not require the Company to effect more than three shelf takedowns (other than shelf takedowns that are Underwritten Offerings) in any 12-month period and (iv) the Holders may not require the Company to effect more than five shelf takedowns that are Underwritten Offerings.

(c)       Blackout. The Company shall be entitled to postpone (upon prior written notice to the Investor) the filing or the effectiveness of a Registration Statement for any Registration or suspend the use of any Registration Statement in the event of a Blackout Period until the expiration of the applicable Blackout Period. Upon notice by the Company to the Holders of a Blackout Period, each Holder shall keep the fact of any such notice strictly confidential and, during any Blackout Period, promptly halt any offer, sale, trading or transfer by it of any Registrable Securities pursuant to the Shelf Registration for the duration of the Blackout Period set forth in such notice (or until such Blackout Period shall be earlier terminated in writing by the Company) and promptly halt any use, publication, dissemination or distribution of any Prospectus covering any Registrable Securities for the duration of the Blackout Period and, if so directed by the Company, shall deliver to the Company any copies then in its possession of any such Prospectus. The Company shall use commercially reasonable efforts to terminate any postponement or suspension under any Blackout Period (including any Unscheduled Blackout Period) as promptly as practicable.

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(d)       Effective Registration. Subject to the applicability of Blackout Periods, the Company shall use its commercially reasonable efforts to keep the Shelf Registration for purposes of Section 2.1(a) continuously effective under the Securities Act in order to permit the Prospectus forming a part thereof to be usable by Holders until the termination of the registration rights pursuant to Section 2.10.

(e)       Underwritten Offering. In the event that a Holder intends to distribute the Registrable Securities in a Registration by means of an Underwritten Offering, no Holder may include Registrable Securities in such Registration unless such Holder, subject to the limitations set forth in Section 2.6, (i) agrees to sell its Registrable Securities on the basis provided in the applicable underwriting arrangements; (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements; and (iii) cooperates with the Company’s reasonable requests in connection with such Registration (it being understood that the Company’s failure to perform its obligations hereunder, which failure is caused by such Holder’s failure to cooperate, will not constitute a breach by the Company of this Agreement).

(f)       Priority of Securities in an Underwritten Offering. If the managing underwriter or underwriters of a proposed Underwritten Offering informs the Company and the Holders with Registrable Securities in the proposed Underwritten Offering in writing that, in its or their opinion, the number of securities requested to be included in such Underwritten Offering exceeds the number that can be sold in such Underwritten Offering without being likely to have a significant adverse effect on the price, timing or distribution of the securities offered or the market for the securities offered, then the number of securities to be included in such Underwritten Offering shall be reduced to the extent necessary to reduce the total number of securities to be included in such offering to the number recommended by the managing underwriter or underwriters in the following order of priority: first, there shall be excluded from the Underwritten Offering any securities to be sold for the account of any selling securityholder, including the Holders, that have been requested to be included therein pursuant to piggyback registration rights (including Section 2.2), pro rata based on the number of securities owned by such selling securityholder; second, there shall be excluded from the Underwritten Offering any securities to be sold for the account of selling securityholders, including the Holders, that originally requested the Underwritten Offering, pro rata based on the number of securities owned by such selling securityholder to the extent there is more than one such initiating selling securityholder; and finally, there shall be excluded from the Underwritten Offering any securities to be sold for the account of the Company.

(g)       Eligibility for Form F-3 and WKSI Status. The Company represents and warrants to the Investor as of the date hereof that the Company meets the requirements for use of Form F-3 under the Securities Act and the Company is a “well-known seasoned issuer” as defined in Rule 405 under the Securities Act. The Company shall use commercially reasonable efforts to maintain its eligibility for a Shelf Registration under Form F-3 and in the event that the Company fails to meet the requirements for use of Form F-3, the Company shall be required to perform its obligations under this Agreement as if all references to “Form F-3” were replaced by “Form F-1” for the purposes of the definition of “Shelf Registration”.

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2.2           Piggyback Registrations.

(a)       Participation. After the Lockup Date (or an earlier date agreed by the Company in writing), if the Company proposes to file a Prospectus as part of any Registration Statement under the Securities Act with respect to any offering of Company Securities for its own account and/or for the account of any other Persons (other than a Registration (i) under Section 2.1 hereof, (ii) pursuant to a Registration Statement on Form S-8 (or other registration solely relating to an offering or sale to employees or directors of the Company pursuant to any employee stock plan or other employee benefit arrangement) or Form F-4, Form S-4 or similar form that relates to a transaction subject to Rule 145 under the Securities Act, (iii) pursuant to any form that does not include substantially the same information as would be required to be included in a Registration Statement covering the sale of Registrable Securities, (iv) in connection with any dividend reinvestment or similar plan, (v) for the sole purpose of offering securities to another entity or its security holders in connection with the acquisition of assets or securities of such entity or any similar transaction, or (vi) that relates to an offering of Company Securities that is not underwritten and that occurs at a time when a Shelf Registration is effective in accordance with Section 2.1(a)), then the Company shall give written notice of such proposed filing to the Investor on behalf of each Holder as soon as practicable (but in any event at least ten (10) Business Days prior to the proposed date of printing the preliminary Prospectus), and such notice shall offer such Holders the opportunity to Register under such Registration Statement such number of Registrable Securities as each such Holder may request in writing (a “Piggyback Registration”). Subject to this Section 2.2(a) and Section 2.2(c), the Company shall use commercially reasonable efforts to include in such Registration Statement all such Registrable Securities that are requested to be included therein within six (6) Business Days after the date of any such notice. If the offering pursuant to a Registration Statement pursuant to this Section 2.2(a) is to be an Underwritten Offering, then each Holder making a request for a Piggyback Registration pursuant to this Section 2.2(a) shall, and the Company shall use commercially reasonable efforts to coordinate arrangements with the underwriters so that each such Holder may, participate in such Underwritten Offering. If the offering pursuant to such Registration Statement is to be on any other basis, then each Holder making a request for a Piggyback Registration pursuant to this Section 2.2(a) shall, and the Company shall use commercially reasonable efforts to coordinate arrangements so that each such Holder may, participate in such offering on such basis. If the Company files a Shelf Registration for its own account and/or for the account of any other Persons, the Company agrees that it shall use its commercially reasonable efforts to include in such Registration Statement such disclosures as may be required by Rule 430B under the Securities Act in order to ensure that the Holders may be added to such Shelf Registration at a later time through the filing of a Prospectus supplement rather than a post-effective amendment.

(b)       Right to Withdraw. Each Holder shall have the right to withdraw such Holder’s request for inclusion of its Registrable Securities in any Underwritten Offering pursuant to this Section 2.2 at any time prior to the execution of an underwriting agreement with respect thereto by giving written notice to the Company of such Holder’s request to withdraw and, subject to the preceding clause, each Holder shall be permitted to withdraw all or part of such Holder’s Registrable Securities from a Piggyback Registration at any time prior to the printing of the preliminary Prospectus.

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(c)       Priority of Piggyback Registration. If the managing underwriter or underwriters of any proposed Underwritten Offering of a class of Registrable Securities included in a Piggyback Registration informs the Company and the Holders in writing that, in its or their opinion, the number of securities of such class which such Holder and any other Persons intend to include in such Underwritten Offering exceeds the number which can be sold in such Underwritten Offering without being likely to have a significant adverse effect on the price, timing or distribution of the securities offered or the market for the securities offered, then the securities to be included in such Underwritten Offering shall be reduced to the extent necessary to reduce the total number of securities to be included in such offering to the number recommended by the managing underwriter or underwriters in the following order of priority: first, there shall be excluded from the Underwritten Offering any securities to be sold for the account of any selling securityholder, including the Holders, that have been requested to be included therein pursuant to piggyback registration rights (including this Section 2.2), pro rata based on the number of securities owned by such selling securityholder; second, there shall be excluded from the Underwritten Offering any securities to be sold for the account of selling securityholders, including the Holders, that originally requested the Underwritten Offering, pro rata based on the number of securities owned by such selling securityholder to the extent there is more than one such initiating selling securityholder; and finally, there shall be excluded from the Underwritten Offering any securities to be sold for the account of the Company.

(d)       Determination Not to Conduct Offering. If at any time after giving a Piggyback Registration notice and prior to the filing of a final prospectus supplement in connection with such offering, the Company shall determine for any reason not to offer the securities originally intended to be included in such offering, the Company may, at its election, give written notice of such determination to the Investor and thereupon the Company shall be relieved of its obligation to include any Holder’s Registrable Securities in such offering.

2.3           Notification to Holder. The Company shall advise each Holder promptly in writing of the existence of any fact and the happening of any event that makes any statement of a material fact made in any Registration Statement or Prospectus untrue, or that requires the making of any additions to or changes in any Registration Statement or Prospectus in order to make the statements therein not misleading and in such event the Company shall prepare and file with the SEC, as soon as reasonably practicable, an amendment to such Registration Statement or an amendment or supplement to such Prospectus or a report on Form 6-K, as the case may be, so that, as so amended or supplemented, such Registration Statement and such Prospectus will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances then existing, not misleading. Upon receipt of such written advice, each Holder shall discontinue and refrain from making any sales of Registrable Securities, until such time as the Company advises such Holder that such Registration Statement or such Prospectus no longer contains an untrue statement or omission of a material fact, and if so directed by the Company, such Holder will deliver to the Company (at the Company’s expense) all copies of the Prospectus covering such Registrable Securities current at the time of receipt of such notice. The period during which the sales of Registrable Securities are suspended pursuant to the foregoing sentence shall count as an Unscheduled Blackout Period.

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2.4           Holder Information. As a condition precedent to any Registration hereunder, the Company may require each Holder as to which any Registration is being effected to furnish to the Company, and each such Holder agrees to furnish to the Company, such information regarding the distribution of such securities and such other information relating to such Holder, its ownership of Registrable Securities and other matters as the Company may from time to time reasonably request in writing to enable the Company to comply with the provisions of this Agreement.

2.5          Holdback Agreements. Each of the Company and the Holders agrees, upon reasonable request from the managing underwriter or underwriters in connection with any Registration for an Underwritten Offering of the Company’s securities (other than pursuant to a registration statement on Form F-4, Form S-4 or any similar or successor form or pursuant to a registration solely relating to an offering and sale to employees or directors of the Company pursuant to any employee stock plan or other employee benefit plan arrangement), not to effect (other than pursuant to such Registration) any public sale or distribution of Registrable Securities, including, but not limited to, any sale pursuant to Rule 144, or make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of, any Registrable Securities, any other Company Securities without the prior written consent of the managing underwriters during such period as reasonably requested by the managing underwriters (but in no event longer than the seven days before and the 30 days after the pricing of such Underwritten Offering).

2.6          Underwriting Agreement in Underwritten Offerings. If requested by the managing underwriters for any Underwritten Offering, the Company and the participating Holders shall enter into an underwriting agreement in customary form with such underwriters for such offering.

2.7          Registration Expenses. In the case of any Registration of Registrable Securities required pursuant to this Agreement (including any Registration that is delayed or withdrawn) or proposed Underwritten Offering pursuant to this Agreement, the Company shall pay all Registration Expenses regardless of whether the Registration Statement becomes effective or the Underwritten Offering is completed; provided, however, that in the case of any proposed shelf takedown pursuant to this Agreement that is an Underwritten Offering or an At-the-Market Offering, the Investor shall pay such out-of-pocket Registration Expenses (other than Registration Expenses to the extent such Registration Expenses would have been incurred by the Company if the shelf takedown were not an Underwritten Offering or At-the-Market Offering) on a pro rata basis with reference to the number of the Registered Securities being offered by the Investor in such shelf takedown and promptly reimburse such expenses to the Company upon request regardless of whether such Underwritten Offering or At-the-Market Offering is completed. The Company shall have no obligation to pay any Selling Expenses.

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2.8           Indemnification.

(a)       Indemnification by the Company. The Company agrees to indemnify and hold harmless, to the full extent permitted by law, each Holder and such Holder’s officers, directors, employees, advisors, Affiliates and agents and each Person who controls (within the meaning set forth in the Securities Act or the Exchange Act) such Holder from and against any and all losses, claims, damages, liabilities (or actions in respect thereof) and expenses, joint or several (including reasonable costs of investigation and legal expenses) (each, a “Loss” and collectively “Losses”) arising out of or based upon (i) any untrue or alleged untrue statement of a material fact contained in any Registration Statement under which the sale of such Registrable Securities was Registered under the Securities Act (including any final or preliminary Prospectus contained therein or any amendment thereof or supplement thereto or any documents incorporated by reference therein), or any such statement made in any free writing prospectus (as defined in Rule 405 under the Securities Act) that the Company has filed or is required to file pursuant to Rule 433(d) of the Securities Act, or (ii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of a Prospectus, preliminary Prospectus or free writing prospectus, in light of the circumstances under which they were made) not misleading; provided, however, that the Company shall not be liable to any particular indemnified party in any such case to the extent that any such Loss arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in any such Registration Statement (including any final or preliminary Prospectus contained therein or any amendment thereof or supplement thereto or any documents incorporated by reference therein) or any such statement made in any free writing prospectus in reliance upon and in conformity with written information furnished to the Company by such indemnified party expressly for use in the preparation thereof. This indemnity shall be in addition to any liability the Company may otherwise have. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Holder or any indemnified party and shall survive the transfer of such securities by such Holder.

(b)       Indemnification by the Selling Holder. Each selling Holder agrees (severally and not jointly) to indemnify and hold harmless, to the full extent permitted by law, the Company and the Company’s directors, officers, employees, advisors, Affiliates and agents and each Person who controls (within the meaning set forth in the Securities Act or the Exchange Act) the Company from and against any Losses arising out of or based upon (i) any untrue or alleged untrue statement of a material fact contained in any Registration Statement under which the sale of such Registrable Securities was Registered under the Securities Act (including any final or preliminary Prospectus contained therein or any amendment thereof or supplement thereto or any documents incorporated by reference therein), or any such statement made in any free writing prospectus that the Company has filed or is required to file pursuant to Rule 433(d) of the Securities Act, or (ii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of a Prospectus, preliminary Prospectus or free writing prospectus, in light of the circumstances under which they were made) not misleading to the extent, but, in each case (i) or (ii), only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission is made in reliance upon and in conformity with any written information furnished by such selling Holder to the Company expressly for inclusion in such Registration Statement, Prospectus, preliminary Prospectus or free writing prospectus. This indemnity shall be in addition to any liability the selling Holder may otherwise have. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Company or any indemnified party.

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(c)       Conduct of Indemnification Proceedings. Any Person seeking indemnification hereunder will (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (it being understood that any delay or failure to so notify the indemnifying party shall relieve the indemnifying party of its obligations hereunder to the extent that it is materially prejudiced by reason of such delay or failure) and (ii) permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party; provided, however, that any Person entitled to indemnification hereunder shall have the right to select and employ separate counsel and to participate in the defense of such claim, but the fees and expenses of such counsel shall be at the expense of such Person unless (a) the indemnifying party has agreed in writing to pay such fees or expenses, (b) the indemnifying party shall have failed to assume the defense of such claim within 15 Business Days after receipt of notice of such claim from the Person seeking indemnification hereunder or fails to employ counsel reasonably satisfactory to such Person within 15 Business Days after receipt of notice of such claim or to pursue the defense of such claim in a reasonably vigorous manner, (c) the named parties to any proceeding include both such indemnified and the indemnifying party and the indemnified party has reasonably concluded (based on written advice of counsel) that there may be legal defenses available to it or other indemnified parties that are different from or in addition to those available to the indemnifying party, or (d) in the reasonable judgment of any such Person, based upon written advice of its counsel, a conflict of interest may exist between such Person and the indemnifying party with respect to such claims (in which case, if the Person notifies the indemnifying party in writing that such Person elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such claim on behalf of such Person). If such defense is not assumed by the indemnifying party, the indemnifying party will not be subject to any liability for any settlement made without its consent, but such consent shall not be unreasonably withheld, conditioned or delayed. If the indemnifying party assumes the defense, the indemnifying party shall not have the right to settle such action or enter into any judgment without the consent of the indemnified party, which consent shall not be unreasonably withheld, conditioned or delayed, unless such settlement or judgment (i) includes as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of an unconditional release from all liability in respect to such claim or litigation, (ii) does not include a statement as to or an admission of fault, culpability or failure to act, by or on behalf of any indemnified party and (iii) does not provide for any action on the part of any party other than the payment of money damages which is to be paid in full by the indemnifying party. It is understood that the indemnifying party or parties shall not, in connection with any proceeding or related proceedings in the same jurisdiction, arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one separate firm (in addition to one local counsel) at any one time from all such indemnified party or parties unless (x) the employment of more than one counsel has been authorized in writing by the indemnifying party or parties, (y) an indemnified party has reasonably concluded (based on written advice of counsel) that there may be legal defenses available to it that are different from or in addition to those available to the other indemnified parties or (z) a conflict or potential conflict exists or in the reasonable judgment of such Person may exist (based on advice of counsel to an indemnified party) between such indemnified party or parties and the other indemnified parties, in each of which cases the indemnifying party shall be obligated to pay the reasonable fees and expenses of such additional counsel.

(d)       Contribution. If for any reason the indemnification provided for in Section 2.8(a) or Section 2.8(b) is unavailable to an indemnified party or insufficient to hold it harmless as contemplated by Section 2.8(a) or Section 2.8(b), then the indemnifying party shall, in lieu of indemnifying such indemnified party thereunder, contribute to the amount paid or payable by the indemnified party as a result of such Loss in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and the indemnified party on the other hand in connection with the statements or omissions which resulted in such Loss as well as any other relevant equitable considerations. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the indemnifying party or the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 2.8(d) were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in this Section 2.8(d). No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. The amount paid or payable by an indemnified party hereunder shall be deemed to include, for purposes of this Section 2.8(d), any legal or other expenses reasonably incurred by such indemnified party in connection with investigating, preparing to defend or defending against or appearing as a third party witness in respect of, or otherwise incurred in connection with, any such loss, claim, damage, expense, liability, action, investigation or proceeding. If indemnification is available under this Section 2.8, the indemnifying parties shall indemnify each indemnified party to the full extent provided in Section 2.8(a) and Section 2.8(b) hereof without regard to the relative fault of said indemnifying parties or indemnified party.

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2.9          Reporting Requirements; Rule 144. The Company shall use its commercially reasonable efforts to be and remain in compliance with the periodic filing requirements imposed under the SEC’s rules and regulations, including the Exchange Act, and thereafter shall timely file such information, documents and reports as the SEC may require or prescribe under Section 13 or 15(d) (whichever is applicable) of the Exchange Act. If the Company is not required to file such reports during such period, it will, upon the request of any Holder, make publicly available such necessary information for so long as necessary to permit sales pursuant to Rule 144 or Regulation S under the Securities Act, and it will take such further action as any Holder may reasonably request, all to the extent required from time to time to enable such Holder to sell Registrable Securities without Registration under the Securities Act within the limitation of the exemptions provided by (a) Rule 144 or Regulation S under the Securities Act, as such Rules may be amended from time to time, or (b) any rule or regulation hereafter adopted by the SEC.

2.10        Termination. The Company shall have no obligations to register any Registrable Securities proposed to be sold by any Holder upon the earlier of (i) the third anniversary of the Lockup Date and (ii) such time as there are no Registrable Securities.

3. Transfer

3.1          Transfer Restrictions.

(a)       Subject to Section 3.1(c), the Investor shall not, and shall cause its Affiliates not to, directly or indirectly, transfer, sell, hedge, assign, gift, pledge, encumber, hypothecate, mortgage, exchange or otherwise dispose, by operation of Law or otherwise (any such occurrence, a “Transfer”), (i) any Purchased Shares prior to the date that is one (1) year following the date of Closing (such date, the “Lockup Date”), or (ii) any Existing Shares prior to the date that is six (6) months following the date of the Share Subscription Agreement (“Additional Lockup Date”), in each case, without the prior written consent of the Company.

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(b)       Subject to Section 3.1(c), unless otherwise agreed by the Company in writing, the Investor shall not, and shall cause its Affiliates not to, Transfer to any Company Competitor (i) any Purchased Shares within twelve (12) months after the Lockup Date, or (ii) any Existing Shares within twelve (12) months after the Additional Lockup Date, in each case of (i) and (ii), other than any Transfer through open market brokerage transaction where the identity of the purchaser is unknown.

(c)       Notwithstanding the foregoing, the Investor may at any time Transfer its Lockup Shares to a Permitted Transferee; provided that prior to any Transfer pursuant to this Section 3.1(c), such Permitted Transferee shall have agreed in writing to be bound by the terms of this Agreement pursuant to documentation reasonably satisfactory to the Company; provided, further, that no Transfer pursuant to this Section 3.1(c) shall relieve any transferor from any liability for damages incurred or suffered by the Company as a result of any breach of this Agreement by such transferor.

3.2           No Avoidance of Restrictions. The Parties hereto agree that the Transfer restrictions in this Agreement shall not be capable of being avoided by the holding of Lockup Shares indirectly through a company or other entity that can itself be sold in order to dispose of an interest in Lockup Shares free of such restrictions, or any trust, derivative contract or other economic arrangement transferring the benefits of ownership of any Lockup Shares. The Investor undertakes that it shall not take any action intended to avoid such restrictions in any manner. Any Transfer or other disposal of any shares (or other interest) resulting in any change in the control of the Investor or of any Person having control over the Investor shall be treated as being a Transfer of the Lockup Shares held by the Investor, and the provisions of this Agreement that apply in respect of the Transfer of Lockup Shares shall thereupon apply in respect of the Lockup Shares so held. Any Transfer in violation of this Section 3.2 shall be null and void ab initio and have no force or effect whatsoever.

4. Voting Agreement

4.1          The Investor hereby agrees that, until the Lockup Date, (A) without prejudice to the rights of the Investor set forth in clause (B), the Investor shall not, and shall cause its Affiliates who hold any Company Securities not to, solicit, effect or seek to effect, offer or propose (whether publicly or otherwise) to effect, or cause or participate in, or in any way knowingly assist or facilitate any other person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in, or make any public statement with respect to, any action with respect to the Company or its Subsidiaries (as defined in the Share Subscription Agreement) (including without limitation any merger, consolidation, business combination, tender or exchange offer involving the Company) that is not recommended by the Board, and (B) at any meeting of the shareholders of the Company, however called, or at any adjournment or postponement thereof (a “Company Shareholders’ Meeting”), or in any other circumstances upon which a vote, consent or other approval (including by written consent) is sought by or from the shareholders of the Company: (i) the Investor shall, and shall cause its Affiliates who hold any Company Securities to, appear at such Company Shareholders’ Meeting or otherwise cause all Company Securities Beneficially Owned by the Investor or its Affiliates to be counted as present thereat for the purpose of establishing a quorum and shall take all other necessary or desirable actions within their control (including, without limitation, execution of written consents or resolutions in lieu of meetings); and (ii) with respect to any matter upon which a vote, consent or other approval (including by written consent) is sought by or from the shareholders of the Company, the Investor shall, and shall cause its Affiliates who hold any Company Securities to, vote and cause to be voted all Company Securities Beneficially Owned by the Investor or its Affiliates in the manner recommended by the Board at any such Company Shareholders’ Meeting or under any such other circumstances upon which a vote, consent or other approval (including by written consent) is sought, in the case of (B), (x) to the extent such Company Securities may be voted on such matter and (y) other than with respect to any such matter (1) that relates to a transaction between the Company, on the one hand, and any Affiliate of the Company or any officer, director, shareholder or member of the Company or any of its Affiliates, on the other hand, (2) that relates to the disposition of a material portion of the assets or securities of the Company and its Subsidiaries (as defined in the Share Subscription Agreement), taken as a whole, or (3) that constitutes a material violation of applicable Law by the Company.

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5. Corporate Governance

5.1           Investor Nominee Director.

(a)       The minimum number of directors on the Board shall be five and the maximum number shall be seven, of whom one director shall be designated by the Investor (such nominee, or such other individual who may be designated by the Investor from time to time in accordance with this Agreement, the “Investor Nominee”). On the date hereof, or if prior to the date hereof the Investor has not provided notice to the Company of the Investor Nominee together with the Investor Nominee’s consent to serve as a director, within five (5) Business Days after written notice by the Investor of its initial Investor Nominee and delivery of the applicable consent form to the Company (which notice and delivery may be made solely via email), the Board shall appoint such Investor Nominee to serve on the Board.

(b)       In the event of the death, disability, retirement or resignation of the Investor Nominee or any change of designation of the Investor Nominee by the Investor, the Investor shall have the exclusive right to designate another individual (the “Replacement Nominee”) to fill such vacancy and serve on the Board, and the Company shall use all best efforts to ensure that the Replacement Nominee is so appointed to the Board within five Business Days after designation of such Replacement Nominee in writing by the Investor.

5.2          Termination of Governance Rights. Notwithstanding anything in this Agreement to the contrary, on the date (i) the Initial Investor Ownership Percentage is less than 75% and (ii) the Investor’s Aggregate Ownership Percentage is less than 15%, the Investor shall have no further rights, and the Company shall have no further obligations, under Section 5.1 of this Agreement.

6. Issuance of New Securities

6.1           Consent Rights of Investor.

(a)       As long as the Investor owns at least fifty percent (50%) of the Ordinary Shares it owns on the date of Closing (as proportionally adjusted to give effect to any stock split, stock dividend, recapitalization or any similar transaction after the Closing), the Company may not undertake to issue any New Securities (in a single transaction or a series of related transactions) without the written consent of the Investor, not to be unreasonably withheld.

15

(b)       Provided that such written consent of the Investor is required at such time that the Company proposes to undertake an issuance of New Securities, it shall give to the Investor written notice of its intention to issue New Securities (the “Issuance Notice”), describing the amount and type of New Securities, the price and the general terms upon which the Company proposes to issue such New Securities in accordance with Section 7.4 of this Agreement. The Investor shall have ten (10) Business Days from the date of receipt of any such Issuance Notice (the “Issuance Consent Period”) to withhold its consent in writing to the Issuance of such New Securities for the price and upon the terms and conditions specified in the Issuance Notice by giving written notice to the Company. If the Investor fails to so withhold its consent in writing within the Issuance Consent Period to such proposed issuance of New Securities, then the Investor shall be deemed to have provided written consent to such issuance under Section 6.1(a) of this Agreement.

7. Miscellaneous

7.1          Governing Law. This Agreement shall be governed by, and construed in accordance with, the Laws of the State of New York without regard to its conflicts of law principles thereof.

7.2           Dispute Resolution. Any dispute, controversy or claim arising out of or relating to this Agreement or its subject matter shall be finally settled by arbitration. The place and seat of arbitration shall be Hong Kong, and the arbitration shall be administered by the Hong Kong International Arbitration Centre (the “HKIAC”) in accordance with the HKIAC Administered Arbitration Rules then in force (the “HKIAC Rules”). The number of arbitrators shall be three (3). Each Party shall appoint one arbitrator and the third arbitrator, who shall serve as chairperson of the arbitral tribunal, shall be selected by the mutual agreement of the first two arbitrators. Any arbitrator that is not so appointed shall instead be appointed in accordance with the HKIAC Rules. The language to be used in the arbitration proceedings shall be English. The award of the arbitral tribunal shall be final, conclusive and binding upon the Parties. Judgment upon any award may be entered and enforced in any court having jurisdiction over a Party or any of its assets. For the purpose of the enforcement of an award, the Parties irrevocably and unconditionally submit to the jurisdiction of any competent court and waive any defenses to such enforcement, including any defenses based on lack of personal jurisdiction or inconvenient forum.

7.3          Counterparts. This Agreement may be executed and delivered (including by electronic transmission in PDF format or by facsimile transmission) in one or more counterparts, and by the Parties in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.

7.4           Notices. Any notice required or permitted pursuant to this Agreement shall be given in writing and shall be given either personally or by sending it by next-day or second-day courier service, fax, electronic mail or similar means to such Party. Where a notice is sent by next-day or second-day courier service, service of the notice shall be deemed to be effected by properly addressing, pre-paying and sending by next-day or second-day service through an internationally-recognized courier a letter containing the notice, with a confirmation of delivery, and to have been effected at the expiration of two days after the letter containing the same is sent as aforesaid. Where a notice is sent by fax or electronic mail, service of the notice shall be deemed to be effected by properly addressing, and sending such notice through a transmitting organization, with a written confirmation of delivery, and to have been effected on the day the same is sent as aforesaid.

16

7.5          Successors and Assigns. This Agreement shall be binding upon and inure solely to the benefit of each Party, and nothing in this Agreement, express or implied, is intended to confer upon any other person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement. Neither this Agreement nor any of the rights or obligations of any Party may be assigned by any Party without the prior written consent of the other Party, except that (a) the Investor may assign this Agreement and the rights or obligations of the Investor hereunder to any of its Affiliates and (b) the registration rights of the Investor with respect to any Registrable Securities may be transferred to a Permitted Transferee of the Investor (i) to which Registrable Securities have been transferred and (ii) who executes and delivers to the Company a written instrument in form and substance reasonably satisfactory to the Company agreeing to be bound by and entitled to the benefits of, the terms of this Agreement, and any purported assignment in breach hereof by the Investor shall be void. Each Party hereto who transfers Registrable Securities to a Permitted Transferee shall cause such Permitted Transferee to execute and deliver to the Company a written instrument in form and substance reasonably satisfactory to the Company agreeing to be bound by and entitled to the benefits of, the terms of this Agreement.

7.6          Headings and Titles. Headings and titles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

7.7          Entire Agreement; Amendments and Waivers. This Agreement constitutes the full and entire understanding and agreement among the Parties with regard to the subjects hereof and thereof, and supersedes all other agreements between or among any of the Parties with respect to the subject matter hereof. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of both Parties.

7.8           Severability. If a provision of this Agreement is held to be unenforceable under applicable Laws, such provision shall be excluded from this Agreement and the remainder of the Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms.

7.9           Further Assurances. The Parties agree to execute such further instruments and to take such further action as may be reasonably necessary to carry out the intent of this Agreement.

7.10         Rights Cumulative. Each and all of the various rights, powers and remedies of a Party hereto will be considered to be cumulative with and in addition to any other rights, powers and remedies which such Party may have at law or in equity in the event of the breach of any of the terms of this Agreement. The exercise or partial exercise of any right, power or remedy will neither constitute the exclusive election thereof nor the waiver of any other right, power or remedy available to such Party.

17

7.11         No Waiver. Failure to insist upon strict compliance with any of the terms, covenants, or conditions hereof will not be deemed a waiver of such term, covenant, or condition, nor will any waiver or relinquishment of, or failure to insist upon strict compliance with, any right, power or remedy power hereunder at any one or more times be deemed a waiver or relinquishment of such right, power or remedy at any other time or times.

7.12         No Presumption. The Parties acknowledge that any applicable Law that would require interpretation of any claimed ambiguities in this Agreement against the Party that drafted it has no application and is expressly waived. If any claim is made by a Party relating to any conflict, omission or ambiguity in the provisions of this Agreement, no presumption or burden of proof or persuasion will be implied because this Agreement was prepared by or at the request of any Party or its counsel.

[Signature page follows]

18

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date first written above.

LONG HAN INVESTMENT
MANAGEMENT CO., LTD.
(隆瀚投资管理有限公司)
By:
	Name:	Shuang Cheng Zhou
	Title:	Chief Executive Officer

[Signature Page to Investor Rights Agreement]

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date first written above.

ORIGIN AGRITECH LIMITED
By:
	Name:	Zheng James Chen
	Title:	Chief Executive Officer

[Signature Page to Investor Rights Agreement]

Schedule I

Company Competitors

Company Names

1. Yuan Long Ping High-Tech Agriculture Co., Ltd. (referred to as “Long Ping High-Tech”) (隆平高科)

2. Shandong Denghai Seeds Co., Ltd (山东登海种业股份有限公司)

3. Beijing Golden Seeds Science & Technology Co., Ltd (北京金色农华种业科技有限公司)

4. Liaoning East-Asia Seeds Co., Ltd (辽宁东亚种业)

5. China National Seed Group Co., Ltd (中国种子集团有限公司)

6. Beijing Lantron Seed Corporation (北京联创种业股份有限公司)

7. Beijing Doneed Seed Co. Ltd (北京德农种业有限公司)

8. Henan Jin Yuan Seed Corporation (河南金苑种业股份有限公司)

9. SinoFarm Genetics & Seeds (Group) Co., Ltd (中地种业 (集团) 有限公司)

10. Henan Qiule Seed Industry Science & Technology Ltd (河南秋乐种业科技股份有限公司)

11. Henan Dr. Jin Seed Corporation (河南金博士种业股份有限公司)

12. Dupont Pioneer (杜邦先锋公司)

13. Beijing Chemical Technology Seeds Co., Ltd (北京化工种业有限公司)

14. Henan Huafeng Seeds Science & Technology Co., Ltd (河南滑丰种业科技有限公司)

15. Join Hope Seeds Co., Ltd (新疆九禾种业 (已更名为九圣禾种业股份有限公司)

16. Hebei Xuntian Agriculture Co. Ltd. (河北巡天农业科技有限公司)

17. Shouguang Hongxiang Seed Co. Ltd. (寿光宏翔种业)

18. Heilongjiang Kenfeng Seed Co. Ltd. (黑龙江垦丰种业有限公司)

19. Beijing Shunxin Seed Co. Ltd. (北京顺鑫种业科技有限公司)

EX-8.1

Exhibit 8.1

List of Subsidiaries

List of Subsidiaries	Jurisdiction of Incorporation	Ownership
Subsidiaries
State Harvest Holdings Limited	British Virgin Island	100%
Beijing Origin State Harvest Biotechnology Limited	People’s Republic of China	100%
Variable Interest Entity
Beijing Origin Seed Limited	People’s Republic of China	—
Subsidiaries held by Beijing Origin
Henan Origin Cotton Development Limited	People’s Republic of China	92.04%
Xinjiang Originbo Seed Company Limited	People’s Republic of China	51%
Beijing State Harvest Zhongying Network Technology Limited	People’s Republic of China	100%
Hubei Aoyu Agricultural Technology Limited	People’s Republic of China	51%
Anhui Aoyu Zhonggye Technology Ltd.	People’s Republic of China	50%
Xuzhou Aoyu Agricultural Technology Ltd.	People’s Republic of China	51%
Shandong Aoyu Zhongye Limited	People’s Republic of China	51%
Henan Aoyu Zhongye Limited	People’s Republic of China	51%

EX-12.1

Exhibit 12.1

CERTIFICATION

I, Gengchen Han, certify that:

1.       I have reviewed this annual report on Form 20-F of Origin Agritech Limited;

2.       Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.       Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4.       The company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the company's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company's internal control over financial reporting; and

5.       The company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company's auditors and the audit committee of the company's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company's internal control over financial reporting.

Date: June 3, 2019
/s/ Gengchen Han
Name:	Gengchen Han
Title:	Chairman of the Board and Chief Executive Officer

EX-12.2

Exhibit 12.2

CERTIFICATION

I, James Chen, certify that:

1.       I have reviewed this annual report on Form 20-F of Origin Agritech Limited;

2.       Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.       Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4.       The company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the company's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company's internal control over financial reporting; and

5.       The company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company's auditors and the audit committee of the company's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company's internal control over financial reporting.

Date: June 3, 2019
/s/ James Chen
Name:	James Chen
Title:	Chief Financial Officer

EX-13.1

Exhibit 13.1

ORIGIN AGRITECH LIMITED

Certification

Pursuant to 18 U.S.C. Section 1350, the undersigned, Gengchen Han, Chairman of the Board of Directors of Origin Agritech Limited (the “Company”), hereby certifies, to his knowledge, that the Company's annual report on Form 20-F for the year ended September 30, 2018 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: June 3, 2019
/s/ Gengchen Han
Name:	Gengchen Han
Title:	Chairman of the Board and Chief Executive Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

The foregoing certification is being furnished with the Company’s Report pursuant to 18 U.S.C. Section 1350. It is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and it is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

EX-13.2

Exhibit 13.2

ORIGIN AGRITECH LIMITED

Certification

Pursuant to 18 U.S.C. Section 1350, the undersigned, James Chen, Chief Financial Officer of Origin Agritech Limited (the “Company”), hereby certifies, to his knowledge, that the Company's annual report on Form 20-F for the year ended September 30, 2018 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: June 3, 2019
/s/ James Chen
Name:	James Chen
Title:	Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

The foregoing certification is being furnished with the Company’s Report pursuant to 18 U.S.C. Section 1350. It is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and it is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

EX-15.1

Exhibit 15.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Origin Agritech Limited

No. 21 Sheng Ming Yuan Road

Changping District

Beijing 102206

China

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (File No. 333-202947, 333-166226 and 333-145865) of Origin Agritech Limited and its subsidiaries and variable interest entities (the “Company”) of our report dated June 3, 2019, relating to the consolidated financial statements, which appears in this Form 20-F for the year ended September 30, 2018. Our report contains an explanatory paragraph regarding the Company’s ability to continue as a going concern.

/s/ BDO China Shu Lun Pan Certified Public Accountants LLP

Shenzhen, The People’s Republic of China

June 3, 2019

XML

Document and Entity Information	12 Months Ended
	Sep. 30, 2018 USD ($) shares
Document and Entity Information [Abstract]
Document Type	20-F
Amendment Flag	false
Document Period End Date	Sep. 30, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	FY
Entity Registrant Name	Origin Agritech LTD
Entity Central Index Key	0001321851
Current Fiscal Year End Date	--09-30
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Public Float | $	$ 0
Trading Symbol	SEED
Entity Common Stock, Shares Outstanding | shares	3,196,244
Entity Shell Company	false
Entity Emerging Growth Company	false

XML

CONSOLIDATED BALANCE SHEETS ¥ in Thousands, $ in Thousands		Sep. 30, 2018 CNY (¥)	Sep. 30, 2018 USD ($)	Sep. 30, 2017 CNY (¥)
Current assets:
Cash and cash equivalents		¥ 1,990	$ 289	¥ 3,245
Due from related parties (note 3)		129,506	18,826	55,940
Accounts receivable		0	0	24
Advances to suppliers (note 5)		1,188	173	5,298
Inventories (note 6)		81,947	11,912	23,226
Other current assets (note 7)		247	33	1,326
Total current assets		214,878	31,233	89,059
Land use rights, net (note 8)		16,564	2,408	19,108
Plant and equipment, net (note 9)		172,748	25,112	177,317
Long-term investment (note 10)		16,347	2,376	18,721
Acquired intangible assets, net (note 11)		8,362	1,216	15,739
Other assets (note 12)		1,202	175	4,196
Total assets (including amounts of the consolidated VIEs without recourse to the Company of RMB312,578 and RMB423,533 as of September 30, 2017 and 2018, respectively)		430,101	62,520	324,140
Current liabilities:
Short-term borrowings (note 13)		0	0	15,000
Current portion of long-term borrowings (note 13)		78,235	11,373	35,504
Accounts payable		7,955	1,156	1,454
Due to growers		7,984	1,161	6,535
Due to related parties (note 3)		293,732	42,699	11,592
Advances from customers		6,338	921	1,866
Notes payable (note 14)		0	0	8,335
Other payables and accrued expenses (note 15)		37,927	5,513	31,178
Current liabilities of discontinued operations (note 4)		0	0	22,640
Total current liabilities		432,171	62,823	134,104
Long-term borrowing (note 13)		0	0	56,769
Other long-term liability (note 16)		21,278	3,093	20,468
Total liabilities (including amounts of the consolidated VIEs without recourse to the Company of RMB200,687 and RMB450,585 as of September 30, 2017 and 2018, respectively)		453,449	65,916	211,341
Commitments and contingencies (note 23)
Shareholders' equity:
Preferred stock(no par value; 1,000,000 shares authorized, none issued)		0	0	0
Common stock (no par value; 60,000,000 shares authorized, 2,937,430 and 3,261,153 shares issued as of September 30, 2017 and 2018; 2,859,668 and 3,196,244 shares outstanding as of September 30, 2017 and 2018, respectively)	[1]	0	0	0
Additional paid-in capital		428,311	62,262	411,981
Accumulated deficit		(411,723)	(59,850)	(258,060)
Treasury stock at cost (77,762 and 64,909 shares as of September 30, 2017 and 2018, respectively) (note 18)	[1]	(19,163)	(2,786)	(22,791)
Accumulated other comprehensive loss		(22,136)	(3,220)	(18,821)
Total Origin Agritech Limited shareholders' equity		(24,711)	(3,594)	112,309
Non-controlling interests		1,363	198	490
Total equity		(23,348)	(3,396)	112,799
Total liabilities and equity		¥ 430,101	$ 62,520	¥ 324,140

[1] Retrospectively restated for effect of reverse stock split

XML

CONSOLIDATED BALANCE SHEETS [Parenthetical] ¥ in Thousands, $ in Thousands	Sep. 30, 2018 CNY (¥) shares	Sep. 30, 2018 USD ($) $ / shares shares	Sep. 30, 2017 CNY (¥) shares	Sep. 30, 2017 $ / shares
Preferred Stock, No Par Value | $ / shares		$ 0		$ 0
Preferred stock, shares authorized	1,000,000	1,000,000	1,000,000
Preferred stock, shares issued	0	0	0
Common Stock, No Par Value | $ / shares		$ 0		$ 0
Common stock, shares authorized	60,000,000	60,000,000	60,000,000
Common stock, shares issued	3,261,153	3,261,153	2,937,430
Common stock, shares outstanding	3,196,244	3,196,244	2,859,668
Treasury stock, shares	64,909	64,909	77,762
Total assets	¥ 430,101	$ 62,520	¥ 324,140
Total liabilities	453,449	$ 65,916	211,341
Variable Interest Entity, Not Primary Beneficiary [Member]
Total assets | ¥	423,533		312,578
Total liabilities | ¥	¥ 450,585		¥ 200,687

XML

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME ¥ in Thousands, $ in Thousands		12 Months Ended
		Sep. 30, 2018 CNY (¥) ¥ / shares shares	Sep. 30, 2018 USD ($) $ / shares shares	Sep. 30, 2017 CNY (¥) ¥ / shares shares	Sep. 30, 2016 CNY (¥) ¥ / shares shares
Revenues		¥ 12,927	$ 1,879	¥ 870	¥ 481
Cost of revenues		(7,047)	(1,024)	(678)	0
Gross profit		5,880	855	192	481
Operating expenses
Selling and marketing		(411)	(60)	0	0
General and administrative		(32,147)	(4,673)	(36,094)	(32,974)
Research and development		(27,132)	(3,944)	(38,682)	(41,272)
Other income, net		18,291	2,659	5,028	8,265
Total operating expenses, net		(41,399)	(6,018)	(69,748)	(65,981)
Loss from continuing operations		(35,519)	(5,163)	(69,556)	(65,500)
Interest expense		(22,787)	(3,312)	(9,006)	(7,607)
Interest income		6	1	1,427	69
Impairment loss		(3,807)	(553)	(44,706)	0
Loss on termination of business disposal		(90,683)	(13,182)	0	0
Loss before income taxes from continuing operations		(152,790)	(22,209)	(121,841)	(73,038)
Income tax (expense) benefits from continuing operations (note 20)
Current		0	0	0	0
Deferred		0	0	0	0
Income tax (expenses) benefit from continuing operations		0	0	0	0
Net loss from continuing operations		(152,790)	(22,209)	(121,841)	(73,038)
Discontinued Operations:
(Loss) income from discontinued operations, net of taxes (note 4)		0	0	18,862	(3,795)
Loss on disposal of commercial seed business, net of taxes (note 4)		0	0	(3,282)	0
Net (loss) income from discontinued operations		0	0	15,580	(3,795)
Net loss		(152,790)	(22,209)	(106,261)	(76,833)
Less: Net (loss) income attributable to non-controlling interests		873	127	(30,587)	(11,255)
Net loss attributable to Origin Agritech Limited		(153,663)	(22,336)	(75,674)	(65,578)
Other comprehensive loss
Net loss		(152,790)	(22,209)	(106,261)	(76,833)
Foreign currency translation difference		(3,315)	(482)	(7,644)	(4,124)
Comprehensive loss		(156,105)	(22,691)	(113,905)	(80,957)
Less: Comprehensive (loss) income attributable to non-controlling interests		873	127	(30,587)	(11,255)
Comprehensive loss attributable to Origin Agritech Limited		¥ (156,978)	$ (22,818)	¥ (83,318)	¥ (69,702)
Basic and diluted net income (loss) per share (note 21)
Continuing operations | (per share)		¥ (50.18)	$ (7.29)	¥ (32.20)	¥ (22.56)
Discontinued operations | (per share)		0	0	5.25	(1.20)
Basic and diluted net loss per share attributable to Origin Agritech Limited | (per share)		¥ (50.18)	$ (7.29)	¥ (26.95)	¥ (23.76)
Shares used in calculating basic and diluted net income (loss) per share	[1]	3,061,979	3,061,979	2,808,293	2,759,834

[1] Retrospectively restated for effect of reverse stock split

XML

CONSOLIDATED STATEMENTS OF EQUITY ¥ in Thousands, $ in Thousands		CNY (¥) shares	USD ($) shares	Common stock [Member] CNY (¥) shares		Additional Paid-in Capital [Member] CNY (¥)	Accumulated Deficit [Member] CNY (¥)	Accumulated Other Comprehensive Loss [Member] CNY (¥)	Treasury Stock [Member] CNY (¥)	Non- controlling Interests [Member] CNY (¥)
Balance at Sep. 30, 2015		¥ 290,778		¥ 0		¥ 402,500	¥ (116,808)	¥ (7,053)	¥ (37,445)	¥ 49,584
Balance (in shares) at Sep. 30, 2015 | shares	[1]			2,755,334
Net loss for the year		(76,833)		¥ 0		0	(65,578)	0	0	(11,255)
Issuance of restricted share		0		¥ 0		0	0	0	0	0
Issuance of restricted share (in shares) | shares	[1]			6,000
Share-based compensation expense		8,796				8,796	0	0	0	0
Share-based compensation expense				¥ 0
Translation adjustments		(4,124)		0		0	0	(4,124)	0	0
Balance at Sep. 30, 2016		218,617		¥ 0		411,296	(182,386)	(11,177)	(37,445)	38,329
Balance (in shares) at Sep. 30, 2016 | shares	[1]			2,761,334
Net loss for the year		(106,261)		¥ 0			(75,674)	0	0	(30,587)
Sale of treasury stock		¥ 6,115		¥ 0		(8,539)	0	0	14,654	0
Sale of treasury stock (in shares) | shares		50,000	50,000	50,000	[1]
Exercise of share option		¥ 543		¥ 0		543	0	0	0	0
Exercise of share option (in shares) | shares		0	0	5,500	[1]
Share-based compensation expense		¥ 5,404		¥ 0		5,404	0	0	0	0
Share-based compensation expense (in shares) | shares	[1]			13,000
Issuance of common shares		2,885		¥ 0		2,885	0	0	0	0
Issuance of common shares (in shares) | shares	[1]			29,834
Business disposal		(6,860)		¥ 0		392	0	0	0	(7,252)
Translation adjustments		(7,644)		0		0	0	(7,644)	0	0
Balance at Sep. 30, 2017		112,799		¥ 0		411,981	(258,060)	(18,821)	(22,791)	490
Balance (in shares) at Sep. 30, 2017 | shares	[1]			2,859,668
Net loss for the year		¥ (152,790)	$ (22,209)	¥ 0		0	(153,663)	0	0	873
Exercise of share option (in shares) | shares		0	0
Retire and cancellation of common stock		¥ 0		¥ 0		0	0	0	0	0
Retire and cancellation of common stock (in shares) | shares	[1]			(200)
Share-based compensation expense		4,313		¥ 0		685	0	0	3,628	0
Share-based compensation expense (in shares) | shares	[1]			40,454
Issuance of common shares		15,645		¥ 0		15,645	0	0	0	0
Issuance of common shares (in shares) | shares	[1]			296,322
Translation adjustments		(3,315)	$ (482)	¥ 0			0	(3,315)	0	0
Balance at Sep. 30, 2018		¥ (23,348)	$ (3,396)	¥ 0		¥ 428,311	¥ (411,723)	¥ (22,136)	¥ (19,163)	¥ 1,363
Balance (in shares) at Sep. 30, 2018 | shares	[1]			3,196,244

[1] Retrospectively restated for effect of reverse stock split

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CONSOLIDATED STATEMENTS OF EQUITY [Parenthetical]	Sep. 30, 2018 $ / ¥
Foreign Currency Exchange Rate, Translation	6.8792

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CONSOLIDATED STATEMENTS OF CASH FLOWS ¥ in Thousands, $ in Thousands	12 Months Ended
	Sep. 30, 2018 CNY (¥)	Sep. 30, 2018 USD ($)	Sep. 30, 2017 CNY (¥)	Sep. 30, 2016 CNY (¥)
Operating activities:
Net loss	¥ (152,790)	$ (22,209)	¥ (106,261)	¥ (76,833)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	16,452	2,392	27,687	31,222
Loss/(gain) on disposal of plant and equipment	(5,299)	(770)	327	257
Gain on disposal of land use right	(1,505)	(219)	0	0
Loss on termination of business disposal	90,683	13,182	0	0
Loss on disposal of subsidiaries and assets	0	0	3,282	0
Allowance for doubtful account	2,105	306	0	242
Recovery on receivables	0	0	(712)	0
Impairment on intangible assets	1,433	208	0	0
Impairment on long-term equity investment	2,374	345	0	0
Impairment on plant and equipment	0	0	25,873	0
Changes in provision for inventories	(13,601)	(1,977)	18,833	20,502
Non-cash interest expense (interest accretion)	16,757	2,436	3,227	0
Shares issued upon sign off of Equity Purchase Agreement   (note 19)	0	0	1,039	0
Share-based compensation expense	4,313	627	5,404	8,796
Changes in operating assets and liabilities:
Accounts receivable	24	3	36	1,318
Due from related parties	55,940	8,132	0	0
Advances to growers	0	0	15,318	(876)
Advances to suppliers	2,062	300	(126)	3,121
Inventories	13,064	1,899	(21,533)	50,974
Income tax recoverable	0	0	49	0
Other current assets	1,084	158	(4,153)	40
Other assets	(6)	(1)	(1,914)	436
Accounts payable	(950)	(138)	4,114	(15)
Due to growers	1,449	211	21,114	2,589
Due to related parties	(50,077)	(7,279)	61,903	58,291
Advances from customers	4,018	584	(157,407)	(55,703)
Income tax payable	0	0	0	(37)
Deferred revenues	0	0	(7,008)	(4,240)
Other long-term liabilities	810	118	66	7,568
Other payables and accrued expenses	1,615	235	(9,325)	253
Net cash provided by (used in) operating activities	(10,045)	(1,457)	(120,167)	47,905
Investing activities:
Proceeds from disposal of commercial seed business, net of cash disposed (note 4)	33,600	4,884	33,165	10,000
Purchase of plant and equipment	(2,982)	(433)	(2,624)	(15,714)
Proceeds from disposal of plant and equipment and land use right	16,872	2,453	265	483
Purchase of land use rights	0	0	(1,267)	0
Purchase of intangible assets	0	0	0	(1,250)
Cash from termination of second closing of disposal of commercial seed business (note 4)	101	15	0	0
Net cash (used in) provided by investing activities	47,591	6,919	29,539	(6,481)
Financing activities:
Restricted cash	0	0	21,181	(901)
Proceeds from short-term borrowings	19,000	2,762	15,000	195,000
Proceeds from issuance of convertible promissory note	0	0	8,628	0
Proceeds from exercise of stock options	0	0	543	0
Proceeds from issuance of treasury stocks	0	0	6,115	0
Repayment of short-term borrowings	(34,000)	(4,942)	(90,000)	(225,000)
Proceeds from long-term borrowings			120,000	6,085
Repayment of long-term borrowings	(20,376)	(2,962)	(34,459)	(24,000)
Net cash provided by (used in) financing activities	(35,376)	(5,142)	47,008	(48,816)
Net (decrease) increase in cash and cash equivalents	2,170	320	(43,620)	(7,392)
Cash and cash equivalents, beginning of year	3,245	472	54,509	66,025
Effect of exchange rate changes on cash and cash equivalents	(3,425)	(503)	(7,644)	(4,124)
Cash and cash equivalents, end of the year	1,990	289	3,245	54,509
Supplemental disclosures of cash flow information:
Income taxes paid	0	0	1,282	1,436
Interest paid, net of interest capitalized	4,861	707	14,486	14,251
Supplemental disclosure of non-cash financing activities:
Issuance of commitment shares related to notes payable	0	0	1,847	0
Conversion of convertible promissory note	¥ 15,644	$ 2,274	¥ 0	¥ 0

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ORGANIZATION AND PRINCIPAL ACTIVITIES

12 Months Ended

Sep. 30, 2018

Organization, Consolidation and Presentation Of Financial Statements [Abstract]

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

1. ORGANIZATION AND PRINCIPAL ACTIVITIES

Origin Agritech Limited (“Agritech”), incorporated under the laws of the British Virgin Islands, and its subsidiaries and variable interest entities are referred to in this report as "we", "us", "our", or "the Company". We are principally engaged in hybrid crop seed development, production and distribution business.

On September 26, 2016, we entered into a Master Transaction Agreement (the “Master Agreement”) with Beijing Shihui Agricultural Development Co., Ltd. ( “Beijing Shihui” or the “Buyer”, a related party being controlled by close family members of the Company’s Chairman), formerly known as Beijing Shihui Agricultural Ltd., under which the Buyer agreed to purchase the corn seed production and distribution assets, the office building in Beijing, China, and generally the business of commercial corn seed production and sales now operated by the Company. On July 31, 2017, we completed the sale of 100% equity ownership interest in Changchun Origin Seed Technology Development Limited (“Changchun Origin”), 98.58% equity ownership interest in Denong Zhengcheng Seed Limited (“Denong”), 100% equity ownership interest in Linze Origin Seed Limited and Linze Branch of Beijing Origin Seed Limited (“Linze Origin”). On August 31, 2017, we transferred the control of Zhengzhou Branch of Beijing Origin Seed Limited (“Zhengzhou Branch”) to Beijing Shihui pursuant to a Management Agreement.

On September 21, 2018, the Company and certain subsidiaries of the Company entered into a Termination Agreement (“Termination Agreement”) with Beijing Shihui to terminate that certain Master Agreement, dated as of September 26, 2016, by and among the Company, Beijing Shihui, and certain subsidiaries of the Company. Pursuant to the Termination Agreement, the Company and Beijing Shihui agreed to terminate the Master Agreement and not to pursue the second closing contemplated under the Master Agreement. As a result of the Termination Agreement, the Company will not transfer certain assets, including the headquarters building of the Company located in Beijing, PRC and certain other assets, to Beijing Shihui, meanwhile, the transfer of control of Zhengzhou Branch was rewound as a result of termination of the Management Agreement on September 21, 2018. For additional information, see note 4 - Discontinued Operations.

As of September 30, 2018, the Company’s subsidiaries and variable interest entities included in continuing operations consisted of the following:

	Date of	Place of	Percentage
	Incorporation	Incorporation	of			Principal
Name	or Establishment	or Establishment	Ownership			Activity
Subsidiaries:
State Harvest Holdings Limited(“State Harvest”)	October 6, 2004	British Virgin Islands		100	%	Investment Holding
Beijing Origin State Harvest Biotechnology Limited (“BioTech”)	December 1, 2004	People’s Republic of China (“PRC”)		100	%	Hybrid seed technology development
Origin Agritech USA LLC (“Origin USA”)	August 12, 2016	United States of America (“USA”)		100	%	Hybrid seed  technology development
Beijing State Harvest Zhongying Network Technology Limited  (“Zhongying Network”)	April 27, 2018	PRC		100	%	Selling agricultural seed products, other agricultural inputs, foods, household products, and other consumer products on e-commerce platform
Variable interest entity:
Beijing Origin Seed Limited (note (i)) (“Beijing Origin”)	December 26, 1997	PRC		-		Hybrid crop seed development, production and distribution
Subsidiaries held by Beijing Origin:
Henan Origin Cotton Technology Development Limited (note (i)) (“Henan Cotton”)	March 2, 2001	PRC		92.04	%	Hybrid crop seed development, production and distribution
Xinjiang Originbo Seed Company Limited (note (i)) (“Xinjiang Origin”)	July 13, 2011	PRC		51	%	Hybrid crop seed development, production and distribution
Henan Aoyu Zhongye Limited (note (i)) (“Aoyu Zhongye”)	July 16, 2018	PRC		51	%	Agricultural seed products distribution through e-commune network

Note (i): Beijing Origin Seed Limited, Henan Origin Cotton Technology Development Limited, Xinjiang Originbo Seed Company Limited, Zhengzhou Branch of Beijing Origin Seed Limited and Aoyu Zhongye are collectively referred to as “Beijing Origin”.

Reorganization of State Harvest prior to the share exchange transaction with Chardan China Acquisition Corp. (“Chardan”)

On December 1, 2004, State Harvest established BioTech, a wholly-owned foreign enterprise (“WOFE”) under the laws of the PRC with an operating period of 20 years.

Under PRC law, foreign entities are not currently permitted to own more than 49% of a seed production company. In order to address those restrictions, State Harvest conducts substantially all of its business through contractual agreements with its variable interest entity (“VIE”), Beijing Origin. These agreements are summarized in the following paragraphs.

Stock Consignment Agreements

As discussed above in “Foreign Ownership Restrictions,” under Chinese law, foreign ownership of businesses engaged in the breeding of new varieties, development, production, marketing, distribution and sale of hybrid food crop seeds is limited to 49% pursuant to the Regulation on the Approval and Registration of Foreign Investment Enterprises in Agricultural Seed Industry and The Foreign Investment Industrial Guidance Catalogue. State Harvest, as a non-Chinese corporation, may not directly own more than 49% of any of the PRC Operating Companies. However, Chinese law does not forbid the owner of stock to consign rights associated with the stock, as long as the owner does not transfer title to the stock. To gain control over the PRC Operating Companies, State Harvest entered into a series of stock consignment agreements with shareholders of those companies.

State Harvest has been assigned 97.96% voting rights by the shareholders of Beijing Origin through a consignment agreement which includes the following terms: (1) The shares of Beijing Origin cannot be transferred without the approval of State Harvest; (2) State Harvest has the right to appoint all directors and senior management personnel of Beijing Origin and (3) The shareholder rights including voting rights require the transfer of the shares of Beijing Origin to State Harvest or any party designated by State Harvest within three years upon the removal of the PRC legal restriction.

Technical Service Agreements

Beijing Origin entered into Technical Service Agreements with BioTech dated December 25, 2004. Under these agreements, BioTech shall provide, with its own technical research resource and team, technical services for the production and distribution of agricultural seeds during the period of the agreements. In return, Beijing Origin is required to pay BioTech service fee calculated according to the weight of corn, rice and cotton seeds sold by the Beijing Origin.

Through the contractual agreements described above, State Harvest is deemed the sole beneficiary of Beijing Origin resulting in Beijing Origin being deemed a subsidiary of State Harvest under the requirements of Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) 810-10-05. The agreements described above provided for effective control of Beijing Origin to be transferred to State Harvest at December 25, 2004. Neither State Harvest nor BioTech had any operating activity prior to entering into the consignment agreements with Beijing Origin. In substance, State Harvest has substantially all the same shareholders of Beijing Origin. This transaction has been accounted for on a basis similar to reorganization between entities under common control. Accordingly, State Harvest’s consolidated financial statements are prepared by including the consolidated financial statements of Beijing Origin through December 24, 2004, and subsequently the Company’s consolidated financial statements include the financial statements of State Harvest, its majority owned subsidiary and Beijing Origin through the date of the Share Exchange Transaction.

Risks in relation to the VIE structure

Four of our PRC operating subsidiaries are controlled subsidiaries through stock consignment agreements rather than by direct ownership of shares, the terms of which may have to be enforced, which would require us to incur extra costs, create uncertainty as to ownership of the operating businesses involved and risk the possible loss of rights. There is the risk, however, that a consigning shareholder will not fulfill its obligations under the stock consignment agreement. In that event, we may need to resort to the PRC courts to have our rights under the applicable agreement enforced. Such enforcement will cause us to incur legal expenses. In addition, while a case is pending there will be uncertainty regarding our rights as to the three PRC operating subsidiaries involved. In addition, a PRC court may decide not to enforce the agreements in whole or in part. To the extent these agreements are neither observed nor enforced as intended, the PRC operating subsidiaries will not be controlled by us as intended, which will affect our enterprise value and restrict our ability to obtain the income and other rights of ownership associated with the consigned stock. It may also prevent the consolidation of our financial statements with the PRC operating subsidiaries, which would reduce the reported earnings of the consolidated companies. The uncertainty of ownership may also adversely affect the market value of our ordinary shares.

Whether or not a stock consignment agreement is terminated depends on the consensus of our Board and the consignees. Any such termination could result in a possible loss of certain rights or assets held by us without receiving fair value in return. The stock consignment agreements relating to our control of the stock of our PRC operating subsidiaries may be terminated after three years upon mutual agreement between us and the consignees. Holding this amount of stock will allow these officers to control or greatly influence the selection of directors and matters submitted to a vote of our shareholders, including voting to terminate the stock consignment agreements.

There are corporate protections in place designed to protect our interests, such as an independent Board of Directors, an audit committee comprised of independent directors that must approve insider transactions, a code of conduct requiring fair dealing with the Company, and the British Virgin Islands statutory provision that a disposition of more than 50% of the assets of a company must be approved by a majority of the shareholders. Moreover, if consigned stock is transferred to us as provided in the stock consignment agreements when the restrictions under PRC law are lifted, that stock will no longer be subject to the stock consignment agreements, and the termination of the stock consignment agreements would then have no effect on the ownership of that stock. However, if the stock consignment agreements are terminated, then we would lose our rights with respect to the consigned stock and the profits from the issuing corporation. Such a loss would impair the value of the Company and would reduce our ability to generate revenues.

The Company has aggregated the financial information of Beijing Origin and its subsidiaries in the table below. The aggregated carrying amount of assets and liabilities of Beijing Origin and its subsidiaries after elimination of intercompany transactions and balances consolidated in the Company’s consolidated balance sheets as of September 30, 2017 and 2018 are as follows: 

Risks in relation to the VIE structure

	September 30,
	2017		2018		2018
	RMB		RMB		US$
ASSETS
Current Assets
Cash and cash equivalents		2,848		1,826		265
Due from related party		33,300		129,506		18,826
Accounts receivable		24		-		-
Advances to suppliers		5,293		1,188		173
Inventories		41,914		81,903		11,906
Other current assets		1,306		213		31
Total current assets		84,685		214,636		31,201
Land use rights, net		19,108		16,564		2,408
Plant and equipment, net		177,282		172,760		25,113
Equity investments		18,721		16,347		2,376
Acquired intangible assets, net		8,585		2,024		294
Other assets		4,196		1,202		175
Total assets		312,577		423,533		61,567
LIABILITIES
Current liabilities
Short-term borrowings		15,000		-		-
Current portion of long-term borrowings		35,504		78,235		11,373
Accounts payable		1,451		7,952		1,156
Due to growers		6,535		7,984		1,161
Due to related parties		10,000		291,882		42,430
Advances from customers		1,866		5,959		866
Other payables and accrued expenses		30,454		37,295		5,421
Current liabilities of discontinued operations		22,640		-		-
Total current liabilities		123,450		429,307		62,407
Long-term borrowings		56,769		-		-
Other long-term liability		20,468		21,278		3,093
Total liabilities		200,687		450,585		65,500

As of September 30, 2017 and 2018, consolidated assets of RMB42,978 and RMB37,415, respectively, are collateral for the VIE’s obligations. These consolidated assets consisted of land use right of RMB5,258, and RMB2,177 and plant and equipment of RMB37,720 and RMB35,238 as of September 30, 2017 and 2018, respectively.

The consolidated revenues of the Company generated from the VIE and its subsidiaries for the year ended September 30, 2016 and 2017 are 99.86% and 100.00% respectively, which are reported in discontinued operations. The consolidated revenues of the Company generated from the VIE and its subsidiaries for the year ended September 30, 2018 is 99.27%, of the total revenues, which RMB12,833 is reported in continuing operations. The VIE and its subsidiaries also account for 96.43% and 98.47% of the total assets of the Company as at September 30, 2017 and 2018, respectively.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Sep. 30, 2018

Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of consolidation

The consolidated financial statements of the Company are prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”); include the assets, liabilities, revenues, expenses and cash flows of all subsidiaries and variable interest entities. Intercompany balances, transactions and cash flows are eliminated on consolidation.

Reverse Stock Split

On June 26, 2018, the Company’s Shareholders and the Board of Directors approved a reverse stock split pursuant to which all classes of our issued and outstanding shares of common stock at the close of business on such date were combined and reconstituted into a smaller number of shares of common stock in a ratio of 1 share of common stock for every 10 shares of common stock (“1-for-10 reverse stock split”). The 1-for-10 reverse stock split was effective as of close of business on July 10, 2018 and the Company’s stock began trading on a split-adjusted basis on July 11, 2018.

On the exchange date, the reverse stock split reduced the number of outstanding shares to approximately 2.7 million ordinary shares, subject to additional shares being issued for fractional shares and preservation of round lots. Proportional adjustments have been made to the conversion and exercise prices of the Company’s outstanding common stock, treasury stock, warrants, restricted stock awards, and stock options, and to the number of shares issued and issuable under the Company’s Stock Incentive Plan. Upon the effectiveness of the 1-for-10 reverse stock split, each ten shares of the Company’s issued common stock were automatically combined and converted into one issued share of common stock, no par value. The Company did not issue any fractional shares in connection with the reverse stock split. Instead, fractional share interests were rounded up to the next largest whole share. The reverse split also preserved round lots of 100 shares, meaning that if the reverse split resulted in a shareholder holding less than 100 shares, the Company would issue, at no cost, additional shares to increase the holding to a full 100 shares. The reverse stock split does not modify the rights or preferences of the common stock. The number of authorized shares of the Company’s common stock remained at 60 million shares and no par value.

The accompanying consolidated financial statements and footnotes have been retroactively adjusted to reflect the effects of the 1-for-10 reverse stock split.

Liquidity and Going Concern

The Company incurred net losses of RMB76,833, RMB106,261 and RMB152,790 in the years ended September 30, 2016, 2017 and 2018, respectively. Working capital deficit was RMB45,045 and RMB217,293 as of September 30, 2017 and 2018, respectively. Accumulated deficit was RMB258,060 and RMB411,723 as of September 30, 2017 and 2018, respectively. We are currently seeking to restructure the terms of our liabilities by raising funds to pay off liabilities. Our ability to continue as a going concern is depend upon obtaining the necessary financing or negotiating the terms of the existing borrowing to meet our current and future liquidity need.

On October 16, 2018, the Company entered into a Share Subscription Agreement with Longhan Investment Management, Co., Ltd. (“Longhan”) to sell 1,397,680 shares of the Company’s common stock for an aggregate purchase price of US$7,743,147. On January 4, 2019, the Company entered into a Financing Support Agreement with Tiger Capital Fund SPC (“Tiger Fund”) and Longhan. This agreement allows Tiger Fund to join Longhan to invest in Origin under the Share Subscription Agreement dated as of October 16, 2018 by and between Longhan and the Company. Under the Share Subscription Agreement and the Financing Support Agreement, Longhan and Tiger Fund purchased 1,397,680 shares of the Company’s common stock for an aggregate purchase price of US$7,743,147 as of the date of this report.

On May 17, 2019, the Company entered into a Cooperation Framework Agreement with Beijing Changping Technology Innodevelop Group (BC-TID), an entity owned by the government of Changping District of Beijing City. Under this agreement, BC-TID and Origin will form a new entity, which 51% and 49% of equity interests would be owned by BC-TID and the Company, respectively. Based on the agreement, Beijing Origin will contribute the headquarters building in Beijing and certain of its seed technology assets related to genetically modified seeds to the new entity. BC-TID will fund the joint venture with a total of RMB204 million in cash. Also agreed under this agreement, the new entity will pay off the bank loan of RMB78 million, which is collateralized by the Company’s headquarters building in Beijing, upon receiving the RMB204 million investment from BC-TID. The transaction is subject to the satisfaction or waiver of several conditions set forth in the agreement.

As of September 30, 2018, the amount due to Beijing Shihui, Zhangye Shihui Agricultural Development Co. Ltd. (“Zhangye Shihui”), Xinjiang Ginbo Seeds Center, Linze Origin Seeds Limited and Dr. Han Gengchen, the Chairman and Chief Executive Director of the Company, amounted to RMB137,811, RMB10,000, RMB10,000, RMB123,579 and RMB9,692, respectively. These related parties agreed that they shall not request the Company to repay outstanding balances until the Company are in a position to repay.

Besides the expected cash inflows from the aforementioned existing agreements, the Company is also seeking funds from other resources including but not limited to licensing its cord seed traits to its customers, applying for government grants for research and development activities, pursuing other capital investment from investors and selling certain company assets. The Company consistently reviews its working capital requirements and has also taken steps to reduce expenses. The Company has closed down the office of Origin USA and cut down the related personnel and administrative costs. The Company is also currently working with certain vendors and creditors to extend repayment terms.

Despite the Company’s effort to obtain additional funding and reduce operating costs, there is no assurance that the Company’s plans and actions will be successful. In addition, there can be no assurance that in the event additional sources of funds are needed they will be available on acceptable terms, if at all. The Company’s consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liquidation of liabilities during the normal course of operations.

Convenience translation into United States dollars

The consolidated financial statements are presented in Renminbi. The translation of Renminbi amounts into United States dollar amounts has been made for the convenience of the reader and has been made at the exchange rate quoted by the middle rate by the State Administration of Foreign Exchange in China on September 30, 2018 of RMB6.8792 to US $1.00. Such translation amounts should not be construed as representations that the Renminbi amounts could be readily converted into United States dollar amounts at that rate or any other rate.

Use of estimates

The preparation of the consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are adjusted to reflect actual experience when necessary. Significant accounting estimates reflected in the Company’s consolidated financial statements include inventory valuation, account receivable valuation, useful lives of plant and equipment and acquired intangible assets, the valuation allowance for deferred income tax assets, valuation of long-lived assets and share-based compensation expense. Actual results could differ from those estimates.

Cash and cash equivalents

Cash and cash equivalents consist of cash on hand, cash accounts, interest bearing savings accounts, time certificates of deposit and debt securities with a maturities of three months or less when purchased.

Inventories

Inventories are stated at the lower of cost, determined by weighted-average method, or net realizable value. Work-in-progress and finished goods inventories consist of raw materials, direct labor and overhead associated with the manufacturing process. The Company’s commercial seed inventories are reported in discontinued operations. Parent seed represents the seeds that are used for research and development activities.

The Company periodically performs an analysis of inventory to determine obsolete or slow-moving inventory and determine if its cost exceeds the estimated market value. Write down of potentially obsolete or slow-moving inventory are recorded based on management’s analysis of inventory levels.

Land use rights, net

Land use rights are recorded at cost less accumulated amortization. Amortization is provided over the term of the land use right agreements on a straight-line basis for the beneficial period.

Plant and equipment, net

Plant and equipment are recorded at cost less accumulated depreciation and amortization. Maintenance and repairs are charged to expense as incurred. Depreciation is calculated on a straight-line basis over the following estimated useful lives:

Plant and building	20-40 years
Machinery and equipment	10-15 years
Furniture and office equipment	5-8 years
Motor vehicles	5-10 years
Leasehold improvements	Shorter of the useful lives or the lease term

The Company constructs certain of its facilities. In addition to costs under construction contracts, external costs directly related to the construction of such facilities, including duty and tariff, and equipment installation and shipping costs, are capitalized. Depreciation is recorded at the time assets are placed in service.

Leases

Leases are classified at the inception date as either a capital lease or an operating lease. For the lessee, a lease is a capital lease if any of the following conditions exist: a) ownership is transferred to the lessee by the end of the lease term, b) there is a bargain purchase option, c) the lease term is at least 75% of the property’s estimated remaining economic life or d) the present value of the minimum lease payments at the beginning of the lease term is 90% or more of the fair value of the leased property to the lessor at the inception date. A capital lease is accounted for as if there was an acquisition of an asset and an incurrence of an obligation at the inception of the lease. All other leases are accounted for as operating leases. The Company has no capital leases for any of the periods presented.

Acquired intangible assets, net

Acquired intangible assets primarily consist of purchased technology rights and distribution network and are stated at cost less accumulated amortization. Amortization is calculated on a straight-line basis over the estimated useful lives of these assets and recorded in operating expenses. Amortization is calculated on a straight-line basis over the following estimated useful lives for the main acquired intangible assets:

Technology rights for licensed seeds	3-20 years
Distribution network	6-14 years
Trademark	Indefinite

Trademarks, which have indefinite lives are not amortized but are reviewed for impairment at least annually, at year end date, or earlier upon the occurrence of certain triggering events. The Company has performed an impairment analysis on the acquired intangible assets in Beijing Origin and recorded an impairment provision of RMB1,433 during the year ended September 30, 2018.

Equity investments

Equity method investment is accounted for using the equity method whereby they are initially recognized at cost and thereafter, their carrying amount are adjusted for the Company’s share of the post-acquisition change in the net assets of equity method investments less impairment losses, if any. The dividend received was accounted for as a reduction in equity investments.

Cost method investment is stated at cost less impairment loss. The Company recorded an impairment loss of RMB2,374 on its cost method investment during the year ended September 30, 2018.

Valuation of long-lived asset

The Company reviews the carrying value of long-lived assets to be held and used, including other intangible assets subject to amortization, when events and circumstances warrants such a review. The carrying value of a long-lived asset is considered impaired when the anticipated undiscounted cash flow from such asset is separately identifiable and is less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair market value of the long-lived asset and intangible assets. Fair market value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. Losses on long-lived assets and intangible assets to be disposed are determined in a similar manner, except that fair market values are reduced for the cost to dispose. The Company has performed an impairment analysis on the plant and equipment in Xinjiang Origin and recorded an impairment loss of RMB25,873 during the year ended September 30, 2017, and the impairment loss was reported in continuing operations. No impairment was recorded during the year ended September 30, 2018.

Revenue recognition

The Company derives its revenues primarily from the sale of various branded conventional seeds and branded seeds with biotechnology traits.

Revenue is recognized when pervasive evidence of an arrangement exists, products have been delivered, the price is fixed or determinable, collectability is reasonably assured and the right of return has expired. The Company generally determines the final selling price after a period the goods are delivered to the customers. Accordingly, the Company defers revenues recognition until the selling price has been finalized with the customers. The estimated amounts of revenues billed in excess of revenues recognized are recorded as deferred revenues.

Government subsidies

A government subsidy is not recognized until there is reasonable assurance that: (a) the enterprise will comply with the conditions attached to the grant; and (b) the grant will be received.

When the Company received the government subsidies but the conditions attached to the grants have not been fulfilled, such government subsidies are deferred and recorded under other payables and accrued expenses, and other long-term liability. The reclassification of short-term or long-term liabilities is depended on the management’s expectation of when the conditions attached to the grant can be fulfilled.

The Company received several financial supports from various levels of the government. At fiscal years ended 2017 and 2018, the Company received government subsidies of RMB2,660 and RMB9,193, respectively for R&D and others. Government subsidies recognized as other income in the statement of income for the years ended September 30, 2016, 2017 and 2018, were RMB3,688, RMB1,407 and RMB5,516, respectively.

Cost of revenues

Cost of revenues consists of expenses directly related to sales, including the purchase prices and development costs for seeds and, during the fiscal years ended September 30, 2016, 2017 and 2018, agricultural chemical products, depreciation and amortization, impairment of inventory, shipping and handling costs, salary and compensation, supplies, license fees, and rent.

Research and development costs

Research and development costs relating to the development of new products and processes, including significant improvements and refinements to existing products, are expensed as incurred.

Advertising costs

Advertising costs are expensed when incurred and included in selling and marketing expenses. For the years ended September 30, 2016, 2017 and 2018, advertising costs were RMB3,237, RMB521 and RMBnil, respectively.

Shipping and handling cost

The Company includes shipping and handling costs as either cost of goods sold or selling and administrative expenses depending on the nature of the expenses. Shipping and handling costs which relate to transportation of products to customers’ locations is charged to selling and marketing expenses and shipping and handling which relate to the transportation of goods to factories from suppliers and from one factory to another is charged to cost of revenues.

For the years ended September 30, 2016, 2017 and 2018, shipping and handling cost included in selling and marketing expenses were RMB2,055, RMB1,604, and RMB400, respectively.

Borrowing cost

Borrowing costs attributable directly to the acquisition, construction or production of qualifying assets which require a substantial period of time to be ready for their intended use or sale, are capitalized as part of the cost of those assets. Income earned on temporary investments of specific borrowings pending their expenditure on those assets is deducted from borrowing costs capitalized. All other borrowing costs are recognized in interest expenses in the statement of income and comprehensive income in the period in which they are incurred.

Allowance for doubtful account

The Company regularly monitors and assesses the risk of not collecting amounts owed to the Company by customers. This evaluation is based upon a variety of factors including: an analysis of amounts current and past due along with relevant history and facts particular to the customer. Based on the result of this analysis, the Company records an allowance for doubtful accounts.

Income taxes

Deferred income taxes are recognized for the future tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts in the consolidated financial statements, net of operating loss carry forwards and credits. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Current income taxes are provided for in accordance with the laws of the relevant tax authorities.

The Company adopted FASB ASC 740-10. The Company’s policy on classification of all interest and penalties related to unrecognized tax benefits, if any, as a component of income tax provisions.

Foreign currency translation

The functional currency of the Company excluding Agritech, Origin USA and State Harvest is Renminbi. Monetary assets and liabilities denominated in currencies other than Renminbi are translated into Renminbi at the rates of exchange ruling at the balance sheet date. Transactions in currencies other than Renminbi are converted into Renminbi at the applicable rates of exchange prevailing the transactions occurred. Transaction gains and losses are recognized in the consolidated statements of income and comprehensive income.

The functional currency of Agritech, Origin USA and State Harvest are maintained in United State dollars. Assets and liabilities are translated at the exchange rates at the balance sheet date, equity accounts are translated at historical exchange rates and revenues, expenses, gains and losses are translated using the average rate for the period. Translation adjustments are reported as cumulative translation adjustments and are shown as a separate component of other comprehensive (loss)/income. The Company has chosen Renminbi as its reporting currency.

Comprehensive income (loss)

Comprehensive income (loss) is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. Comprehensive income (loss) for the years has been disclosed within the consolidated statements of income and comprehensive income for presentational purpose of the disclosure of comprehensive income (loss) attributable to Agritech and the non-controlling interests respectively.

Income (loss) per share

Basic income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the years. Diluted income (loss) per share gives effect to all dilutive potential common shares outstanding during the years. The weighted average number of common shares outstanding is adjusted to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued. In computing the dilutive effect of potential common shares, the average stock price for the period is used in determining the number of treasury shares assumed to be purchased with the proceeds from the exercise of options.

Share-based compensation

The Company adopts FASB ASC 718-10. ASC 718-10 requires that share-based payment transactions with employees, such as share options, be measured based on the grant-date fair value of the equity instrument issued and recognized as compensation expense over the requisite service period, with a corresponding addition to equity. Under this method, compensation cost related to employee share options or similar equity instruments is measured at the grant date based on the fair value of the award and is recognized over the period during which an employee is required to provide service in exchange for the award, which generally is the vesting period.

Fair value measurement

The Company adopted FASB ASC 820-10, and which defines fair value, establishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements. ASC 820-10 does not require any new fair value measurements, but provides guidance on how to measure fair value by providing a fair value hierarchy used to classify the source of the information.

ASC 820-10 establishes a three-level valuation hierarchy of valuation techniques based on observable and unobservable inputs, which may be used to measure fair value and include the following:

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Classification within the hierarchy is determined based on the lowest level of input that is significant to the fair value measurement.

Discontinued Operations

The Company reports operating results for discontinued operations separately from continuing operations to distinguish the financial impact of disposal transactions from ongoing operations. Through September 30, 2018, the Company reported discontinued operations when the operations and cash flows of a component of the Company had been eliminated or intended to be eliminated from ongoing operations. For a component to be disposed of by sale, financial results were classified as discontinued only when held for sale criteria were met. For a component to be disposed of other than by sale, financial results were not classified as discontinued until abandonment, distribution, or exchange occurred, depending on the manner of disposal. In the annual report for the year ended September 30, 2016 and 2017, the operating results of the seed production and distribution entities and assets mainly including Changchun Origin, Denong, Linze Origin, Zhengzhou Branch and office building in Beijing, PRC are presented as discontinued operations. The office building in Beijing, PRC was previously planned to be sold to Beijing Shihui. However, the Company changed the original plan and decided not to sell this part of assets. On September 21, 2018, the Company and certain subsidiaries of the Company entered into a Termination Agreement. Pursuant to this agreement, the Company will not transfer the above-mentioned office building in Beijing to Beijing Shihui.

As the office building in Beijing no longer meets the held-for-sale criteria, this part of assets has been reclassified as held and used and the related operation results were reclassified to continuing operations for all periods presented in this report. See note 4 for details.

Recently issued accounting pronouncements

· In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The amendments in this update require all equity investments to be measured at fair value with changes in the fair value recognized through net income (other than those accounted for under equity method of accounting or those that result in consolidation of the investee).The amendments in this update also require an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. In addition the amendments in this update eliminate the requirement for to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet for public entities. For public business entities, the amendments in ASU No. 2016-01 are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Except for the early application guidance discussed in ASU No. 2016-01, early adoption of the amendments in this update is not permitted. The Company does not expect the adoption of ASU No. 2016-01 will have a material impact on its consolidated financial statements.

● In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). In July 2018, the FASB also issued ASU 2018-10 Codification Improvements to Topic 842, Leases and ASU 2018-11 Leases (Topic 842) Targeted Improvements.  The amendments in this update will increase the transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The amendments are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years for public business entities. Early application of the amendments is permitted, and may be applied through a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements with certain practical expedients available.  An entity may apply the new leases standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company is currently evaluating the effect of this standard on its consolidated financial statements.

● In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.  Financial Instruments—Credit Losses (Topic 326) amends guideline on reporting credit losses for assets held at amortized cost basis and available-for-sale debt securities.  For assets held at amortized cost basis, Topic 326 eliminates the probable initial recognition threshold in current GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected. For available-for-sale debt securities, credit losses should be measured in a manner similar to current GAAP, however Topic 326 will require that credit losses be presented as an allowance rather than as a write-down.  ASU No. 2016-13 affects entities holding financial assets and net investment in leases that are not accounted for at fair value through net income. The amendments affect loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. The amendments in this ASU will be effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.  The Company is currently evaluating the impact of the adoption of ASU No. 2016-13 on its consolidated financial statements.

● In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which addresses the following eight specific cash flow issues: Debt prepayment or debt extinguishment costs; settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies (including bank-owned life insurance policies; distributions received from equity method investees; beneficial interests in securitization transactions; and separately identifiable cash flows and application of the predominance principle. The amendments in this ASU are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company does not expect the adoption of ASU No. 2016-15 will have a material impact on its consolidated financial statements.

● In May 2017, the FASB issued ASU 2017-09-Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting. The requirement provides guidance on determining which changes to the terms and conditions of share-based payment awards require an entity to apply modification accounting under Topic 718. For public business entities, this ASU should be effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2017. The Company does not expect the adoption of ASU No. 2017-09 will have a material impact on its consolidated financial statements.

● In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”). This ASU is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers: Principal versus Agent Considerations (Reporting Gross versus Net), which is effective upon adoption of ASU 2014-09. This ASU clarifies the implementation guidance in ASU 2014-09 on principal versus agent considerations. These ASUs are effective for annual reporting periods beginning after December 15, 2017 and interim periods within those annual periods. The Company will adopt ASU 2014-09, and its related clarifying ASUs, as of October 1, 2018. The Company anticipates adopting the standard using the modified retrospective transition approach. Under this approach, the new standard would apply to all new contracts initiated on or after October 1, 2018. For existing contracts that have remaining obligations as of October 1, 2018, any difference between the recognition criteria in these ASUs and the Company’s current revenue recognition practices would be recognized using a cumulative effect adjustment to the opening balance of retained earnings. Our revenues are generally recognized upon delivery to the customer, which is when we control transfers to the customer. The majority of the Company’s customer contracts, which may be in the form of purchase orders, contracts or purchase agreements, contain performance obligations for delivery of agreed upon goods. Delivery of all performance obligations contained within a contract with a customer typically occurs at the same time. The Company has also determined that it will make accounting policy elections to 1) treat shipping and handling activities that occur after the customer obtains control of the goods as fulfillment costs and 2) exclude sales (and similar) taxes from the measurement of the transaction price. We have no open contracts as of September 30, 2018, there will be no cumulative effect of applying the new standards. Based on the revenue streams for year ended September 30, 2018, we do not expect the adoption of these ASUs to have a material impact on our consolidated financial statements.

● In August 2018, the FASB issued ASU 2018-13, Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in this standard will remove, modify and add certain disclosures under ASC Topic 820, Fair Value Measurement, with the objective of improving disclosure effectiveness. For public business entities, this ASU should be effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2019. The transition requirements are dependent upon each amendment within this update and will be applied either prospectively or retrospectively. The Company does not expect ASU 2018-13 to have a material impact to the Company’s consolidated financial statements.

The Company believes that other recent accounting pronouncement updates will not have a material effect on the Company’s consolidated financial statements.

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RELATED PARTY BALANCES AND TRANSACTIONS

12 Months Ended

Sep. 30, 2018

Related Party Transactions [Abstract]

Related Party Transactions Disclosure [Text Block]

3. RELATED PARTY BALANCES AND TRANSACTIONS

(1) Related party relationships

Name of related parties	Relationship
Beijing Shihui	Being owned by close family members of the Company's Chairman
Zhangye Shihui	Being owned by close family members of the Company's Chairman
Xinjiang Ginbo Seeds Center	Being the non-controlling interest of Xinjiang Origin
Jilin Jinong Hi-tech Development Shares Co.,Ltd.("Jinong")	Being long-term investment of the Company (note 10)
Henan Agricultural University	Being the non-controlling interest of Beijing Origin
Linze Origin Seeds Ltd	Being owned by close family members of the Company's Chairman
De Nong Zheng Cheng Seed Limited	Being owned by close family members of the Company's Chairman
Beijing Origin Zhengzhou Branch("Zhengzhou Branch")	Being controlled by close family members of the Company's Chairman from August 16, 2017 to September 21, 2018

(1) Due from related parties

	September 30,
	2017		2018
	RMB		RMB
Beijing Shihui (i)		55,940		-
De Nong Zheng Cheng Seed Limited		-		129,506
		55,940		129,506

Note (i): Balance due from Shihui as of September 30, 207 mainly consisted of receivables of RMB38,200 related to disposal of the commercial seed business and working capital loan of RMB17,740.

(2) Due to related parties

	September 30,
	2017		2018
	RMB		RMB
Beijing Shihui		-		137,811
Zhangye Shihui		-		10,000
Linze Origin Seeds Limited		-		123,579
Henan Agriculture University		-		1,000
Xinjiang Ginbo Seeds Center (i)		10,000		10,000
Companies controlled by the Company’s directors		1,576		1,634
The Company’s Chairman		-		9,692
Ex-shareholders		16		16
		11,592		293,732

Note (i): Xinjiang Origin has received a cash advance of RMB10,000 from Xinjiang Ginbo Seeds Center during the year ended September 30, 2016, which is unsecured, interest-free and repayable on demand.

(3) Transactions with related parties

(a) Sales to

	Year ended September 30,
	2016		2017		2018
	RMB		RMB		RMB
Linze Origin Seeds Limited		-		-		45
Zhengzhou Branch		-		-		7,803
		-		-		7,848

(b) Technology usage fees charged by

	Year ended September 30,
	2016		2017		2018
	RMB		RMB		RMB
Henan Agriculture University		1,000		-		-

The above amounts related to technology usage fees paid to certain related party for the exclusive right to use certain seed technologies.

(c) Rental income received from

	Year ended September 30,
	2016		2017		2018
	RMB		RMB		RMB
Beijing Shihui		250		-		-

(d) Service income received from

	Year ended September 30,
	2016		2017		2018
	RMB		RMB		RMB
Beijing Shihui		-		396		-

(e) Service fee charged by

	Year ended September 30,
	2016		2017		2018
	RMB		RMB		RMB
Beijing Shihui		-		600		-

(f) License usage fees charged to

	Year ended September 30,
	2016		2017		2018
	RMB		RMB		RMB
Beijing Shihui		-		-		1,575

(g) Guarantee
The Company guaranteed a loan of RMB11,850 taken by Beijing Shihui from July 24, 2018 to July 23, 2019.

(h) Termination of assets sold to and a subsidiary acquired from a related party

As further described in note 4, on September 26, 2016, the Company entered into a Master Agreement to sell its proprietary China-based commercial corn seed production and distribution business for RMB400,000 to Beijing Shihui. On August 16, 2017, the Company entered into a supplemental agreement to the Master Agreement to increase the total consideration to RMB421,000 and modify the payment terms.

On September 21, 2018, the Company and certain subsidiaries of the Company entered into a Termination Agreement with Beijing Shihui to terminate that certain Master Agreement, dated as of September 26, 2016, by and among the Company, Beijing Shihui, and certain subsidiaries of the Company. Pursuant to the Termination Agreement, the Company and Beijing Shihui agreed to terminate the Master Agreement and not to pursue the second closing contemplated under the Master Agreement. As a result of the Termination Agreement, the Company will not transfer certain assets, including the headquarters building of the Company located in Beijing, PRC and certain other assets, to Beijing Shihui, meanwhile, the transfer of control of Zhengzhou Branch was rewound as a result of termination of the Management Agreement on September 21, 2018.

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DISCONTINUED OPERATIONS

12 Months Ended

Sep. 30, 2018

Discontinued Operations and Disposal Groups [Abstract]

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

4. DISCONTINUED OPERATIONS

On September 26, 2016, the Company entered into a Master Agreement with Beijing Shihui, under which the Buyer agreed to purchase the corn seed production and distribution assets, the office building in Beijing, China, and generally the business of commercial corn seed production and sales operated by the Company. On August 16, 2017, the Company entered into a Supplemental Agreement to the Master Agreement, pursuant to which, the aggregate purchase price was increased from RMB400,000 to RMB421,000 and certain payment arrangement provisions were amended.

The overall transaction is conducted in two steps. The first step is the sale of the equity held by Beijing Origin of each of the Denong, Changchun Origin and Linze Origin companies, and the second step is the sale of a company holding the assets of Zhengzhou Branch and the office building in Beijing, PRC. The second step requires Beijing Origin to effect a restructuring to form an entity to own the current office building located in Beijing, China and certain other assets (together the “Zhengzhou Branch Assets”), which entity is sold to the Buyer so as to transfer the building and assets to the Buyer.

When the first step is completed (the “First Closing”), the Buyer should give Beijing Origin a total consideration of RMB221,000, consisting of cash payment of RMB79,000 and bank loans reduction of RMB142,000, for the 98.58% equity ownership interest in Denong, 100% equity ownership interest in Changchun Origin and 100% equity ownership interest in Linze Origin (together the “VIE Subsidiaries”). The First Closing is conditioned (among other things) on Beijing Origin acquiring the current minority percentage ownership of Changchun Origin that is held by the Company’s Chairman, so as to deliver to the Buyer 100% of the equity ownership of Changchun Origin. The minority interest of Denong should continue to be held by two third parties and should not be sold to the Buyer. When the second step is completed (the “Second Closing”), the Buyer should give Beijing Origin a total consideration of RMB200,000, payable in cash after offsetting the then outstanding payables to the Buyer up to RMB150,000, for the 100% ownership interest in an entity formed by Beijing Origin as part of its reorganization to hold the Zhengzhou Branch Assets.

On July 31, 2017, the Company completed the First Closing and sold the VIE subsidiaries. On August 31, 2017, the Company transferred the control of Zhengzhou Branch to Beijing Shihui pursuant to a Management Agreement and the net assets in Zhengzhou Branch intended to be sold at the Second Closing are considered disposed. Of the total purchase price of RMB421,000, RMB347,085 was allocated to the aforementioned disposed entities and assets and RMB73,915 was allocated to the office building in Beijing, China. As of September 30, 2017, (1) total cash consideration of RMB45,400 inclusive of the RMB10,000 deposits was received, (2) principal amount of the bank loans amounted to RMB142,000 in the VIE subsidiaries was offset against the purchase price, (3) outstanding payables of RMB121,485 by Zhengzhou Branch to Buyer was offset against the purchase price. During the year ended September 30, 2017, we recognized a loss of RMB3,282 on the sale of commercial corn seed production and sales business operated by the Company. The loss is reported in discontinued operations in the consolidated statements of operations and comprehensive income.

On September 21, 2018, the Company and certain subsidiaries of the Company entered into a Termination Agreement (“Termination Agreement”) with Beijing Shihui to terminate that certain Master Agreement, dated as of September 26, 2016, by and among the Company, Beijing Shihui, and certain subsidiaries of the Company. Pursuant to the Termination Agreement, the Company and Beijing Shihui agreed to terminate the Master Agreement and not to pursue the second closing contemplated under the Master Agreement. As a result of the Termination Agreement, the Company will not transfer certain assets, including the headquarters building of the Company located in Beijing, PRC and certain other assets, to Beijing Shihui, meanwhile, the transfer of control of Zhengzhou Branch was rewound as a result of termination of the Management Agreement on September 21, 2018.

The Company reports operating results for discontinued operations separately from continuing operations to distinguish the financial impact of disposal transactions from ongoing operations. Through September 30, 2018, the Company reported discontinued operations when the operations and cash flows of a component of the Company had been eliminated or intended to be eliminated from ongoing operations. For a component to be disposed of by sale, financial results were classified as discontinued only when held for sale criteria were met. For a component to be disposed of other than by sale, financial results were not classified as discontinued until abandonment, distribution, or exchange occurred, depending on the manner of disposal. In the annual report for the year ended September 30, 2016 and 2017, the operating results of the seed production and distribution entities and assets mainly including Changchun Origin, Denong, Linze Origin, Zhengzhou Branch and office building in Beijing, PRC are presented as discontinued operations. The office building in Beijing, PRC was previously planned to be sold to Beijing Shihui. However, the Company changed the original plan and decided not to sell this part of assets. On September 21, 2018, the Company and certain subsidiaries of the Company entered into a Termination Agreement. Pursuant to this agreement, the Company will not transfer the above-mentioned office building in Beijing to Beijing Shihui.

As the above-mentioned office building in Beijing no longer meets the held-for-sale criteria, this part of assets has been reclassified as held and used and the related operation results were reclassified to continuing operations for all periods presented in this report.

The effect in the results of discontinued operations due to the aforesaid reclassification are summarized as follows:

Results of operations reclassified from discontinued operations to continued operations for the fiscal years 2016 and 2017:

	Year ended September 30,
	2016			2017
	RMB			RMB
Revenues		-			871
Cost of revenues		-			(679	)
Gross profit		-			192
Operating expenses
General and administrative		(1,188	)		(1,188	)
Total operating expenses, net		(1,188	)		(1,188	)
Impairment loss		-			(44,706	)
Loss before income taxes		(1,188	)		(45,702	)
Net Loss		(1,188	)		(45,702	)

Assets and liabilities reclassified from discontinued operations to continued operations:

	September 30,
	2017
	RMB
Assets
Accounts receivable		24
Inventories		22,003
Total current assets		22,027
Land use rights, net		5,258
Plant and equipment, net		32,484
Non-current assets		37,742
Total assets		59,769
Liabilities
Due to growers		6,535
Advances from customers		1,866
Total liabilities		8,401

The assets and liabilities of the entities that were sold and to be sold have been reclassified as “assets of discontinued operations” and “liabilities of discontinued operations” within current and non-current assets and liabilities, respectively, on the consolidated balance sheets as of September 30, 2017. The results of operations of the entities or assets that were sold and to be sold have been reclassified to “net income (loss) from discontinued operations” in the consolidated statements of income and comprehensive income for the years ended September 30, 2016 and 2017.

Results of discontinued operations are summarized as follows:

	Year ended September 30,
	2016			2017			2018		2018
	RMB			RMB			RMB		US$
Revenues		334,770			234,952			-		-
Cost of revenues		(259,253	)		(171,501	)		-		-
Gross profit		75,517			63,451			-		-
Operating expenses
Selling and marketing		(38,079	)		(21,149	)		-		-
General and administrative		(29,185	)		(16,414	)		-		-
Research and development		(2,760	)		(659	)		-		-
Other (expense) income, net		(1,301	)		360			-		-
Total operating expenses, net		(71,325	)		(37,862	)		-		-
Income from discontinued operations		4,192			25,589			-		-
Interest expense		(6,644	)		(5,480	)		-		-
Interest income		93			34			-		-
Impairment on plant and equipment and inventories		-			-			-		-
(Loss) income before income taxes from discontinued operations		(2,359	)		20,143			-		-
Income tax expense from discontinued operations
Current		(1,436	)		(1,281	)		-		-
Deferred		-			-			-		-
Income tax expenses from discontinued operations		(1,436	)		(1,281	)		-		-
Loss on disposal of commercial seed business		-			(3,282	)		-		-
Net (loss) income from discontinued operations		(3,795	)		15,580			-		-
Less: Net (loss) income attributable to non-controlling interests		(481	)		821			-		-
Net income (loss) from discontinued operations attributable to Origin Agritech Ltd.		(3,314	)		14,759			-		-

Liabilities from discontinued operations are summarized as follows:

	September 30,
	2017		2018		2018
	RMB		RMB		US$
Liabilities of discontinued operations
Due to related parties		22,640		-		-
Total liabilities of discontinued operations		22,640		-		-

The Company has combined cash flows from discontinued operations with cash flows from continuing operations within the operating, investing and financing categories within the consolidated statement of cash flows. Cash and non-cash items for certain operating and investing activities related to discontinued operations for the years ended September 30, 2016, 2017 and 2018 are as follows: 

	Year Ended September 30
	2016		2017		2018		2018
	RMB		RMB		RMB		US$
Depreciation and amortization		11,295		11,295		-		-
Asset impairment		26,941		-		-		-
Capital expenditures		2,510		-		-		-

Related party transactions that are reported in discontinued operations are as follows:

(1) Due to related parties

	Year ended September 30,
	2017		2018
	RMB		RMB
Beijing Shihui		22,640		-

(2) Sales to related parties

	Year ended September 30,
	2016		2017		2018
	RMB		RMB		RMB
Beijing Shihui		102,234		183,487		-

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ADVANCES TO SUPPLIERS

12 Months Ended

Sep. 30, 2018

Advances To Suppliers [Abstract]

Advances To Suppliers Disclosure [Text Block]

5. ADVANCES TO SUPPLIERS

Advances to suppliers consist of the following:

	September 30,
	2017		2018
	RMB		RMB
Prepayments for advertisement		2,206		-
Prepayments for testing fee		719		140
Deposits for research and development fee		207		207
Prepayments for professional fee		200		-
Others		1,966		841
		5,298		1,188

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INVENTORIES

12 Months Ended

Sep. 30, 2018

Inventory Disclosure [Abstract]

Inventory Disclosure [Text Block]

6. INVENTORIES

Inventories consist of the following:

	September 30,
	2017			2018
	RMB			RMB
Low value supplies		925			2,063
Parent seeds		298			81
Work in progress		40,836			85,035
Provision		(18,833	)		(5,232	)
		23,226			81,947

No inventories have been pledged as collateral for bank loans as of September 30, 2017 and 2018. Provision made for inventories for the years ended September 30, 2017, 2018 were RMB18,833 and RMBnil, respectively. Written-off of provision for inventories for the years ended September 30, 2018 were RMB13,601.

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OTHER CURRENT ASSETS

12 Months Ended

Sep. 30, 2018

Other Current Assets [Abstract]

Other Current Assets Disclosure [Text Block]

7. OTHER CURRENT ASSETS

Other current assets consist of the following:

	September 30,
	2017		2018
	RMB		RMB
Advances to staff for business use		1,249		119
Deposits for rental		3		7
Others		74		121
		1,326		247

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LAND USE RIGHTS, NET

12 Months Ended

Sep. 30, 2018

Land Use Rights [Abstract]

Land Use Rights Disclosure [Text Block]

8. LAND USE RIGHTS, NET

Land use rights, net consist of the following:

	September 30,
	2017			2018
	RMB			RMB
Land use rights		24,757			22,275
Accumulated amortization		(5,649	)		(5,711	)
Land use rights, net		19,108			16,564

Land use rights have been pledged as collateral for bank loans as of September 30, 2017 and 2018 were RMB5,258 and RMB2,177, respectively. Amortization expenses for the years ended September 30, 2016, 2017 and 2018 were RMB701, RMB701 and RMB668, respectively.

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PLANT AND EQUIPMENT, NET

12 Months Ended

Sep. 30, 2018

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment Disclosure [Text Block]

9. PLANT AND EQUIPMENT, NET

Plant and equipment, net consist of the following:

	September 30,
	2017			2018
	RMB			RMB
Plant and building		171,799			162,507
Machinery and equipment		92,470			101,543
Furniture and office equipment		12,392			12,367
Motor vehicles		4,777			3,591
Total		281,438			280,008
Accumulated depreciation		(79,759	)		(85,600	)
Accumulated impairment		(25,873	)		(25,873	)
Construction in progress		1,511			4,213
Plant and equipment, net		177,317			172,748

Included in plant and building with net values of RMB37,720 and RMB35,238 have been pledged for bank loans as of September 30, 2017 and September 30, 2018.

The depreciation expenses for the years ended September 30, 2016, 2017 and 2018 were RMB8,805, RMB13,305, and RMB9,840, respectively.

Construction in progress mainly refers to the new seed incubation facilities under construction.

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LONG TERM INVESTMENTS

12 Months Ended

Sep. 30, 2018

Equity Method Investments and Joint Ventures [Abstract]

Equity Method Investments Disclosure [Text Block]

10. LONG TERM INVESTMENTS

Equity investments consist of the following:

	September 30,
	2017		2018
	RMB		RMB
Cost method investment		18,721		18,721
Impairment on cost method investment		-		(2,374	)
Cost method investment		18,721		16,347

In previous years, the Company owned 23% equity interest in Jinong and accounted for equity method investment. In 2012, one shareholder of Jinong increased its investment in Jinong’s shares, thereby the equity interests held by the Company were reduced to 17.94% and the Company is considered to no longer have a significant influence on Jinong. Therefore, the investment in Jinong was accounted for the cost method investment as of September 30, 2017 and 2018. The Company recorded an impairment loss of RMBnil, RMBnil and RMB2,374 on its cost method investment for the years ended September 30, 2016, 2017 and 2018, respectively.

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ACQUIRED INTANGIBLE ASSETS, NET

12 Months Ended

Sep. 30, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets Disclosure [Text Block]

11. ACQUIRED INTANGIBLE ASSETS, NET

Acquired intangible assets, net consist of the following:

	September 30,
	2017			2018
	RMB			RMB
Technology rights for licensed seeds		75,899			75,899
Others		4,739			4,739
		80,638			80,638
Accumulated amortization		(61,862	)		(67,806	)
Impairment provision		(3,037	)		(4,470	)
Acquired intangible assets, net		15,739			8,362

Amortization expenses for the years ended September 30, 2016, 2017 and 2018 were RMB6,637, RMB6,153 and RMB5,944, respectively. RMBnil and RMBnil and RMB1,433 were charged for the years ended September 30, 2016, 2017 and 2018, respectively.

Amortization expense on these intangible assets for each of the next five years is as follows:

Year ending September 30,	RMB
2019		2,034
2020		1,058
2021		832
2022		795
2023		782
Total		5,501

The Company enters into technology transfer and usage agreements with strategic partners and pays up-front fees for the exclusive rights to certain seed technologies. Technology rights are amortized over an average usage period of 3 to 20 years and are charged to general and administrative expenses.

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OTHER ASSETS

12 Months Ended

Sep. 30, 2018

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Other Assets [Text Block]

12. OTHER ASSETS

Other assets consist of the following:

	September 30,
	2017		2018
	RMB		RMB
Prepaid lease		1,196		1,202
Guarantee fund for long-term borrowing		3,000		-
		4,196		1,202

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BORROWINGS

12 Months Ended

Sep. 30, 2018

Debt Disclosure [Abstract]

Borrowings Disclosure [Text Block]

13. BORROWINGS

Borrowings consisted of the following:

	September 30,
	2017		2018
	RMB		RMB
Borrowing from Bank of Communications under Zhengzhou Branch, originally due on May 18, 2017 and extended to November 18, 2017 with annual interest rate of 5.87% and 6.41% at September 30, 2016 and 2017, respectively, secured by Zhengzhou Branch’s plant and equipment and is guaranteed by the Chairman of the Company, fully repaid on January 8, 2018		15,000		-
Short-term borrowings		15,000		-
Borrowing from Shanghai Pudong Development Bank under Beijing Origin, due on December 8, 2017 with annual interest rate of 6.18%, guaranteed by the Company’s chairman, fully paid on December 27, 2017		20,000		-
Borrowing from Beijing Agriculture Finance Leasing, LLC.(“BAFL”) under Beijing Origin, payable on installment, due on December 29 , 2020 with annual interest rate of 6%, secured by Beijing’s properties and land use right *		72,273		78,235
Long-term borrowings		92,273		78,235
Current portion of long-term borrowings		35,504		78,235
Non-current portion of long-term borrowings		56,769		-

* Beijing Origin did not make any principal payments for the borrowing. Beijing Origin entered into negotiations with BAFL regarding modification of payment schedule. As of the date of this report, there is no formed agreements signed regarding modification of payment schedule. As of September 30, 2018, the Company reclassified the borrowing as current liability in consolidated balance sheets result from the default.

Interest expense related to borrowings amounted to RMB7,607, RMB8,760 and RMB15,370 for the years ended September 30, 2016, 2017 and 2018, respectively.  

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NOTES PAYABLE

12 Months Ended

Sep. 30, 2018

Convertible Debt Disclosure [Abstract]

Convertible Debt Disclosure [Text Block]

14. NOTES PAYABLE

On July 5, 2017, the Company issued a convertible promissory note (the “Loan Note”) to L2 Capital, LLC (“L2”) in the aggregate principal amount of up to a maximum amount of RMB15,562 (US$2,345), which will be available in five tranches. Each tranche is available to be withdrawn when the specified milestone is achieved. The Loan Note bears interest at 8% per annum and has an original issue discount of approximately 13%. In connection with each draw down of the Loan Note, the Company should issue its common stocks, for an aggregate maximum of 293,087 shares (“Commitment Shares”). The Loan Note matures six months from the date of each draw down, and the principal is repaid with a premium ranging from 115% to 130%, depending on the date of repayment. The default repayment premium is 40%. The maturities may be extended for two-week periods upon the prepayment of a percentage portion of the principal then due. The Loan Note must also be repaid in full upon a qualified offering of in excess of US$2,000. The Loan Note is secured by all the assets of the Company located in the United States. As of September 30, 2017, the Company has completed Tranche 1 and Tranche 2 withdrawals with cash proceeds of RMB8,628 (US$1,300) and issued 189,644 shares for Commitment Shares. The aggregate principal of Tranche 1 and Tranche 2 amounted to RMB10,068 (US$1,517).

The Loan Note is convertible to common stock at any time on or after an event of default as defined in the Loan Note agreement at a conversion price equaled to the lowest trading price of the common stock during the 15 trading days prior to the conversion. The holder’s conversion right commenced January 5, 2018, and continued until the Loan Note was paid in full. Through September 30, 2018, the holder has converted an aggregate of US2,388 due under the terms of the Loan Note into an aggregate of 2,963,220 ordinary shares.

The Company evaluated FASB ASC 480-10, Distinguishing Liabilities from Equity to determine the appropriate classification of the Loan Note. The Loan Note will be settled with a variable number of common stocks the monetary value of which is based solely or predominantly on a fixed monetary amount known at inception, and therefore is accounted for as liabilities in accordance with FASB ASC 480-10, no further analysis for FASB ASC 815, Derivatives and Hedging was required. The Company measured the Loan Note initially at fair value, which is accreted up to the amounts expected to be settled (either cash expected to be paid or common stocks expected to be converted) based on the Company’s analysis. At the inception, the Company considered the principal, interests and penalty (default repayment premium) amounts will be very likely to be settled in full by the conversion of common stocks at the maturity of the Loan Note due to the Company’s working capital deficiency situation (note 2), the fair value of the Loan Note is therefore determined and accounted for at the maximum amounts of principal, interest and default repayment premium under the effective interest method. The related debt issuance costs including the original issuance discount, the legal fees and the Commitment Shares are reported in the balance sheet as a direct deduction from the fair value of the Loan Note.

As of September 30, 2018, total amount due on the Loan Note is fully converted into shares of common stock.

The Loan Note was measured subsequently at fair value with changes in fair value recognized in earnings. No changes in fair value was recognized as of September 30, 2018. As of September 30, 2017 and 2018, the balance of Loan Note was RMB8,335 and RMBnil, respectively.

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OTHER PAYABLES AND ACCRUED EXPENSES

12 Months Ended

Sep. 30, 2018

Payables and Accruals [Abstract]

Accounts Payable and Accrued Liabilities Disclosure [Text Block]

15. OTHER PAYABLES AND ACCRUED EXPENSES

Other payables and accrued expenses consist of:

	September 30,
	2017		2018
	RMB		RMB
Payable for purchase of plant and equipment		69		470
Payable for purchase of construction-in-progress		5,346		7,989
Professional fee payable		6,741		8,578
Salaries and bonus payable		8,537		9,272
Accrued interest		390		390
Deposits from others		652		665
Payable for labor union, housing fund and education expenses		488		1,399
Deferred government subsidies		4,782		7,649
Others		4,173		1,515
		31,178		37,927

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OTHER LONG-TERM LIABILITY

12 Months Ended

Sep. 30, 2018

Other Long Term Liabilities Disclosure [Abstract]

Other Long Term Liabilities Disclosure [Text Block]

16. OTHER LONG-TERM LIABILITY

During the fiscal year 2011, the Company received government subsidies from the local PRC government for plant and equipment projects of RMB14.00 million and land use right of RMB10.90 million; in fiscal year 2016, the Company received government subsidies from the local PRC government for equipment projects of RMB8.63 million. In fiscal year 2017, the Company received government subsidies from the local PRC government for equipment projects of RMB4.04 million (US$0.6 million). In fiscal year 2018, the Company received government subsidies from the local PRC government for equipment projects of RMB3.7 million (US$0.5 million). The non-current portion of such government subsidies are recorded as long-term liability for, which will be amortized over the estimated useful lives related to the plant and equipment and land use right.

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STOCK-BASED COMPENSATION

12 Months Ended

Sep. 30, 2018

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

17. STOCK-BASED COMPENSATION

On November 8, 2005, the Company adopted the 2005 Performance Equity Plan (the “2005 Plan”) which allows the Company to offer a variety of incentive awards to employees to acquire up to 150,000 ordinary shares under the 2005 Plan. On April 22, 2010, the Company adopted the 2009 Performance Equity Plan (the “2009 Plan”) and is authorized to issue equity based awards for up to 150,000 ordinary shares to the Company’s employees and senior managements. On December 22, 2014 the Company adopted the 2014 Performance Equity Plan, under which we are able to issue equity awards with the right to acquire up to 500,000 ordinary shares to our directors, officers, employees, individual consultants and advisors. The main purpose of the plan is to provide an existing structure and renewable benefit plan for senior management and directors and others providing services to the company. In addition to current equity awards to the directors and officers, we plan to expand our equity awards to a broader range of employees in order to align our employee incentives towards the stock performance. The main purpose of the two plans is to provide an existing structure and renewable benefit plan for senior management and directors, employees and consultants.

Under the terms of the 2005 Plan on January 4, 2010 the Company granted its employees options to purchase 12,500 ordinary shares at the price of US$122.3 (“Tranche 5”). Under the terms of the 2009 Plan, on January 3, 2011, the Company granted its employees options to purchase 12,000 ordinary shares at the price of US$108.4 (“Tranche 6”); and on January 3, 2012, the Company granted its employees options to purchase 36,500 ordinary shares at the price of US$25.5 (“Tranche 7”), and on January 2, 2013, the Company granted its employees options to purchase 36,000 ordinary shares at the price of US$14.4 (“Tranche 8”) Subject to the modifications discussed below, and on January 2, 2014, the Company granted its employees options to purchase 35,000 ordinary shares at the price of US$12.7 (“Tranche 9”).

Under the terms of the 2014 Plan, on January 2, 2015 the Company granted its employees options to purchase 19,500 ordinary shares at the price of US$14.8 (“Tranche 10”), on January 4, 2016 the Company granted its employees options to purchase 18,500 ordinary shares at the price of US$13.8 (“Tranche 11”), on April 19, 2016 the Company granted its employees options to purchase 60,000 ordinary shares at the price of US$20.5 (“Tranche 12”), on May 16, 2016 the Company granted its employees options to purchase 20,000 ordinary shares at the price of US$16.5 (“Tranche 13”),on August 3, 2016 the Company granted its employees options to purchase 20,000 ordinary shares at the price of US$20.0 (“Tranche 14”), on January 3, 2017 the Company granted its employees options to purchase 18,000 ordinary shares at the price of US$20.7 (“Tranche 15”), on October 2, 2017 the Company granted its employees options to purchase 2,500 ordinary shares at the price of US$16.5 (“Tranche 16”), on December 22, 2017 the Company granted its employees options to purchase 8,800 ordinary shares at the price of US$8.0 (“Tranche 17”), on January 2, 2018 the Company granted its employees options to purchase 29,000 ordinary shares at the price of US$9.1 (“Tranche 18”), on March 1, 2018 the Company granted its employees options to purchase 20,000 ordinary shares at the price of US$8.2 (“Tranche 19”).

All the options have an expiration date that is 5 to 10 years from the date of grant and vest immediately or over a period of 1 to 5 years. 70,000 and 70,000 options under the 2009 Plan, and 151,000 and 211,300 options under the 2014 Plan were outstanding as of September 30, 2017 and 2018, respectively.

After the adjusted awards, all the option awards have an exercise price of US$8.0 to US$20.7 and expire 5 to 10 years from the date of grant and vest immediately or over a period of 1 to 10 years.

On December 22, 2014, January 2, 2016 and December 28, 2016, the compensation committee of the Board of Directors approved the substitution of restricted stock for outstanding grants under Tranche 5, 6&7 respectively, that no longer offer the kind of incentive opportunity originally sought for valued employees given the fall in the market price of the ordinary shares during recent years. The revised terms of the stock options were accounted for as a modification in accordance with ASC 718-20. For the purpose of determining the amount of any incremental share-based compensation cost that may have resulted from the modification of the exercise prices, the Company compared the fair value of modified awards and that of the original awards, determined that RMB616, RMB542 and RMB982 respectively, of the modifications required the recognition of additional share-based payment expense, respectively.

For the options outstanding at September 30, 2017 and 2018, the weighted average remaining contractual lives are 4.9 and 4.17 years, respectively.

The Company recorded share-based compensation expense for share options of RMB8,796, RMB3,016 and RMB4,313 for the years ended September 30, 2016, 2017 and 2018 respectively. As of September 30, 2017 and 2018, there were RMB690 and RMB1,228 of total unrecognized compensation expense related to non-vested share-based compensation arrangement under the 2014 Plan. The unrecognized compensation expense is expected to be recognized over a weighted-average period of 0.48 year.

Under the terms of the 2009 Plan, on December 28, 2017 the Company granted 33,000 restricted shares to its management at an aggregate value of US$287,100, based on the stock closing price of US$8.7 at December 28, 2017. The vesting period of these shares was five-days from grant date, which was January 3, 2018.

Under the term of the 2014 Plan, on March 1, 2018, June 1, 2018 and September 1, 2018 the Company granted total of 22,500 restricted shares to its management at an aggregate value of US$167,925, based on the stock closing price of US$8.6, US$7.2 and US$6.6 at March 1, 2018, June 1, 2018 and September 1, 2018, respectively. The vesting period of these shares was 1 year from the grant date, which is March 1, 2019, June 1, 2019 and September 1, 2019, respectively.

The Company recorded share-based compensation expense for restricted shares of RMBnil, RMBnil and RMB2,272 for the years ended September 30, 2016, 2017 and 2018 respectively. As of September 30, 2017 and 2018, there were RMBnil and RMB709 of total unrecognized compensation expense related to non-vested restricted shares compensation arrangement under the 2009 Plan and 2014 Plan. The unrecognized compensation expense is expected to be recognized over a weighted-average period of 0.71 year.

A summary of the share option activity under the 2005, 2009 and 2014 Plans is as follows:

	Tranche			Tranche			Tranche		Tranche		Tranche			Tranche		Tranche		Tranche		Tranche		Tranche		Tranche		Tranche		Tranche
	7			8			9		10		11			12		13		14		15		16		17		18		19
Grant date	January 3,			January 2,			January 2,		January 2,		January 4,			April 19,		May 16,		August 3,		January 3,		October 2,		December 22,		January 2,		March 1,
	2012			2013			2014		2015		2016			2016		2016		2016		2017		2017		2017		2018		2018
Options outstanding as of September 30, 2016		13,500			35,500			34,500		19,500		18,500			60,000		20,000		20,000		-		-		-		-		-
Number of options granted		-			-			-		-		-			-		-		-		18,000		-		-		-		-
Options exercised		(500	)		-			-		-		(5,000	)		-		-		-		-		-		-		-		-
Options cancelled/expired		(13,000	)		-			-		-		-			-		-		-		-		-		-		-		-
Outstanding as of September 30, 2017		-			35,500			34,500		19,500		13,500			60,000		20,000		20,000		18,000		-		-		-		-
Number of options granted		-			-			-		-		-			-		-		-		-		2,500		8,800		29,000		20,000
Options exercised		-			-			-		-		-			-		-		-		-		-		-		-		-
Options cancelled/expired		-			(35,500	)		-		-		-			-		-		-		-		-		-		-		-
Outstanding as of September 30, 2018		-			-			34,500		19,500		13,500			60,000		20,000		20,000		18,000		2,500		8,800		29,000		20,000
Options vested and exercisable
At September 30, 2017		-			35,500			34,500		19,500		13,500			60,000		20,000		20,000		18,000		-		-		-		-
At September 30, 2018		-			-			34,500		19,500		13,500			60,000		20,000		20,000		18,000		2,500		8,800		29,000		20,000
Weighted average fair value at the grant date (US$)		14.5			7.6			6.5		7.5		9.0			15.4		12.4		14.4		4.0		7.7		4.4		5.1		5.1

The fair value of each option granted is estimated on the date of grant using the Black-Scholes Option Pricing Model:

	Tranche			Tranche			Tranche			Tranche			Tranche			Tranche			Tranche			Tranche			Tranche			Tranche			Tranche			Tranche			Tranche
	7			8			9			10			11			12			13			14			15			16			17			18			19
Exercise price (US$)		25.5			14.4			12.7			14.8			13.8			20.5			16.5			20.0			20.7			16.5			8.0			9.1			8.2
Average risk-free interest rate		0.4	%		0.37	%		0.76	%		1.07	%		1.73	%		1.79	%		1.75	%		1.55	%		1.94	%		1.94	%		2.26	%		2.25	%		2.58	%
Expected option life (year)		3			3			3			3			5			10			10			10			5			5			5			5			5
Volatility rate		90.3	%		86.32	%		79.2	%		79.67	%		80.72	%		69.27	%		69.92	%		65.37	%		63.87	%		52.40	%		63.2	%		64.6	%		68.2	%
Dividend yield		-			-			-			-			-			-			-			-			-			-			-			-			-

The aggregate intrinsic value as of September 30, 2017 and 2018 is US$265 and US$nil, respectively

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TREASURY STOCK

12 Months Ended

Sep. 30, 2018

Equity [Abstract]

Treasury Stock [Text Block]

18. TREASURY STOCK

During the year ended September 30, 2007, the Company repurchased 49,885 common stock of the Company with a total cost of RMB29,377 under the approval of the Board of Directors. In February 2013, the board of directors approved a share repurchase program for open market and negotiated transactions for a 12 month period in the amount of US$5 million, under which 61,139 and 16,738 shares with a total cost of RMB6,286 and RMB1,782 were bought in the Nasdaq market during the year ended September 30, 2013 and 2014, respectively, in compliance with U.S. securities laws. The Company recorded the entire purchase price of the treasury stock as a reduction of equity.

During the year ended September 30, 2017, the Company sold 50,000 shares of treasury stock with a total cost of RMB14,654 for a total sale price of RMB6,115. During the year ended September 30, 2018, the Company granted 12,853 shares of treasury stock to its employee under stock-based compensation.

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EQUITY LINE

12 Months Ended

Sep. 30, 2018

Liabilities and Equity [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

19. EQUITY LINE

On July 5, 2017, the Company entered into an equity purchase agreement (the “Equity Purchase Agreement”) with L2 Capital, LLC. Upon the terms and subject to the conditions thereof, the selling stockholder is committed to purchase that number of ordinary shares of the Company (the “Purchase Shares”) equal to an aggregate market price of up to US$4,500 (the “Total Commitment Amount”). From time to time, commencing on the date on which a registration statement registering the ordinary shares to be purchased becomes effective, the Company may, in its sole discretion, provide the selling stockholder with a put notice (each a “Put Notice”) to purchase a specified number of the Purchase Shares (each a “Put Amount Requested”), subject to the limitations and conditions stated in the Equity Purchase Agreement. Upon delivery of a Put Notice, the Company must deliver the Put Amount Requested as a Deposit Withdrawal at Custodian so as to deliver the ordinary shares being sold to the selling stockholder within two trading days. There are certain equity conditions that the Company must meet to be able to deliver a Put Notice, including being in compliance with the terms of the aforementioned Loan Note and the Equity Purchase Agreement, a Put Amount Request cannot exceed the full committed amount under the Equity line, a Put Amount Request cannot exceed 9.99% of the outstanding ordinary shares, the continued listing and trading of the ordinary shares, and the registration statement of which this prospectus is a part, is effective and the information therein is current.

The Put Amount Requested pursuant to any single Put Notice is limited to a maximum of 150% of the average trading volume of the ordinary shares as traded on Nasdaq or other exchange on which the ordinary shares are listed, and not less than US$25 in value. A subsequent put may only be made 10 trading days after the earlier put. The equity line may be terminated at any time, subject to a short notice period.

The actual amount of proceeds the Company receives pursuant to each Put Notice (each, the “Put Amount”) is to be determined by multiplying the Put Amount Requested by the applicable purchase price. The purchase price for each of the Purchase Shares equals to 94% of the lowest market price of the Company’s ordinary shares on Nasdaq for any trading day during the 5 trading days immediately after the date of the respective Put Notice.

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INCOME TAXES

12 Months Ended

Sep. 30, 2018

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

20. INCOME TAXES

Agritech and its subsidiary, State Harvest are incorporated in the British Virgin Islands and are exempted from the income tax under the laws of the British Virgin Islands. State Harvest’s subsidiary and State Harvest’s variable interest entity, Beijing Origin and its majority owned subsidiaries (together, the “PRC entities”) were incorporated in the PRC and governed by the PRC laws.

The applicable tax rate of the PRC Enterprise Income Tax (“EIT”) was changed from 33% to 25% on January 1, 2008, according to the Corporate Income Tax Law. The preferential tax rate previously enjoyed by the PRC entities is gradually transitioned to the new standard rate of 25% over a five-year transitional period. In addition, article 28 of the new tax law stated that the income tax rate of a “high technology” company (high-tech status) is to remain at 15%.

Preferential tax treatment of Beijing Origin as “high technology” company (High-tech Status) from October 28, 2017 to October 27, 2020 has been granted by the relevant tax authorities. Beijing Origin is entitled to a preferential tax rate of 15% which is subject to annual review. As a result of these preferential tax treatments, the reduced tax rates applicable to Beijing Origin Seed Limited for 2016, 2017 and 2018 are 15%. Xinjiang Origin is entitled to a preferential tax of 2 years exemption and 3 years of half EIT from January 1, 2012 to December 31, 2016 in accordance with Cai Shui [2011] No. 53 and Cai Shui [2011] No. 60 issued by the PRC State Administration of Taxation and Xin Cai Fa Shui [2011] No. 51 issued by the Xinjiang Local Taxation Bureau. Xinjiang Origin is currently in the status of 25% for the year ended September 30, 2018.

Had all the above tax holidays and concessions not been available, the tax charges would have been (decreased)/increased by RMB(5,609), RMB4,274 and RMBnil and the basic net loss on per share would have been (decreased)/increased by RMB(0.25), RMB0.18 and RMBnil for the years ended September 30, 2016, 2017 and 2018, respectively. The diluted net loss per share for the years ended September 30, 2016, 2017 and 2018 would have been (decreased)/increased by RMB(0.25), RMB0.18 and RMBnil, respectively.

The Company’s liability for income taxes includes the liability for unrecognized tax benefits, interest and penalties which relate to tax years still subject to review by taxing authorities. Audit periods remain open for review until the statute of limitations has passed. The completion of review or the expiration of the statute of limitations for a given audit period could result in an adjustment to the Company’s liability for income taxes. Any such adjustment could be material to the Company’s results of operations for any given quarterly or annual period based, in part, upon the results of operations for the given period. Until September 30, 2018, the management considered that the Company had no uncertain tax positions affected its consolidated financial position. The Company’s uncertain tax positions are related to tax years that remain subject to examination by the relevant tax authorities and the major one is the China tax authority. The open tax years for examinations in China are 5 years.

The principal components of the deferred income tax assets are as follows:

	September 30,
	2017			2018
	RMB			RMB
Non-current deferred tax assets:
Net operating loss carry forward		39,578			94,750
Impairment on inventory		5,626			1,822
Impairment on long-term equity investment		-			356
Others		(20,252	)		4,644
Non-current deferred income tax assets		24,952			101,572
Valuation allowances		(24,952	)		(101,572	)
Net non-current deferred income tax assets		-			-

The Company did not have any significant temporary differences relating to deferred tax liabilities as of September 30, 2017 and 2018.

A significant portion of the deferred tax assets recognized relates to net operating loss and credit carry forwards. The Company operates through the PRC entities and the valuation allowance is considered on each individual basis.

The net operating loss attributable to those PRC entities can only be carried forward for five to ten years. The operating loss in the United States before December 31, 2017 can be carried forward for 20 years to offset future taxable profit. As of September 30, 2018, the Company's total net operating loss carry forwards of RMB579,677, out of which, RMB63,506 would expire from calendar year ending 2018 through 2021, RMB516,171 can be carried forward from calendar year ending 2022 and after.

Reconciliation between total income tax expenses and the amount computed by applying the statutory income tax rate to income before taxes is as follows:

	Year ended September 30,
	2016			2017			2018
		%			%			%
Statutory rate		25			25			25
Effect of preferential tax treatment		(8	)		3			(3	)
Effect of different tax jurisdiction		(6	)		-			-
Change in valuation allowance		(2	)		(27	)		(26	)
Over provision in prior year		(9	)		(1	)		4
Effective income tax rate		-			-			-

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INCOME/(LOSS) PER SHARE

12 Months Ended

Sep. 30, 2018

Earnings Per Share [Abstract]

Earnings Per Share [Text Block]

21. INCOME/(LOSS) PER SHARE

The following table sets forth the computation of basic and diluted loss per share for the years indicated:

	Year ended September 30,
	2016			2017			2018
	RMB			RMB			RMB
Numerator:
Net loss from continuing operations attributable to Origin Agritech Limited		(62,264	)		(90,433	)		(153,663	)
Net income (loss) from discontinued operations attributable to Origin Agritech Limited		(3,314	)		14,759			-
Net loss attributable to Origin Agritech Limited		(65,578	)		(75,674	)		(153,663	)
Denominator:
Average common stock outstanding - basic		2,759,834			2,808,293			3,061,979
Dilutive effect of share options		-			-			-
Diluted shares		2,759,834			2,808,293			3,061,979
Basic and Diluted Per Share Data:
Basic and diluted loss per share attributable to Origin Agritech Limited:
Continuing operations		(22.56	)		(32.20	)		(50.18	)
Discontinued operations		(1.20	)		5.25			-
		(23.76	)		(26.95	)		(50.18	)

For the year ended September 30, 2016, 2017 and 2018, the effect of the outstanding options was anti-dilutive.

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EMPLOYEE BENEFIT PLAN AND PROFIT APPROPRIATION

12 Months Ended

Sep. 30, 2018

Compensation and Retirement Disclosure [Abstract]

Compensation and Employee Benefit Plans [Text Block]

22. EMPLOYEE BENEFIT PLAN AND PROFIT APPROPRIATION

Full time employees of the PRC entities participate in a government mandated multi-employer defined contribution plan pursuant to which certain pension benefits, medical care, unemployment insurance, employee housing fund and other welfare benefits are provided to employees. Chinese labor regulations require the Company to accrue for these benefits based on certain percentages of the employees’ salaries. The total provisions for such employee benefits were RMB7,875, RMB7,241 and RMB4,615 for the years ended September 30, 2016, 2017 and 2018 respectively.

Pursuant to the laws applicable to the PRC, domestic PRC entities must make appropriations from after-tax profit to non-distributable reserves funds including: (i) the statutory surplus reserve and; (ii) the statutory public welfare fund. Subject to the limits of 50% of the entity’s registered capital, the statutory surplus reserve fund requires annual appropriations of 10% of after-tax profit (as determined under accounting principles generally accepted in the PRC (“PRC GAAP”) at each year-end). The Company’s wholly foreign owned subsidiary, BioTech, however subject to the law applicable to foreign invested enterprises in the PRC, was required annual appropriation of the general reserve fund, no less than 10% of after-tax profit (as determined under PRC GAAP at each year-end). These reserve funds can only be used for specific purposes of enterprise expansion and staff welfare and are not distributable as cash dividends. No appropriation has been made for the years ended September 30, 2016, 2017 and 2018. There was no after-tax profit recorded in the PRC statutory accounts for 2017 and 2018. On the other hand, the amount set aside as of September 30, 2017 and 2018 were RMB20,848 and RMB20,848.

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COMMITMENTS AND CONTINGENCIES

12 Months Ended

Sep. 30, 2018

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

23. COMMITMENTS AND CONTINGENCIES

(a) Capital commitments

As of September 30, 2017 and 2018, capital commitments for the purchase of long-term assets are as follows:

	September 30,
	2017		2018
	RMB		RMB
Equipment		2,702		-
		2,702		-

(b) Operating lease

The Company leased certain land use rights for seed development and office premises under non-cancellable leases. Rental expenses under operating leases for the years ended September 30, 2016, 2017 and 2018 were RMB2,314, RMB2,908 and RMB3,859, respectively.

As of September 30, 2018, the Company was obligated under operating leases requiring minimum rental as follows:

Year ending September 30,	RMB
2019		905
2020		548
2021		516
2022		500
2023		422
Thereafter		3,793
		6,684

(c) Legal proceeding

There are legal proceedings against Linze Origin Seed Limited and Beijing Origin involving unsettled purchase orders to suppliers of Linze Origin Seed Limited. Pursuant to court order and mediations, the total compensation of these proceedings amounted to RMB23.7 million plus interests which primarily shall be settled by Linze Origin Seed Limited, and Beijing Origin shall be jointly and severally liable for these claims.

With respect to the legal proceedings and claims described above, such claims primarily shall be settled by Linze Origin Seed Limited and the Company's liability, if any, with respect to such claims, is uncertain. At present, the Company is unable to estimate a reasonably possible range of loss, if any, that may result from such litigation. If an unfavorable outcome were to occur in the litigation described above, the impact could be material to the Company's business, financial condition, or results of operations.

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FAIR VALUE OF FINANCIAL INSTRUMENTS

12 Months Ended

Sep. 30, 2018

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

24. FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of cash and cash equivalents, restricted cash, accounts receivable, accounts payable and borrowings are reasonable estimates of their fair value. All the financial instruments are for trade purposes. No level 2 or 3 fair value assessment has been made.

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OPERATING RISK

12 Months Ended

Sep. 30, 2018

Risks and Uncertainties [Abstract]

Concentration Risk Disclosure [Text Block]

25. OPERATING RISK

Concentrations of credit risk

Financial instruments that subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents. The Company maintains its cash and cash equivalents with high-quality institutions. Generally these deposits may be redeemed upon demand and therefore bear minimal risk.

Interest risk

The interest rate and term of repayment of other borrowing is 6.0%, which are fixed at the inception of the borrowing. Other financial assets and liabilities do not have material interest rate risk.

Liquidity risk

We believe our working capital is sufficient to meet our present requirements. We may, however, require additional cash due to changing business conditions or other future developments, including any investments or acquisitions we may decide to pursue. In the long-term, we intend to rely primarily on cash flow from operations and additional borrowings from banks to meet our anticipated cash needs. If our anticipated cash flow is insufficient to meet our requirements, we may also seek to sell additional equity, debt or equity-linked securities.

Country risk

The Company has significant investments in the PRC. The operating results of the Company may be adversely affected by changes in the political and social conditions in the PRC and by changes in Chinese government policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods taxation, among other things. There can be no assurance; however, those changes in political and other conditions will not result in any adverse impact.

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SUBSEQUENT EVENTS

12 Months Ended

Sep. 30, 2018

Subsequent Events [Abstract]

Subsequent Events [Text Block]

26. SUBSEQUENT EVENTS

The Company has entered into share subscription agreement with Longhan and Tiger Fund, and sold 1,397,680 shares of the Company’s common stock for an aggregate consideration of US$7,743,147. Also, the Company entered into a Cooperation Framework Agreement with BC-TID. For additional information, see note 2 - Liquidity and Going Concern.

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CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY

12 Months Ended

Sep. 30, 2018

Condensed Financial Information Of Parent Company Only Disclosure [Abstract]

Condensed Financial Information of Parent Company Only Disclosure [Text Block]

27. CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY

The condensed financial statements of Origin Agritech Limited (the “parent company”) have been prepared in accordance with accounting principles generally accepted in the United States of America. Under the PRC laws and regulations, the Company’s PRC subsidiaries are restricted in their ability to transfer certain of their net assets to the parent company in the form of dividend payments, loans or advances. The amounts restricted include paid-in capital, capital surplus and statutory reserves, as determined pursuant to PRC generally accepted accounting principles, totaling RMB84,517 and RMB84,517 as of September 30, 2017 and 2018, respectively.

The following represents condensed unconsolidated financial information of the parent company only:

CONDENSED BALANCE SHEET

	September 30
	2017			2018			2018
	RMB			RMB			US$
ASSETS (LIABILITIES)
Current assets (liabilities)
Cash and cash equivalents		17			47			7
Other receivables		3			4			1
Due from inter-companies		109,321			132,842			19,311
Due to related parties		(1,576	)		(1,634	)		(240	)
Total current assets (liabilities)		107,765			131,259			19,079
Investment in unconsolidated subsidiaries		4,544			(155,970	)		(22,673	)
Total assets (liabilities)		112,309			(24,711	)		(3,594	)
AND EQUITY
Total stockholders’ equity		112,309			(24,711	)		(3,594	)

CONDENSED STATEMENT OF INCOME AND COMPREHENSIVE INCOME

	Year ended September 30,
	2016			2017			2018			2018
	RMB			RMB			RMB			US$
Revenues		204			-			-			-
Operating expenses
General and administrative		(16,035	)		(3,016	)		(5,147	)		(748	)
Loss from operations		(15,831	)		(3,016	)		(5,147	)		(748	)
Equity method loss		(49,009	)		(72,491	)		(148,514	)		(21,589	)
Interest expense		(738	)		(167	)		(2	)		-
Loss before income taxes		(65,578	)		(75,674	)		(153,663	)		(22,337	)
Income tax expense		-			-			-			-
Net loss		(65,578	)		(75,674	)		(153,663	)		(22,337	)
Other comprehensive loss
Foreign currency translation difference		(4,124	)		(7,644	)		(3,315	)		(482	)
Total comprehensive loss		(69,702	)		(83,318	)		(156,978	)		(22,819	)

CONDENSED STATEMENT OF CASH FLOWS

	Year ended September 30,
	2016			2017			2018			2018
	RMB			RMB			RMB			US$
Net cash provided by (used in) operating activities		(20,009	)		20,456			3,345			486
Net cash provided by (used in) financing activities		14,881			(13,376	)		-			-
Net increase (decrease) in cash and cash equivalents		(5,128	)		7,080			3,345			486
Cash and cash equivalents, beginning of year		341			581			17			2
Effect of exchange rate changes on cash and cash equivalents		5,368			(7,644	)		(3,315	)		(482	)
Cash and cash equivalents, end of year		581			17			47			6

BASIS OF PRESENTATION

The condensed financial information has been prepared using the same accounting policies as set out in the Company’s consolidated financial statements except that the parent company has used equity method to account for its investments in subsidiaries.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Sep. 30, 2018

Accounting Policies [Abstract]

Consolidation, Policy [Policy Text Block]

Principles of consolidation

The consolidated financial statements of the Company are prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”); include the assets, liabilities, revenues, expenses and cash flows of all subsidiaries and variable interest entities. Intercompany balances, transactions and cash flows are eliminated on consolidation.

Reverse Stock Split [Policy Text Block]

Reverse Stock Split

On June 26, 2018, the Company’s Shareholders and the Board of Directors approved a reverse stock split pursuant to which all classes of our issued and outstanding shares of common stock at the close of business on such date were combined and reconstituted into a smaller number of shares of common stock in a ratio of 1 share of common stock for every 10 shares of common stock (“1-for-10 reverse stock split”). The 1-for-10 reverse stock split was effective as of close of business on July 10, 2018 and the Company’s stock began trading on a split-adjusted basis on July 11, 2018.

On the exchange date, the reverse stock split reduced the number of outstanding shares to approximately 2.7 million ordinary shares, subject to additional shares being issued for fractional shares and preservation of round lots. Proportional adjustments have been made to the conversion and exercise prices of the Company’s outstanding common stock, treasury stock, warrants, restricted stock awards, and stock options, and to the number of shares issued and issuable under the Company’s Stock Incentive Plan. Upon the effectiveness of the 1-for-10 reverse stock split, each ten shares of the Company’s issued common stock were automatically combined and converted into one issued share of common stock, no par value. The Company did not issue any fractional shares in connection with the reverse stock split. Instead, fractional share interests were rounded up to the next largest whole share. The reverse split also preserved round lots of 100 shares, meaning that if the reverse split resulted in a shareholder holding less than 100 shares, the Company would issue, at no cost, additional shares to increase the holding to a full 100 shares. The reverse stock split does not modify the rights or preferences of the common stock. The number of authorized shares of the Company’s common stock remained at 60 million shares and no par value.

The accompanying consolidated financial statements and footnotes have been retroactively adjusted to reflect the effects of the 1-for-10 reverse stock split.

Liquidity and Going Concern Disclosure [Policy Text Block]

Liquidity and Going Concern

The Company incurred net losses of RMB76,833, RMB106,261 and RMB152,790 in the years ended September 30, 2016, 2017 and 2018, respectively. Working capital deficit was RMB45,045 and RMB217,293 as of September 30, 2017 and 2018, respectively. Accumulated deficit was RMB258,060 and RMB411,723 as of September 30, 2017 and 2018, respectively. We are currently seeking to restructure the terms of our liabilities by raising funds to pay off liabilities. Our ability to continue as a going concern is depend upon obtaining the necessary financing or negotiating the terms of the existing borrowing to meet our current and future liquidity need.

On October 16, 2018, the Company entered into a Share Subscription Agreement with Longhan Investment Management, Co., Ltd. (“Longhan”) to sell 1,397,680 shares of the Company’s common stock for an aggregate purchase price of US$7,743,147. On January 4, 2019, the Company entered into a Financing Support Agreement with Tiger Capital Fund SPC (“Tiger Fund”) and Longhan. This agreement allows Tiger Fund to join Longhan to invest in Origin under the Share Subscription Agreement dated as of October 16, 2018 by and between Longhan and the Company. Under the Share Subscription Agreement and the Financing Support Agreement, Longhan and Tiger Fund purchased 1,397,680 shares of the Company’s common stock for an aggregate purchase price of US$7,743,147 as of the date of this report.

On May 17, 2019, the Company entered into a Cooperation Framework Agreement with Beijing Changping Technology Innodevelop Group (BC-TID), an entity owned by the government of Changping District of Beijing City. Under this agreement, BC-TID and Origin will form a new entity, which 51% and 49% of equity interests would be owned by BC-TID and the Company, respectively. Based on the agreement, Beijing Origin will contribute the headquarters building in Beijing and certain of its seed technology assets related to genetically modified seeds to the new entity. BC-TID will fund the joint venture with a total of RMB204 million in cash. Also agreed under this agreement, the new entity will pay off the bank loan of RMB78 million, which is collateralized by the Company’s headquarters building in Beijing, upon receiving the RMB204 million investment from BC-TID. The transaction is subject to the satisfaction or waiver of several conditions set forth in the agreement.

As of September 30, 2018, the amount due to Beijing Shihui, Zhangye Shihui Agricultural Development Co. Ltd. (“Zhangye Shihui”), Xinjiang Ginbo Seeds Center, Linze Origin Seeds Limited and Dr. Han Gengchen, the Chairman and Chief Executive Director of the Company, amounted to RMB137,811, RMB10,000, RMB10,000, RMB123,579 and RMB9,692, respectively. These related parties agreed that they shall not request the Company to repay outstanding balances until the Company are in a position to repay.

Besides the expected cash inflows from the aforementioned existing agreements, the Company is also seeking funds from other resources including but not limited to licensing its cord seed traits to its customers, applying for government grants for research and development activities, pursuing other capital investment from investors and selling certain company assets. The Company consistently reviews its working capital requirements and has also taken steps to reduce expenses. The Company has closed down the office of Origin USA and cut down the related personnel and administrative costs. The Company is also currently working with certain vendors and creditors to extend repayment terms.

Despite the Company’s effort to obtain additional funding and reduce operating costs, there is no assurance that the Company’s plans and actions will be successful. In addition, there can be no assurance that in the event additional sources of funds are needed they will be available on acceptable terms, if at all. The Company’s consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liquidation of liabilities during the normal course of operations.

Convenience Translation [Policy Text Block]

Convenience translation into United States dollars

The consolidated financial statements are presented in Renminbi. The translation of Renminbi amounts into United States dollar amounts has been made for the convenience of the reader and has been made at the exchange rate quoted by the middle rate by the State Administration of Foreign Exchange in China on September 30, 2018 of RMB6.8792 to US $1.00. Such translation amounts should not be construed as representations that the Renminbi amounts could be readily converted into United States dollar amounts at that rate or any other rate.

Use of Estimates, Policy [Policy Text Block]

Use of estimates

The preparation of the consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are adjusted to reflect actual experience when necessary. Significant accounting estimates reflected in the Company’s consolidated financial statements include inventory valuation, account receivable valuation, useful lives of plant and equipment and acquired intangible assets, the valuation allowance for deferred income tax assets, valuation of long-lived assets and share-based compensation expense. Actual results could differ from those estimates.

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash and cash equivalents

Cash and cash equivalents consist of cash on hand, cash accounts, interest bearing savings accounts, time certificates of deposit and debt securities with a maturities of three months or less when purchased.

Inventory, Policy [Policy Text Block]

Inventories

Inventories are stated at the lower of cost, determined by weighted-average method, or net realizable value. Work-in-progress and finished goods inventories consist of raw materials, direct labor and overhead associated with the manufacturing process. The Company’s commercial seed inventories are reported in discontinued operations. Parent seed represents the seeds that are used for research and development activities.

The Company periodically performs an analysis of inventory to determine obsolete or slow-moving inventory and determine if its cost exceeds the estimated market value. Write down of potentially obsolete or slow-moving inventory are recorded based on management’s analysis of inventory levels.

Land Use Rights [Policy Text Block]

Land use rights, net

Land use rights are recorded at cost less accumulated amortization. Amortization is provided over the term of the land use right agreements on a straight-line basis for the beneficial period.

Property, Plant and Equipment, Policy [Policy Text Block]

Plant and equipment, net

Plant and equipment are recorded at cost less accumulated depreciation and amortization. Maintenance and repairs are charged to expense as incurred. Depreciation is calculated on a straight-line basis over the following estimated useful lives:

Plant and building	20-40 years
Machinery and equipment	10-15 years
Furniture and office equipment	5-8 years
Motor vehicles	5-10 years
Leasehold improvements	Shorter of the useful lives or the lease term

The Company constructs certain of its facilities. In addition to costs under construction contracts, external costs directly related to the construction of such facilities, including duty and tariff, and equipment installation and shipping costs, are capitalized. Depreciation is recorded at the time assets are placed in service.

Lease, Policy [Policy Text Block]

Leases

Leases are classified at the inception date as either a capital lease or an operating lease. For the lessee, a lease is a capital lease if any of the following conditions exist: a) ownership is transferred to the lessee by the end of the lease term, b) there is a bargain purchase option, c) the lease term is at least 75% of the property’s estimated remaining economic life or d) the present value of the minimum lease payments at the beginning of the lease term is 90% or more of the fair value of the leased property to the lessor at the inception date. A capital lease is accounted for as if there was an acquisition of an asset and an incurrence of an obligation at the inception of the lease. All other leases are accounted for as operating leases. The Company has no capital leases for any of the periods presented.

Goodwill and Intangible Assets, Intangible Assets, Policy [Policy Text Block]

Acquired intangible assets, net

Acquired intangible assets primarily consist of purchased technology rights and distribution network and are stated at cost less accumulated amortization. Amortization is calculated on a straight-line basis over the estimated useful lives of these assets and recorded in operating expenses. Amortization is calculated on a straight-line basis over the following estimated useful lives for the main acquired intangible assets:

Technology rights for licensed seeds	3-20 years
Distribution network	6-14 years
Trademark	Indefinite

Trademarks, which have indefinite lives are not amortized but are reviewed for impairment at least annually, at year end date, or earlier upon the occurrence of certain triggering events. The Company has performed an impairment analysis on the acquired intangible assets in Beijing Origin and recorded an impairment provision of RMB1,433 during the year ended September 30, 2018.

Equity Method Investments, Policy [Policy Text Block]

Equity investments

Equity method investment is accounted for using the equity method whereby they are initially recognized at cost and thereafter, their carrying amount are adjusted for the Company’s share of the post-acquisition change in the net assets of equity method investments less impairment losses, if any. The dividend received was accounted for as a reduction in equity investments.

Cost method investment is stated at cost less impairment loss. The Company recorded an impairment loss of RMB2,374 on its cost method investment during the year ended September 30, 2018.

Valuation Of Long Lived Assets [Policy Text Block]

Valuation of long-lived asset

The Company reviews the carrying value of long-lived assets to be held and used, including other intangible assets subject to amortization, when events and circumstances warrants such a review. The carrying value of a long-lived asset is considered impaired when the anticipated undiscounted cash flow from such asset is separately identifiable and is less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair market value of the long-lived asset and intangible assets. Fair market value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. Losses on long-lived assets and intangible assets to be disposed are determined in a similar manner, except that fair market values are reduced for the cost to dispose. The Company has performed an impairment analysis on the plant and equipment in Xinjiang Origin and recorded an impairment loss of RMB25,873 during the year ended September 30, 2017, and the impairment loss was reported in continuing operations. No impairment was recorded during the year ended September 30, 2018.

Revenue Recognition, Policy [Policy Text Block]

Revenue recognition

The Company derives its revenues primarily from the sale of various branded conventional seeds and branded seeds with biotechnology traits.

Revenue is recognized when pervasive evidence of an arrangement exists, products have been delivered, the price is fixed or determinable, collectability is reasonably assured and the right of return has expired. The Company generally determines the final selling price after a period the goods are delivered to the customers. Accordingly, the Company defers revenues recognition until the selling price has been finalized with the customers. The estimated amounts of revenues billed in excess of revenues recognized are recorded as deferred revenues.

Government Subsidies [Policy Text Block]

Government subsidies

A government subsidy is not recognized until there is reasonable assurance that: (a) the enterprise will comply with the conditions attached to the grant; and (b) the grant will be received.

When the Company received the government subsidies but the conditions attached to the grants have not been fulfilled, such government subsidies are deferred and recorded under other payables and accrued expenses, and other long-term liability. The reclassification of short-term or long-term liabilities is depended on the management’s expectation of when the conditions attached to the grant can be fulfilled.

The Company received several financial supports from various levels of the government. At fiscal years ended 2017 and 2018, the Company received government subsidies of RMB2,660 and RMB9,193, respectively for R&D and others. Government subsidies recognized as other income in the statement of income for the years ended September 30, 2016, 2017 and 2018, were RMB3,688, RMB1,407 and RMB5,516, respectively.

Cost of Sales, Policy [Policy Text Block]

Cost of revenues

Cost of revenues consists of expenses directly related to sales, including the purchase prices and development costs for seeds and, during the fiscal years ended September 30, 2016, 2017 and 2018, agricultural chemical products, depreciation and amortization, impairment of inventory, shipping and handling costs, salary and compensation, supplies, license fees, and rent.

Research and Development Expense, Policy [Policy Text Block]

Research and development costs

Research and development costs relating to the development of new products and processes, including significant improvements and refinements to existing products, are expensed as incurred.

Advertising Costs, Policy [Policy Text Block]

Advertising costs

Advertising costs are expensed when incurred and included in selling and marketing expenses. For the years ended September 30, 2016, 2017 and 2018, advertising costs were RMB3,237, RMB521 and RMBnil, respectively.

Shipping and Handling Cost, Policy [Policy Text Block]

Shipping and handling cost

The Company includes shipping and handling costs as either cost of goods sold or selling and administrative expenses depending on the nature of the expenses. Shipping and handling costs which relate to transportation of products to customers’ locations is charged to selling and marketing expenses and shipping and handling which relate to the transportation of goods to factories from suppliers and from one factory to another is charged to cost of revenues.

For the years ended September 30, 2016, 2017 and 2018, shipping and handling cost included in selling and marketing expenses were RMB2,055, RMB1,604, and RMB400, respectively.

Borrowing Cost [Policy Text Block]

Borrowing cost

Borrowing costs attributable directly to the acquisition, construction or production of qualifying assets which require a substantial period of time to be ready for their intended use or sale, are capitalized as part of the cost of those assets. Income earned on temporary investments of specific borrowings pending their expenditure on those assets is deducted from borrowing costs capitalized. All other borrowing costs are recognized in interest expenses in the statement of income and comprehensive income in the period in which they are incurred.

Allowance For Doubtful Account [Policy Text Block]

Allowance for doubtful account

The Company regularly monitors and assesses the risk of not collecting amounts owed to the Company by customers. This evaluation is based upon a variety of factors including: an analysis of amounts current and past due along with relevant history and facts particular to the customer. Based on the result of this analysis, the Company records an allowance for doubtful accounts.

Income Tax, Policy [Policy Text Block]

Income taxes

Deferred income taxes are recognized for the future tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts in the consolidated financial statements, net of operating loss carry forwards and credits. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Current income taxes are provided for in accordance with the laws of the relevant tax authorities.

The Company adopted FASB ASC 740-10. The Company’s policy on classification of all interest and penalties related to unrecognized tax benefits, if any, as a component of income tax provisions.

Foreign Currency Transactions and Translations Policy [Policy Text Block]

Foreign currency translation

The functional currency of the Company excluding Agritech, Origin USA and State Harvest is Renminbi. Monetary assets and liabilities denominated in currencies other than Renminbi are translated into Renminbi at the rates of exchange ruling at the balance sheet date. Transactions in currencies other than Renminbi are converted into Renminbi at the applicable rates of exchange prevailing the transactions occurred. Transaction gains and losses are recognized in the consolidated statements of income and comprehensive income.

The functional currency of Agritech, Origin USA and State Harvest are maintained in United State dollars. Assets and liabilities are translated at the exchange rates at the balance sheet date, equity accounts are translated at historical exchange rates and revenues, expenses, gains and losses are translated using the average rate for the period. Translation adjustments are reported as cumulative translation adjustments and are shown as a separate component of other comprehensive (loss)/income. The Company has chosen Renminbi as its reporting currency.

Comprehensive Income, Policy [Policy Text Block]

Comprehensive income (loss)

Comprehensive income (loss) is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. Comprehensive income (loss) for the years has been disclosed within the consolidated statements of income and comprehensive income for presentational purpose of the disclosure of comprehensive income (loss) attributable to Agritech and the non-controlling interests respectively.

Earnings Per Share, Policy [Policy Text Block]

Income (loss) per share

Basic income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the years. Diluted income (loss) per share gives effect to all dilutive potential common shares outstanding during the years. The weighted average number of common shares outstanding is adjusted to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued. In computing the dilutive effect of potential common shares, the average stock price for the period is used in determining the number of treasury shares assumed to be purchased with the proceeds from the exercise of options.

Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]

Share-based compensation

The Company adopts FASB ASC 718-10. ASC 718-10 requires that share-based payment transactions with employees, such as share options, be measured based on the grant-date fair value of the equity instrument issued and recognized as compensation expense over the requisite service period, with a corresponding addition to equity. Under this method, compensation cost related to employee share options or similar equity instruments is measured at the grant date based on the fair value of the award and is recognized over the period during which an employee is required to provide service in exchange for the award, which generally is the vesting period.

Fair Value Measurement, Policy [Policy Text Block]

Fair value measurement

The Company adopted FASB ASC 820-10, and which defines fair value, establishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements. ASC 820-10 does not require any new fair value measurements, but provides guidance on how to measure fair value by providing a fair value hierarchy used to classify the source of the information.

ASC 820-10 establishes a three-level valuation hierarchy of valuation techniques based on observable and unobservable inputs, which may be used to measure fair value and include the following:

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Classification within the hierarchy is determined based on the lowest level of input that is significant to the fair value measurement.

Discontinued Operations, Policy [Policy Text Block]

Discontinued Operations

The Company reports operating results for discontinued operations separately from continuing operations to distinguish the financial impact of disposal transactions from ongoing operations. Through September 30, 2018, the Company reported discontinued operations when the operations and cash flows of a component of the Company had been eliminated or intended to be eliminated from ongoing operations. For a component to be disposed of by sale, financial results were classified as discontinued only when held for sale criteria were met. For a component to be disposed of other than by sale, financial results were not classified as discontinued until abandonment, distribution, or exchange occurred, depending on the manner of disposal. In the annual report for the year ended September 30, 2016 and 2017, the operating results of the seed production and distribution entities and assets mainly including Changchun Origin, Denong, Linze Origin, Zhengzhou Branch and office building in Beijing, PRC are presented as discontinued operations. The office building in Beijing, PRC was previously planned to be sold to Beijing Shihui. However, the Company changed the original plan and decided not to sell this part of assets. On September 21, 2018, the Company and certain subsidiaries of the Company entered into a Termination Agreement. Pursuant to this agreement, the Company will not transfer the above-mentioned office building in Beijing to Beijing Shihui.

As the office building in Beijing no longer meets the held-for-sale criteria, this part of assets has been reclassified as held and used and the related operation results were reclassified to continuing operations for all periods presented in this report. See note 4 for details.

New Accounting Pronouncements, Policy [Policy Text Block]

Recently issued accounting pronouncements

· In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The amendments in this update require all equity investments to be measured at fair value with changes in the fair value recognized through net income (other than those accounted for under equity method of accounting or those that result in consolidation of the investee).The amendments in this update also require an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. In addition the amendments in this update eliminate the requirement for to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet for public entities. For public business entities, the amendments in ASU No. 2016-01 are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Except for the early application guidance discussed in ASU No. 2016-01, early adoption of the amendments in this update is not permitted. The Company does not expect the adoption of ASU No. 2016-01 will have a material impact on its consolidated financial statements.

● In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). In July 2018, the FASB also issued ASU 2018-10 Codification Improvements to Topic 842, Leases and ASU 2018-11 Leases (Topic 842) Targeted Improvements.  The amendments in this update will increase the transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The amendments are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years for public business entities. Early application of the amendments is permitted, and may be applied through a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements with certain practical expedients available.  An entity may apply the new leases standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company is currently evaluating the effect of this standard on its consolidated financial statements.

● In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.  Financial Instruments—Credit Losses (Topic 326) amends guideline on reporting credit losses for assets held at amortized cost basis and available-for-sale debt securities.  For assets held at amortized cost basis, Topic 326 eliminates the probable initial recognition threshold in current GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected. For available-for-sale debt securities, credit losses should be measured in a manner similar to current GAAP, however Topic 326 will require that credit losses be presented as an allowance rather than as a write-down.  ASU No. 2016-13 affects entities holding financial assets and net investment in leases that are not accounted for at fair value through net income. The amendments affect loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. The amendments in this ASU will be effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.  The Company is currently evaluating the impact of the adoption of ASU No. 2016-13 on its consolidated financial statements.

● In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which addresses the following eight specific cash flow issues: Debt prepayment or debt extinguishment costs; settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies (including bank-owned life insurance policies; distributions received from equity method investees; beneficial interests in securitization transactions; and separately identifiable cash flows and application of the predominance principle. The amendments in this ASU are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company does not expect the adoption of ASU No. 2016-15 will have a material impact on its consolidated financial statements.

● In May 2017, the FASB issued ASU 2017-09-Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting. The requirement provides guidance on determining which changes to the terms and conditions of share-based payment awards require an entity to apply modification accounting under Topic 718. For public business entities, this ASU should be effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2017. The Company does not expect the adoption of ASU No. 2017-09 will have a material impact on its consolidated financial statements.

● In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”). This ASU is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers: Principal versus Agent Considerations (Reporting Gross versus Net), which is effective upon adoption of ASU 2014-09. This ASU clarifies the implementation guidance in ASU 2014-09 on principal versus agent considerations. These ASUs are effective for annual reporting periods beginning after December 15, 2017 and interim periods within those annual periods. The Company will adopt ASU 2014-09, and its related clarifying ASUs, as of October 1, 2018. The Company anticipates adopting the standard using the modified retrospective transition approach. Under this approach, the new standard would apply to all new contracts initiated on or after October 1, 2018. For existing contracts that have remaining obligations as of October 1, 2018, any difference between the recognition criteria in these ASUs and the Company’s current revenue recognition practices would be recognized using a cumulative effect adjustment to the opening balance of retained earnings. Our revenues are generally recognized upon delivery to the customer, which is when we control transfers to the customer. The majority of the Company’s customer contracts, which may be in the form of purchase orders, contracts or purchase agreements, contain performance obligations for delivery of agreed upon goods. Delivery of all performance obligations contained within a contract with a customer typically occurs at the same time. The Company has also determined that it will make accounting policy elections to 1) treat shipping and handling activities that occur after the customer obtains control of the goods as fulfillment costs and 2) exclude sales (and similar) taxes from the measurement of the transaction price. We have no open contracts as of September 30, 2018, there will be no cumulative effect of applying the new standards. Based on the revenue streams for year ended September 30, 2018, we do not expect the adoption of these ASUs to have a material impact on our consolidated financial statements.

● In August 2018, the FASB issued ASU 2018-13, Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in this standard will remove, modify and add certain disclosures under ASC Topic 820, Fair Value Measurement, with the objective of improving disclosure effectiveness. For public business entities, this ASU should be effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2019. The transition requirements are dependent upon each amendment within this update and will be applied either prospectively or retrospectively. The Company does not expect ASU 2018-13 to have a material impact to the Company’s consolidated financial statements.

The Company believes that other recent accounting pronouncement updates will not have a material effect on the Company’s consolidated financial statements.

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ORGANIZATION AND PRINCIPAL ACTIVITIES (Tables)

12 Months Ended

Sep. 30, 2018

Organization, Consolidation and Presentation Of Financial Statements [Abstract]

Schedule Of Subsidiaries and Variable Interest Entities [Table Text Block]

As of September 30, 2018, the Company’s subsidiaries and variable interest entities included in continuing operations consisted of the following:

	Date of	Place of	Percentage
	Incorporation	Incorporation	of			Principal
Name	or Establishment	or Establishment	Ownership			Activity
Subsidiaries:
State Harvest Holdings Limited(“State Harvest”)	October 6, 2004	British Virgin Islands		100	%	Investment Holding
Beijing Origin State Harvest Biotechnology Limited (“BioTech”)	December 1, 2004	People’s Republic of China (“PRC”)		100	%	Hybrid seed technology development
Origin Agritech USA LLC (“Origin USA”)	August 12, 2016	United States of America (“USA”)		100	%	Hybrid seed  technology development
Beijing State Harvest Zhongying Network Technology Limited  (“Zhongying Network”)	April 27, 2018	PRC		100	%	Selling agricultural seed products, other agricultural inputs, foods, household products, and other consumer products on e-commerce platform
Variable interest entity:
Beijing Origin Seed Limited (note (i)) (“Beijing Origin”)	December 26, 1997	PRC		-		Hybrid crop seed development, production and distribution
Subsidiaries held by Beijing Origin:
Henan Origin Cotton Technology Development Limited (note (i)) (“Henan Cotton”)	March 2, 2001	PRC		92.04	%	Hybrid crop seed development, production and distribution
Xinjiang Originbo Seed Company Limited (note (i)) (“Xinjiang Origin”)	July 13, 2011	PRC		51	%	Hybrid crop seed development, production and distribution
Henan Aoyu Zhongye Limited (note (i)) (“Aoyu Zhongye”)	July 16, 2018	PRC		51	%	Agricultural seed products distribution through e-commune network

Note (i): Beijing Origin Seed Limited, Henan Origin Cotton Technology Development Limited, Xinjiang Originbo Seed Company Limited, Zhengzhou Branch of Beijing Origin Seed Limited and Aoyu Zhongye are collectively referred to as “Beijing Origin”.

Schedule of Variable Interest Entities [Table Text Block]

The Company has aggregated the financial information of Beijing Origin and its subsidiaries in the table below. The aggregated carrying amount of assets and liabilities of Beijing Origin and its subsidiaries after elimination of intercompany transactions and balances consolidated in the Company’s consolidated balance sheets as of September 30, 2017 and 2018 are as follows: 

Risks in relation to the VIE structure

	September 30,
	2017		2018		2018
	RMB		RMB		US$
ASSETS
Current Assets
Cash and cash equivalents		2,848		1,826		265
Due from related party		33,300		129,506		18,826
Accounts receivable		24		-		-
Advances to suppliers		5,293		1,188		173
Inventories		41,914		81,903		11,906
Other current assets		1,306		213		31
Total current assets		84,685		214,636		31,201
Land use rights, net		19,108		16,564		2,408
Plant and equipment, net		177,282		172,760		25,113
Equity investments		18,721		16,347		2,376
Acquired intangible assets, net		8,585		2,024		294
Other assets		4,196		1,202		175
Total assets		312,577		423,533		61,567
LIABILITIES
Current liabilities
Short-term borrowings		15,000		-		-
Current portion of long-term borrowings		35,504		78,235		11,373
Accounts payable		1,451		7,952		1,156
Due to growers		6,535		7,984		1,161
Due to related parties		10,000		291,882		42,430
Advances from customers		1,866		5,959		866
Other payables and accrued expenses		30,454		37,295		5,421
Current liabilities of discontinued operations		22,640		-		-
Total current liabilities		123,450		429,307		62,407
Long-term borrowings		56,769		-		-
Other long-term liability		20,468		21,278		3,093
Total liabilities		200,687		450,585		65,500

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

12 Months Ended

Sep. 30, 2018

Accounting Policies [Abstract]

Estimated Useful Lives Of Assets [Table Text Block]

Depreciation is calculated on a straight-line basis over the following estimated useful lives:

Plant and building	20-40 years
Machinery and equipment	10-15 years
Furniture and office equipment	5-8 years
Motor vehicles	5-10 years
Leasehold improvements	Shorter of the useful lives or the lease term

Estimated Useful Lives Of Intangible Assets [Table Text Block]

Amortization is calculated on a straight-line basis over the following estimated useful lives for the main acquired intangible assets:

Technology rights for licensed seeds	3-20 years
Distribution network	6-14 years
Trademark	Indefinite

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RELATED PARTY BALANCES AND TRANSACTIONS (Tables)

12 Months Ended

Sep. 30, 2018

Related Party Transactions [Abstract]

Schedule Of Related Party Relationships [Table Text Block]

(1) Related party relationships

Name of related parties	Relationship
Beijing Shihui	Being owned by close family members of the Company's Chairman
Zhangye Shihui	Being owned by close family members of the Company's Chairman
Xinjiang Ginbo Seeds Center	Being the non-controlling interest of Xinjiang Origin
Jilin Jinong Hi-tech Development Shares Co.,Ltd.("Jinong")	Being long-term investment of the Company (note 10)
Henan Agricultural University	Being the non-controlling interest of Beijing Origin
Linze Origin Seeds Ltd	Being owned by close family members of the Company's Chairman
De Nong Zheng Cheng Seed Limited	Being owned by close family members of the Company's Chairman
Beijing Origin Zhengzhou Branch("Zhengzhou Branch")	Being controlled by close family members of the Company's Chairman from August 16, 2017 to September 21, 2018

Schedule Of Amounts Due From Related Parties [Table Text Block]

(1) Due from related parties

	September 30,
	2017		2018
	RMB		RMB
Beijing Shihui (i)		55,940		-
De Nong Zheng Cheng Seed Limited		-		129,506
		55,940		129,506

Note (i): Balance due from Shihui as of September 30, 207 mainly consisted of receivables of RMB38,200 related to disposal of the commercial seed business and working capital loan of RMB17,740.

Schedule Of Amounts Due To Related Parties [Table Text Block]

(2) Due to related parties

	September 30,
	2017		2018
	RMB		RMB
Beijing Shihui		-		137,811
Zhangye Shihui		-		10,000
Linze Origin Seeds Limited		-		123,579
Henan Agriculture University		-		1,000
Xinjiang Ginbo Seeds Center (i)		10,000		10,000
Companies controlled by the Company’s directors		1,576		1,634
The Company’s Chairman		-		9,692
Ex-shareholders		16		16
		11,592		293,732

Note (i): Xinjiang Origin has received a cash advance of RMB10,000 from Xinjiang Ginbo Seeds Center during the year ended September 30, 2016, which is unsecured, interest-free and repayable on demand.

Schedule of Related Party Transactions [Table Text Block]

(3) Transactions with related parties

(a) Sales to

	Year ended September 30,
	2016		2017		2018
	RMB		RMB		RMB
Linze Origin Seeds Limited		-		-		45
Zhengzhou Branch		-		-		7,803
		-		-		7,848

(b) Technology usage fees charged by

	Year ended September 30,
	2016		2017		2018
	RMB		RMB		RMB
Henan Agriculture University		1,000		-		-

The above amounts related to technology usage fees paid to certain related party for the exclusive right to use certain seed technologies.

(c) Rental income received from

	Year ended September 30,
	2016		2017		2018
	RMB		RMB		RMB
Beijing Shihui		250		-		-

(d) Service income received from

	Year ended September 30,
	2016		2017		2018
	RMB		RMB		RMB
Beijing Shihui		-		396		-

(e) Service fee charged by

	Year ended September 30,
	2016		2017		2018
	RMB		RMB		RMB
Beijing Shihui		-		600		-

(f) License usage fees charged to

	Year ended September 30,
	2016		2017		2018
	RMB		RMB		RMB
Beijing Shihui		-		-		1,575

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DISCONTINUED OPERATIONS (Tables)

12 Months Ended

Sep. 30, 2018

Discontinued Operations and Disposal Groups [Abstract]

Results Of Operations Reclassified From Discontinued Operations [Table Text Block]

Results of operations reclassified from discontinued operations to continued operations for the fiscal years 2016 and 2017:

	Year ended September 30,
	2016			2017
	RMB			RMB
Revenues		-			871
Cost of revenues		-			(679	)
Gross profit		-			192
Operating expenses
General and administrative		(1,188	)		(1,188	)
Total operating expenses, net		(1,188	)		(1,188	)
Impairment loss		-			(44,706	)
Loss before income taxes		(1,188	)		(45,702	)
Net Loss		(1,188	)		(45,702	)

Schedule Of Assets And Liabilities Reclassified To Continued Operations [Table Text Block]

Assets and liabilities reclassified from discontinued operations to continued operations:

	September 30,
	2017
	RMB
Assets
Accounts receivable		24
Inventories		22,003
Total current assets		22,027
Land use rights, net		5,258
Plant and equipment, net		32,484
Non-current assets		37,742
Total assets		59,769
Liabilities
Due to growers		6,535
Advances from customers		1,866
Total liabilities		8,401

Disposal Groups, Including Discontinued Operations [Table Text Block]

Results of discontinued operations are summarized as follows:

	Year ended September 30,
	2016			2017			2018		2018
	RMB			RMB			RMB		US$
Revenues		334,770			234,952			-		-
Cost of revenues		(259,253	)		(171,501	)		-		-
Gross profit		75,517			63,451			-		-
Operating expenses
Selling and marketing		(38,079	)		(21,149	)		-		-
General and administrative		(29,185	)		(16,414	)		-		-
Research and development		(2,760	)		(659	)		-		-
Other (expense) income, net		(1,301	)		360			-		-
Total operating expenses, net		(71,325	)		(37,862	)		-		-
Income from discontinued operations		4,192			25,589			-		-
Interest expense		(6,644	)		(5,480	)		-		-
Interest income		93			34			-		-
Impairment on plant and equipment and inventories		-			-			-		-
(Loss) income before income taxes from discontinued operations		(2,359	)		20,143			-		-
Income tax expense from discontinued operations
Current		(1,436	)		(1,281	)		-		-
Deferred		-			-			-		-
Income tax expenses from discontinued operations		(1,436	)		(1,281	)		-		-
Loss on disposal of commercial seed business		-			(3,282	)		-		-
Net (loss) income from discontinued operations		(3,795	)		15,580			-		-
Less: Net (loss) income attributable to non-controlling interests		(481	)		821			-		-
Net income (loss) from discontinued operations attributable to Origin Agritech Ltd.		(3,314	)		14,759			-		-

Liabilities from discontinued operations are summarized as follows:

	September 30,
	2017		2018		2018
	RMB		RMB		US$
Liabilities of discontinued operations
Due to related parties		22,640		-		-
Total liabilities of discontinued operations		22,640		-		-

The Company has combined cash flows from discontinued operations with cash flows from continuing operations within the operating, investing and financing categories within the consolidated statement of cash flows. Cash and non-cash items for certain operating and investing activities related to discontinued operations for the years ended September 30, 2016, 2017 and 2018 are as follows: 

	Year Ended September 30
	2016		2017		2018		2018
	RMB		RMB		RMB		US$
Depreciation and amortization		11,295		11,295		-		-
Asset impairment		26,941		-		-		-
Capital expenditures		2,510		-		-		-

Related party transactions that are reported in discontinued operations are as follows:

(1) Due to related parties

	Year ended September 30,
	2017		2018
	RMB		RMB
Beijing Shihui		22,640		-

(2) Sales to related parties

	Year ended September 30,
	2016		2017		2018
	RMB		RMB		RMB
Beijing Shihui		102,234		183,487		-

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ADVANCES TO SUPPLIERS (Tables)

12 Months Ended

Sep. 30, 2018

Advances To Suppliers [Abstract]

Schedule Of Prepaid Expenses and Other Assets [Table Text Block]

Advances to suppliers consist of the following:

	September 30,
	2017		2018
	RMB		RMB
Prepayments for advertisement		2,206		-
Prepayments for testing fee		719		140
Deposits for research and development fee		207		207
Prepayments for professional fee		200		-
Others		1,966		841
		5,298		1,188

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INVENTORIES (Tables)

12 Months Ended

Sep. 30, 2018

Inventory Disclosure [Abstract]

Schedule of Inventory, Current [Table Text Block]

Inventories consist of the following:

	September 30,
	2017			2018
	RMB			RMB
Low value supplies		925			2,063
Parent seeds		298			81
Work in progress		40,836			85,035
Provision		(18,833	)		(5,232	)
		23,226			81,947

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OTHER CURRENT ASSETS (Tables)

12 Months Ended

Sep. 30, 2018

Other Current Assets [Abstract]

Schedule of Other Current Assets [Table Text Block]

Other current assets consist of the following:

	September 30,
	2017		2018
	RMB		RMB
Advances to staff for business use		1,249		119
Deposits for rental		3		7
Others		74		121
		1,326		247

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LAND USE RIGHTS, NET (Tables)

12 Months Ended

Sep. 30, 2018

Land Use Rights [Abstract]

Schedule of Finite-Lived Intangible Assets [Table Text Block]

Land use rights, net consist of the following:

	September 30,
	2017			2018
	RMB			RMB
Land use rights		24,757			22,275
Accumulated amortization		(5,649	)		(5,711	)
Land use rights, net		19,108			16,564

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PLANT AND EQUIPMENT, NET (Tables)

12 Months Ended

Sep. 30, 2018

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment [Table Text Block]

Plant and equipment, net consist of the following:

	September 30,
	2017			2018
	RMB			RMB
Plant and building		171,799			162,507
Machinery and equipment		92,470			101,543
Furniture and office equipment		12,392			12,367
Motor vehicles		4,777			3,591
Total		281,438			280,008
Accumulated depreciation		(79,759	)		(85,600	)
Accumulated impairment		(25,873	)		(25,873	)
Construction in progress		1,511			4,213
Plant and equipment, net		177,317			172,748

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LONG TERM INVESTMENTS (Tables)

12 Months Ended

Sep. 30, 2018

Equity Method Investments and Joint Ventures [Abstract]

Schedule of Investments in and Advances to Affiliates, Schedule of Investments [Table Text Block]

Equity investments consist of the following:

	September 30,
	2017		2018
	RMB		RMB
Cost method investment		18,721		18,721
Impairment on cost method investment		-		(2,374	)
Cost method investment		18,721		16,347

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ACQUIRED INTANGIBLE ASSETS, NET (Tables)

12 Months Ended

Sep. 30, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Acquired Finite-Lived Intangible Assets by Major Class [Table Text Block]

Acquired intangible assets, net consist of the following:

	September 30,
	2017			2018
	RMB			RMB
Technology rights for licensed seeds		75,899			75,899
Others		4,739			4,739
		80,638			80,638
Accumulated amortization		(61,862	)		(67,806	)
Impairment provision		(3,037	)		(4,470	)
Acquired intangible assets, net		15,739			8,362

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]

Amortization expense on these intangible assets for each of the next five years is as follows:

Year ending September 30,	RMB
2019		2,034
2020		1,058
2021		832
2022		795
2023		782
Total		5,501

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OTHER ASSETS (Tables)

12 Months Ended

Sep. 30, 2018

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Schedule of Other Assets [Table Text Block]

Other assets consist of the following:

	September 30,
	2017		2018
	RMB		RMB
Prepaid lease		1,196		1,202
Guarantee fund for long-term borrowing		3,000		-
		4,196		1,202

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BORROWINGS (Tables)

12 Months Ended

Sep. 30, 2018

Debt Disclosure [Abstract]

Schedule of Debt [Table Text Block]

Borrowings consisted of the following:

	September 30,
	2017		2018
	RMB		RMB
Borrowing from Bank of Communications under Zhengzhou Branch, originally due on May 18, 2017 and extended to November 18, 2017 with annual interest rate of 5.87% and 6.41% at September 30, 2016 and 2017, respectively, secured by Zhengzhou Branch’s plant and equipment and is guaranteed by the Chairman of the Company, fully repaid on January 8, 2018		15,000		-
Short-term borrowings		15,000		-
Borrowing from Shanghai Pudong Development Bank under Beijing Origin, due on December 8, 2017 with annual interest rate of 6.18%, guaranteed by the Company’s chairman, fully paid on December 27, 2017		20,000		-
Borrowing from Beijing Agriculture Finance Leasing, LLC.(“BAFL”) under Beijing Origin, payable on installment, due on December 29 , 2020 with annual interest rate of 6%, secured by Beijing’s properties and land use right *		72,273		78,235
Long-term borrowings		92,273		78,235
Current portion of long-term borrowings		35,504		78,235
Non-current portion of long-term borrowings		56,769		-

* Beijing Origin did not make any principal payments for the borrowing. Beijing Origin entered into negotiations with BAFL regarding modification of payment schedule. As of the date of this report, there is no formed agreements signed regarding modification of payment schedule. As of September 30, 2018, the Company reclassified the borrowing as current liability in consolidated balance sheets result from the default.

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OTHER PAYABLES AND ACCRUED EXPENSES (Tables)

12 Months Ended

Sep. 30, 2018

Payables and Accruals [Abstract]

Schedule of Accounts Payable and Accrued Liabilities [Table Text Block]

Other payables and accrued expenses consist of:

	September 30,
	2017		2018
	RMB		RMB
Payable for purchase of plant and equipment		69		470
Payable for purchase of construction-in-progress		5,346		7,989
Professional fee payable		6,741		8,578
Salaries and bonus payable		8,537		9,272
Accrued interest		390		390
Deposits from others		652		665
Payable for labor union, housing fund and education expenses		488		1,399
Deferred government subsidies		4,782		7,649
Others		4,173		1,515
		31,178		37,927

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STOCK-BASED COMPENSATION (Tables)

12 Months Ended

Sep. 30, 2018

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]

A summary of the share option activity under the 2005, 2009 and 2014 Plans is as follows:

	Tranche			Tranche			Tranche		Tranche		Tranche			Tranche		Tranche		Tranche		Tranche		Tranche		Tranche		Tranche		Tranche
	7			8			9		10		11			12		13		14		15		16		17		18		19
Grant date	January 3,			January 2,			January 2,		January 2,		January 4,			April 19,		May 16,		August 3,		January 3,		October 2,		December 22,		January 2,		March 1,
	2012			2013			2014		2015		2016			2016		2016		2016		2017		2017		2017		2018		2018
Options outstanding as of September 30, 2016		13,500			35,500			34,500		19,500		18,500			60,000		20,000		20,000		-		-		-		-		-
Number of options granted		-			-			-		-		-			-		-		-		18,000		-		-		-		-
Options exercised		(500	)		-			-		-		(5,000	)		-		-		-		-		-		-		-		-
Options cancelled/expired		(13,000	)		-			-		-		-			-		-		-		-		-		-		-		-
Outstanding as of September 30, 2017		-			35,500			34,500		19,500		13,500			60,000		20,000		20,000		18,000		-		-		-		-
Number of options granted		-			-			-		-		-			-		-		-		-		2,500		8,800		29,000		20,000
Options exercised		-			-			-		-		-			-		-		-		-		-		-		-		-
Options cancelled/expired		-			(35,500	)		-		-		-			-		-		-		-		-		-		-		-
Outstanding as of September 30, 2018		-			-			34,500		19,500		13,500			60,000		20,000		20,000		18,000		2,500		8,800		29,000		20,000
Options vested and exercisable
At September 30, 2017		-			35,500			34,500		19,500		13,500			60,000		20,000		20,000		18,000		-		-		-		-
At September 30, 2018		-			-			34,500		19,500		13,500			60,000		20,000		20,000		18,000		2,500		8,800		29,000		20,000
Weighted average fair value at the grant date (US$)		14.5			7.6			6.5		7.5		9.0			15.4		12.4		14.4		4.0		7.7		4.4		5.1		5.1

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

The fair value of each option granted is estimated on the date of grant using the Black-Scholes Option Pricing Model:

	Tranche			Tranche			Tranche			Tranche			Tranche			Tranche			Tranche			Tranche			Tranche			Tranche			Tranche			Tranche			Tranche
	7			8			9			10			11			12			13			14			15			16			17			18			19
Exercise price (US$)		25.5			14.4			12.7			14.8			13.8			20.5			16.5			20.0			20.7			16.5			8.0			9.1			8.2
Average risk-free interest rate		0.4	%		0.37	%		0.76	%		1.07	%		1.73	%		1.79	%		1.75	%		1.55	%		1.94	%		1.94	%		2.26	%		2.25	%		2.58	%
Expected option life (year)		3			3			3			3			5			10			10			10			5			5			5			5			5
Volatility rate		90.3	%		86.32	%		79.2	%		79.67	%		80.72	%		69.27	%		69.92	%		65.37	%		63.87	%		52.40	%		63.2	%		64.6	%		68.2	%
Dividend yield		-			-			-			-			-			-			-			-			-			-			-			-			-

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INCOME TAXES (Tables)

12 Months Ended

Sep. 30, 2018

Income Tax Disclosure [Abstract]

Schedule of Deferred Tax Assets and Liabilities [Table Text Block]

The principal components of the deferred income tax assets are as follows:

	September 30,
	2017			2018
	RMB			RMB
Non-current deferred tax assets:
Net operating loss carry forward		39,578			94,750
Impairment on inventory		5,626			1,822
Impairment on long-term equity investment		-			356
Others		(20,252	)		4,644
Non-current deferred income tax assets		24,952			101,572
Valuation allowances		(24,952	)		(101,572	)
Net non-current deferred income tax assets		-			-

Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]

Reconciliation between total income tax expenses and the amount computed by applying the statutory income tax rate to income before taxes is as follows:

	Year ended September 30,
	2016			2017			2018
		%			%			%
Statutory rate		25			25			25
Effect of preferential tax treatment		(8	)		3			(3	)
Effect of different tax jurisdiction		(6	)		-			-
Change in valuation allowance		(2	)		(27	)		(26	)
Over provision in prior year		(9	)		(1	)		4
Effective income tax rate		-			-			-

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INCOME/(LOSS) PER SHARE (Tables)

12 Months Ended

Sep. 30, 2018

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

The following table sets forth the computation of basic and diluted loss per share for the years indicated:

	Year ended September 30,
	2016			2017			2018
	RMB			RMB			RMB
Numerator:
Net loss from continuing operations attributable to Origin Agritech Limited		(62,264	)		(90,433	)		(153,663	)
Net income (loss) from discontinued operations attributable to Origin Agritech Limited		(3,314	)		14,759			-
Net loss attributable to Origin Agritech Limited		(65,578	)		(75,674	)		(153,663	)
Denominator:
Average common stock outstanding - basic		2,759,834			2,808,293			3,061,979
Dilutive effect of share options		-			-			-
Diluted shares		2,759,834			2,808,293			3,061,979
Basic and Diluted Per Share Data:
Basic and diluted loss per share attributable to Origin Agritech Limited:
Continuing operations		(22.56	)		(32.20	)		(50.18	)
Discontinued operations		(1.20	)		5.25			-
		(23.76	)		(26.95	)		(50.18	)

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COMMITMENTS AND CONTINGENCIES (Tables)

12 Months Ended

Sep. 30, 2018

Commitments and Contingencies Disclosure [Abstract]

Long-term Purchase Commitment [Table Text Block]

As of September 30, 2017 and 2018, capital commitments for the purchase of long-term assets are as follows:

	September 30,
	2017		2018
	RMB		RMB
Equipment		2,702		-
		2,702		-

Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block]

As of September 30, 2018, the Company was obligated under operating leases requiring minimum rental as follows:

Year ending September 30,	RMB
2019		905
2020		548
2021		516
2022		500
2023		422
Thereafter		3,793
		6,684

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CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY (Tables)

12 Months Ended

Sep. 30, 2018

Condensed Financial Information Of Parent Company Only Disclosure [Abstract]

Schedule of Condensed Balance Sheet [Table Text Block]

CONDENSED BALANCE SHEET

	September 30
	2017			2018			2018
	RMB			RMB			US$
ASSETS (LIABILITIES)
Current assets (liabilities)
Cash and cash equivalents		17			47			7
Other receivables		3			4			1
Due from inter-companies		109,321			132,842			19,311
Due to related parties		(1,576	)		(1,634	)		(240	)
Total current assets (liabilities)		107,765			131,259			19,079
Investment in unconsolidated subsidiaries		4,544			(155,970	)		(22,673	)
Total assets (liabilities)		112,309			(24,711	)		(3,594	)
AND EQUITY
Total stockholders’ equity		112,309			(24,711	)		(3,594	)

Schedule of Comprehensive Income (Loss) [Table Text Block]

CONDENSED STATEMENT OF INCOME AND COMPREHENSIVE INCOME

	Year ended September 30,
	2016			2017			2018			2018
	RMB			RMB			RMB			US$
Revenues		204			-			-			-
Operating expenses
General and administrative		(16,035	)		(3,016	)		(5,147	)		(748	)
Loss from operations		(15,831	)		(3,016	)		(5,147	)		(748	)
Equity method loss		(49,009	)		(72,491	)		(148,514	)		(21,589	)
Interest expense		(738	)		(167	)		(2	)		-
Loss before income taxes		(65,578	)		(75,674	)		(153,663	)		(22,337	)
Income tax expense		-			-			-			-
Net loss		(65,578	)		(75,674	)		(153,663	)		(22,337	)
Other comprehensive loss
Foreign currency translation difference		(4,124	)		(7,644	)		(3,315	)		(482	)
Total comprehensive loss		(69,702	)		(83,318	)		(156,978	)		(22,819	)

Schedule of Condensed Cash Flow Statement [Table Text Block]

CONDENSED STATEMENT OF CASH FLOWS

	Year ended September 30,
	2016			2017			2018			2018
	RMB			RMB			RMB			US$
Net cash provided by (used in) operating activities		(20,009	)		20,456			3,345			486
Net cash provided by (used in) financing activities		14,881			(13,376	)		-			-
Net increase (decrease) in cash and cash equivalents		(5,128	)		7,080			3,345			486
Cash and cash equivalents, beginning of year		341			581			17			2
Effect of exchange rate changes on cash and cash equivalents		5,368			(7,644	)		(3,315	)		(482	)
Cash and cash equivalents, end of year		581			17			47			6

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ORGANIZATION AND PRINCIPAL ACTIVITIES (Details)	12 Months Ended
	Sep. 30, 2018
Entity Incorporation, Place of Incorporation or Establishment	PRC	[1]
Principal Activity	Hybrid crop seed development, production and distribution	[1]
Beijing Origin Seed Limited [Member]
Entity Incorporation, Date of Incorporation or Establishment	Dec. 26, 1997	[1]
Entity Incorporation, Place of Incorporation or Establishment	PRC	[1]
Percentage of Ownership	0.00%	[1]
Principal Activity	Hybrid crop seed development, production and distribution	[1]
Henan Origin Cotton Technology Development Limited [Member]
Entity Incorporation, Date of Incorporation or Establishment	Mar. 02, 2001	[1]
Entity Incorporation, Place of Incorporation or Establishment	PRC	[1]
Percentage of Ownership	92.04%	[2]
Principal Activity	Hybrid crop seed development, production and distribution	[1]
Xinjiang Originbo Seed Company Limited [Member]
Entity Incorporation, Date of Incorporation or Establishment	Jul. 13, 2011	[1]
Entity Incorporation, Place of Incorporation or Establishment	PRC	[1]
Percentage of Ownership	51.00%	[2]
Principal Activity	Hybrid crop seed development, production and distribution	[1]
Henan Aoyu Zhongye Limited [Member]
Entity Incorporation, Date of Incorporation or Establishment	Jul. 16, 2018	[1]
Entity Incorporation, Place of Incorporation or Establishment	PRC	[1]
Percentage of Ownership	51.00%	[1]
Principal Activity	Agricultural seed products distribution through e-commune network	[1]
State Harvest Holdings Limited [Member]
Entity Incorporation, Date of Incorporation or Establishment	Oct. 06, 2004
Entity Incorporation, Place of Incorporation or Establishment	British Virgin Islands
Percentage of Ownership	100.00%
Principal Activity	Investment Holding
Beijing Origin State Harvest Biotechnology Limited [Member]
Entity Incorporation, Date of Incorporation or Establishment	Dec. 01, 2004
Entity Incorporation, Place of Incorporation or Establishment	People's Republic of China ("PRC")
Percentage of Ownership	100.00%
Principal Activity	Hybrid seed technology development
Origin Agritech USA LLC [Member]
Entity Incorporation, Date of Incorporation or Establishment	Aug. 12, 2016
Entity Incorporation, Place of Incorporation or Establishment	United States of America ("USA")
Percentage of Ownership	100.00%
Principal Activity	Hybrid seed technology development
Beijing State Harvest Zhongying Network Technology Limited [Member]
Entity Incorporation, Date of Incorporation or Establishment	Apr. 27, 2018
Entity Incorporation, Place of Incorporation or Establishment	PRC
Percentage of Ownership	100.00%
Principal Activity	Selling agricultural seed products, other agricultural inputs, foods, household products, and other consumer products on e-commerce platform

[1] Beijing Origin Seed Limited, Henan Origin Cotton Technology Development Limited, Xinjiang Originbo Seed Company Limited, Zhengzhou Branch of Beijing Origin Seed Limited and Aoyu Zhongye are collectively referred to as “Beijing Origin”.

[2] Beijing Origin did not make any principal payments for the borrowing. Beijing Origin entered into negotiations with BAFL regarding modification of payment schedule. As of the date of this report, there is no formed agreements signed regarding modification of payment schedule. As of September 30, 2018, the Company reclassified the borrowing as current liability in consolidated balance sheets result from the default.

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ORGANIZATION AND PRINCIPAL ACTIVITIES (Details 1) ¥ in Thousands, $ in Thousands	Sep. 30, 2018 CNY (¥)	Sep. 30, 2018 USD ($)	Sep. 30, 2017 CNY (¥)	Sep. 30, 2017 USD ($)	Sep. 30, 2016 CNY (¥)	Sep. 30, 2015 CNY (¥)
Current assets:
Cash and cash equivalents	¥ 1,990	$ 289	¥ 3,245	$ 472	¥ 54,509	¥ 66,025
Due from related party	129,506	18,826	55,940
Accounts receivable	0	0	24
Advances to suppliers	1,188	173	5,298
Inventories	81,947	11,912	23,226
Other current assets	247	33	1,326
Total current assets	214,878	31,233	89,059
Land use rights, net	16,564	2,408	19,108
Plant and equipment, net	172,748	25,112	177,317
Acquired intangible assets, net	8,362	1,216	15,739
Other assets	1,202	175	4,196
Total assets	430,101	62,520	324,140
Current liabilities
Short-term borrowings	0	0	15,000
Current portion of long-term borrowings	78,235	11,373	35,504
Accounts payable	7,955	1,156	1,454
Due to growers	7,984	1,161	6,535
Due to related parties	293,732	42,699	11,592
Advances from customers	6,338	921	1,866
Other payables and accrued expenses	37,927	5,513	31,178
Current liabilities of discontinued operations	0	0	22,640
Total current liabilities	432,171	62,823	134,104
Long-term borrowings	0	0	56,769
Other long-term liability	21,278	3,093	20,468
Total liabilities	453,449	65,916	211,341
Variable Interest Entity [Member]
Current assets:
Cash and cash equivalents	1,826	265	2,848
Due from related party	129,506	18,826	33,300
Accounts receivable	0	0	24
Advances to suppliers	1,188	173	5,293
Inventories	81,903	11,906	41,914
Other current assets	213	31	1,306
Total current assets	214,636	31,201	84,685
Land use rights, net	16,564	2,408	19,108
Plant and equipment, net	172,760	25,113	177,282
Equity investments	16,347	2,376	18,721
Acquired intangible assets, net	2,024	294	8,585
Other assets	1,202	175	4,196
Total assets	423,533	61,567	312,577
Current liabilities
Short-term borrowings	0	0	15,000
Current portion of long-term borrowings	78,235	11,373	35,504
Accounts payable	7,952	1,156	1,451
Due to growers	7,984	1,161	6,535
Due to related parties	291,882	42,430	10,000
Advances from customers	5,959	866	1,866
Other payables and accrued expenses	37,295	5,421	30,454
Current liabilities of discontinued operations	0	0	22,640
Total current liabilities	429,307	62,407	123,450
Long-term borrowings	0	0	56,769
Other long-term liability	21,278	3,093	20,468
Total liabilities	¥ 450,585	$ 65,500	¥ 200,687

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ORGANIZATION AND PRINCIPAL ACTIVITIES (Details Textual) ¥ in Thousands, $ in Thousands	1 Months Ended	12 Months Ended
	Dec. 31, 2004	Sep. 30, 2018 CNY (¥)	Sep. 30, 2018 USD ($)	Sep. 30, 2017 CNY (¥)	Sep. 30, 2016 CNY (¥)
Variable Interest Entity, Consolidated, Carrying Amount, Assets		¥ 37,415		¥ 42,978
Equity Method Investment, Ownership Percentage		49.00%
Revenues		¥ 12,927	$ 1,879	870	¥ 481
Continuing Operations [Member]
Revenues		¥ 12,833
Changchun Origin [Member]
Equity Method Investment, Ownership Percentage		100.00%
Denong [Member]
Equity Method Investment, Ownership Percentage		98.58%
Linze Origin [Member]
Equity Method Investment, Ownership Percentage		100.00%
Plant and Equipment [Member]
Variable Interest Entity, Consolidated, Carrying Amount, Assets		¥ 35,238		37,720
Land Use Rights [Member]
Variable Interest Entity, Consolidated, Carrying Amount, Assets		¥ 2,177		¥ 5,258
State Harvest Holdings Limited [Member]
Share Exchange Transaction Variable Interest Entity Voting Rights Assigned		97.96%	97.96%
Period Of Operations	20 years
Assets Disposed Of By Methods Other Than Sale In Period Of Disposition		50.00%	50.00%
State Harvest Holdings Limited [Member] | Criteria One [Member]
Equity Method Investment, Ownership Percentage		49.00%
State Harvest Holdings Limited [Member] | Criteria Two [Member]
Equity Method Investment, Ownership Percentage		49.00%
Beijing Origin Seed Limited [Member]
Variable Interest Entity Revenue Percentage		99.27%	99.27%	100.00%	99.86%
Variable Interest Entity Total Assets Percentage		98.47%	98.47%	96.43%

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details)	12 Months Ended
	Sep. 30, 2018
Leasehold improvements [Member]
Property, Plant and Equipment, Estimated Useful Lives	Shorter of the useful lives or the lease term
Maximum [Member] | Plant and building [Member]
Property, Plant and Equipment, Useful Life	40 years
Maximum [Member] | Machinery and equipment [Member]
Property, Plant and Equipment, Useful Life	15 years
Maximum [Member] | Furniture and office equipment [Member]
Property, Plant and Equipment, Useful Life	8 years
Maximum [Member] | Motor vehicles [Member]
Property, Plant and Equipment, Useful Life	10 years
Minimum [Member] | Plant and building [Member]
Property, Plant and Equipment, Useful Life	20 years
Minimum [Member] | Machinery and equipment [Member]
Property, Plant and Equipment, Useful Life	10 years
Minimum [Member] | Furniture and office equipment [Member]
Property, Plant and Equipment, Useful Life	5 years
Minimum [Member] | Motor vehicles [Member]
Property, Plant and Equipment, Useful Life	5 years

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1)	12 Months Ended
	Sep. 30, 2018
Maximum [Member] | Technology Rights [Member]
Finite-Lived Intangible Asset, Useful Life	20 years
Maximum [Member] | Distribution Rights [Member]
Finite-Lived Intangible Asset, Useful Life	14 years
Minimum [Member] | Technology Rights [Member]
Finite-Lived Intangible Asset, Useful Life	3 years
Minimum [Member] | Distribution Rights [Member]
Finite-Lived Intangible Asset, Useful Life	6 years

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Textual) ¥ in Thousands, $ in Thousands		1 Months Ended			12 Months Ended
	Aug. 26, 2018 shares	May 17, 2019 CNY (¥)	Oct. 16, 2018 USD ($) shares	Jun. 26, 2018 shares	Sep. 30, 2018 CNY (¥) $ / ¥ ¥ / $ shares	Sep. 30, 2018 USD ($)	Sep. 30, 2017 CNY (¥) shares	Sep. 30, 2016 CNY (¥)	Sep. 30, 2018 USD ($) $ / ¥ ¥ / $ shares	Jul. 10, 2018 shares
Foreign Currency Exchange Rate, Translation | $ / ¥					6.8792				6.8792
Government Subsidies Recognized					¥ 5,516		¥ 1,407	¥ 3,688
Selling and Marketing Expense					411	$ 60	0	0
Net Income (Loss), Including Portion Attributable To Noncontrolling Interest					(152,790)	(22,209)	(106,261)	(76,833)
Retained Earnings (Accumulated Deficit)					(411,723)		(258,060)		$ (59,850)
Working Capital Deficit					¥ 217,293		45,045
Equity Method Investment, Ownership Percentage					49.00%				49.00%
Due to Related Parties, Current					¥ 293,732		11,592		$ 42,699
Asset Impairment Charges					0	0	25,873	0
Cost-method Investments, Other than Temporary Impairment					¥ 2,374		¥ 0	0
Stock Issued During Period, Shares, Reverse Stock Splits | shares	2,700,000
Common Stock, Shares Authorized | shares					60,000,000		60,000,000		60,000,000	60,000,000
Reserve Stock Split Minimum Shares Applicability | shares				100
Share Holders Equity Reverse stock Split Description				1-for-10 reverse stock split
Impairment of Intangible Assets (Excluding Goodwill)					¥ 1,433	$ 208	¥ 0	0
Scenario, Forecast [Member]
Equity Method Investment, Ownership Percentage		49.00%
Beijing Origin Group [Member]
Impairment of Intangible Assets (Excluding Goodwill)					1,433
Dr Han Gengchen [Member]
Due to Related Parties, Current					9,692
Beijing Shihui [Member]
Due to Related Parties, Current					137,811
Xinjiang Ginbo Seeds Center [Member]
Due to Related Parties, Current					10,000
Zhangye Shihui Agricultural Development Co Ltd [Member]
Due to Related Parties, Current					10,000
Linze Origin Seeds Limited [Member]
Due to Related Parties, Current					¥ 123,579
Subsequent Event [Member]
Proceeds from (Repayments of) Debt		¥ 78,000
Beijing Changping Technology Innodevelop Group [Member] | Scenario, Forecast [Member]
Equity Method Investment, Ownership Percentage		51.00%
Funding By Coventurer		¥ 204
Maximum [Member]
Foreign Currency Exchange Rate, Translation | ¥ / $					6,879.2				6,879.2
Minimum [Member]
Foreign Currency Exchange Rate, Translation | ¥ / $					1.00				1.00
Research and Development [Member]
Government Subsidies Recognized					¥ 9,193		2,660
Advertising Expenses [Member]
Advertising Expense					0		521	3,237
Shipping Handling and Transportation Cost [Member]
Selling and Marketing Expense					¥ 400		¥ 1,604	¥ 2,055
Longhan and Tiger Fund [Member] | Subsequent Event [Member]
Stock Issued During Period, Shares, New Issues | shares			1,397,680
Proceeds from Issuance of Common Stock | $			$ 7,743,147

XML

RELATED PARTY BALANCES AND TRANSACTIONS (Details)	12 Months Ended
	Sep. 30, 2018
Jilin Jinong Hi-tech Development Shares Co., Ltd. ("Jinong") [Member]
Related Party Nature Of Relationship	Being long-term investment of the Company (note 10)
Henan Agriculture University [Member]
Related Party Nature Of Relationship	Being the non-controlling interest of Beijing Origin
Beijing Shihui [Member]
Related Party Nature Of Relationship	Being owned by close family members of the Company's Chairman
Zhangye Shihui [Member]
Related Party Nature Of Relationship	Being owned by close family members of the Company's Chairman
Xinjiang Ginbo Seeds Center [Member]
Related Party Nature Of Relationship	Being the non-controlling interest of Xinjiang Origin
Linze Origin Seeds Ltd [Member]
Related Party Nature Of Relationship	Being owned by close family members of the Company's Chairman
De Nong Zheng Cheng Seed Limited [Member]
Related Party Nature Of Relationship	Being owned by close family members of the Company's Chairman
Beijing Origin Zhengzhou Branch("Zhengzhou Branch") [Member]
Related Party Nature Of Relationship	Being controlled by close family members of the Company's Chairman from August 16, 2017 to September 21, 2018

XML

RELATED PARTY BALANCES AND TRANSACTIONS (Details 1) ¥ in Thousands, $ in Thousands		Sep. 30, 2018 CNY (¥)	Sep. 30, 2018 USD ($)	Sep. 30, 2017 CNY (¥)
Due From Related Parties, Current		¥ 129,506	$ 18,826	¥ 55,940
Beijing Shihui [Member]
Due From Related Parties, Current	[1]	0		55,940
De Nong Zheng Cheng Seed Limited [Member]
Due From Related Parties, Current		¥ 129,506		¥ 0

[1] Balance due from Shihui as of September 30, 207 mainly consisted of receivables of RMB38,200 related to disposal of the commercial seed business and working capital loan of RMB17,740.

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RELATED PARTY BALANCES AND TRANSACTIONS (Details 2) ¥ in Thousands, $ in Thousands		Sep. 30, 2018 CNY (¥)	Sep. 30, 2018 USD ($)	Sep. 30, 2017 CNY (¥)
Due to related parties		¥ 293,732	$ 42,699	¥ 11,592
Shijiazhuang Liyu Technology and Development Limited Liyu [Member]
Due to related parties		293,732		11,592
Henan Agriculture University [Member] | Shijiazhuang Liyu Technology and Development Limited Liyu [Member]
Due to related parties		1,000		0
Beijing Shihui [Member]
Due to related parties		137,811
Beijing Shihui [Member] | Shijiazhuang Liyu Technology and Development Limited Liyu [Member]
Due to related parties		137,811		0
Linze Origin Seeds Limited [Member] | Shijiazhuang Liyu Technology and Development Limited Liyu [Member]
Due to related parties		123,579		0
Xinjiang Ginbo Seeds Center [Member]
Due to related parties		10,000
Xinjiang Ginbo Seeds Center [Member] | Shijiazhuang Liyu Technology and Development Limited Liyu [Member]
Due to related parties	[1]	10,000		10,000
Companies controlled by the Company's directors [Member] | Shijiazhuang Liyu Technology and Development Limited Liyu [Member]
Due to related parties		1,634		1,576
Ex-shareholders of State Harvest [Member] | Shijiazhuang Liyu Technology and Development Limited Liyu [Member]
Due to related parties		16		16
The Companys Chairman [Member] | Shijiazhuang Liyu Technology and Development Limited Liyu [Member]
Due to related parties		9,692		0
Zhangye Shihui [Member] | Shijiazhuang Liyu Technology and Development Limited Liyu [Member]
Due to related parties		¥ 10,000		¥ 0

[1] (i): Xinjiang Origin has received a cash advance of RMB10,000 from Xinjiang Ginbo Seeds Center during the year ended September 30, 2016, which is unsecured, interest-free and repayable on demand.

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RELATED PARTY BALANCES AND TRANSACTIONS (Details 3) - CNY (¥) ¥ in Thousands	12 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2016
Related Party Transaction, Amounts of Transaction	¥ 7,848	¥ 0	¥ 1,000
Beijing Shihui Agriculture Ltd.
Related Party Transaction, Amounts of Transaction	0	0	250
Revenue from Related Parties	0	396	0
Service Fee Charged By Related Party	0	600	0
Beijing Shihui Agriculture Ltd. | License [Member]
Related Party Transaction, Amounts of Transaction	1,575	0	0
Linze Origin Seeds Ltd [Member]
Related Party Transaction, Amounts of Transaction	45	0	0
Zhengzhou Branch [Member]
Related Party Transaction, Amounts of Transaction	¥ 7,803	¥ 0	¥ 0

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RELATED PARTY BALANCES AND TRANSACTIONS (Details Textual) ¥ in Thousands, $ in Thousands		Sep. 30, 2018 CNY (¥)	Sep. 30, 2018 USD ($)	Sep. 30, 2017 CNY (¥)	Aug. 16, 2017 CNY (¥)	Sep. 26, 2016 CNY (¥)
Expected Cash Proceeds From Sale Of Business					¥ 421,000
Due From Related Parties, Current		¥ 129,506	$ 18,826	¥ 55,940
China-Based Commercial Corn Seed Production and Distribution Business [Member]
Expected Cash Proceeds From Sale Of Business						¥ 400,000
Beijing Shihui [Member]
Guarantees Provided		11,850
Due From Related Parties, Current	[1]	¥ 0		55,940
Beijing Shihui [Member] | Business Disposal Receivables [Member]
Due From Related Parties, Current				38,200
Beijing Shihui [Member] | Working Capital Loan Receivable [Member]
Due From Related Parties, Current				¥ 17,740

[1] Balance due from Shihui as of September 30, 207 mainly consisted of receivables of RMB38,200 related to disposal of the commercial seed business and working capital loan of RMB17,740.

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DISCONTINUED OPERATIONS (Details) ¥ in Thousands, $ in Thousands	12 Months Ended
	Sep. 30, 2018 CNY (¥)	Sep. 30, 2018 USD ($)	Sep. 30, 2017 CNY (¥)	Sep. 30, 2016 CNY (¥)
Revenues	¥ 0	$ 0	¥ 234,952	¥ 334,770
Cost of revenues	0	0	(171,501)	(259,253)
Gross profit	0	0	63,451	75,517
Operating expenses
General and administrative	0	0	16,414	29,185
Total operating expenses, net	0	0	37,862	71,325
Impairment loss	0	0	0	0
Loss before income taxes	0	0	20,143	(2,359)
Net Loss	¥ 0	$ 0	15,580	(3,795)
Reclassified To Continuing Operation [Member]
Revenues			871	0
Cost of revenues			(679)	0
Gross profit			192	0
Operating expenses
General and administrative			(1,188)	(1,188)
Total operating expenses, net			(1,188)	(1,188)
Impairment loss			(44,706)	0
Loss before income taxes			(45,702)	(1,188)
Net Loss			¥ (45,702)	¥ (1,188)

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DISCONTINUED OPERATIONS (Details 1) ¥ in Thousands, $ in Thousands	Sep. 30, 2018 CNY (¥)	Sep. 30, 2018 USD ($)	Sep. 30, 2017 CNY (¥)
Liabilities
Total liabilities	¥ 0	$ 0	¥ 22,640
Reclassified To Continuing Operation [Member]
Assets
Accounts receivable			24
Inventories			22,003
Total current assets			22,027
Land use rights, net			5,258
Plant and equipment, net			32,484
Non-current assets			37,742
Total assets			59,769
Liabilities
Due to growers			6,535
Advances from customers			1,866
Total liabilities			¥ 8,401

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DISCONTINUED OPERATIONS (Details 2) ¥ in Thousands, $ in Thousands	12 Months Ended
	Sep. 30, 2018 CNY (¥)	Sep. 30, 2018 USD ($)	Sep. 30, 2017 CNY (¥)	Sep. 30, 2016 CNY (¥)
Revenues	¥ 0	$ 0	¥ 234,952	¥ 334,770
Cost of revenues	0	0	(171,501)	(259,253)
Gross profit	0	0	63,451	75,517
Operating expenses
Selling and marketing	0	0	(21,149)	(38,079)
General and administrative	0	0	(16,414)	(29,185)
Research and development	0	0	(659)	(2,760)
Other (expense) income, net	0	0	360	(1,301)
Total operating expenses, net	0	0	(37,862)	(71,325)
Income from discontinued operations	0	0	25,589	4,192
Interest expense	0	0	(5,480)	(6,644)
Interest income	0	0	34	93
Impairment on plant and equipment and inventories	0	0	0	0
(Loss) income before income taxes from discontinued operations	0	0	20,143	(2,359)
Income tax expense from discontinued operations
Current	0	0	(1,281)	(1,436)
Deferred	0	0	0	0
Income tax expenses from discontinued operations	0	0	(1,281)	(1,436)
Loss on disposal of commercial seed business	0	0	(3,282)	0
Net (loss) income from discontinued operations	0	0	15,580	(3,795)
Less: Net (loss) income attributable to non-controlling interests	0	0	821	(481)
Net income (loss) from discontinued operations attributable to Origin Agritech Ltd.	¥ 0	$ 0	¥ 14,759	¥ (3,314)

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DISCONTINUED OPERATIONS (Details 3) ¥ in Thousands, $ in Thousands	Sep. 30, 2018 CNY (¥)	Sep. 30, 2018 USD ($)	Sep. 30, 2017 CNY (¥)
Liabilities of discontinued operations
Due to related parties	¥ 0	$ 0	¥ 22,640
Total liabilities of discontinued operations	¥ 0	$ 0	¥ 22,640

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DISCONTINUED OPERATIONS (Details 4) ¥ in Thousands, $ in Thousands	12 Months Ended
	Sep. 30, 2018 CNY (¥)	Sep. 30, 2018 USD ($)	Sep. 30, 2017 CNY (¥)	Sep. 30, 2016 CNY (¥)
Depreciation and amortization	¥ 0	$ 0	¥ 11,295	¥ 11,295
Asset impairment	0	0	0	0
Capital expenditures	¥ 0	$ 0	¥ 0	¥ 2,510

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DISCONTINUED OPERATIONS (Details 5) ¥ in Thousands, $ in Thousands	12 Months Ended
	Sep. 30, 2018 CNY (¥)	Sep. 30, 2017 CNY (¥)	Sep. 30, 2016 CNY (¥)	Sep. 30, 2018 USD ($)
Due to related parties	¥ 0	¥ 22,640		$ 0
Beijing Shihui [Member]
Due to related parties	0	22,640
Sales to related parties	¥ 0	¥ 183,487	¥ 102,234

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DISCONTINUED OPERATIONS (Details Textual) ¥ in Thousands, $ in Thousands	12 Months Ended
	Sep. 30, 2018 CNY (¥)	Sep. 30, 2018 USD ($)	Sep. 30, 2017 CNY (¥)	Sep. 30, 2016 CNY (¥)	Aug. 31, 2017 CNY (¥)	Aug. 16, 2017 CNY (¥)
Disposal Group, Including Discontinued Operation, Consideration					¥ 421,000
Equity Method Investment, Ownership Percentage	49.00%
Disposal Group Including Discontinued Operation, Consideration Allocated to Disposed Entities					347,085
Disposal Group Including Discontinued Operation, Consideration Allocated to Office Building					¥ 73,915
Proceeds from Divestiture of Businesses and Interests in Affiliates			¥ 45,400
Securities Loaned, Amount Offset Against Collateral			142,000
Notes Payable, Amount Offset Against Collateral			121,485
Discontinued Operation, Gain (Loss) on Disposal of Discontinued Operation, Net of Tax	¥ 0	$ 0	(3,282)	¥ 0
Deposits [Member]
Proceeds from Divestiture of Businesses and Interests in Affiliates			¥ 10,000
First Closing [Member] | Beijing Origin Seeds Limited [Member]
Subsidiary or Equity Method Investee, Cumulative Proceeds Receivable	221,000
Subsidiary or Equity Method Investee, Proceeds Receivable by cash	79,000
Subsidiary or Equity Method Investee, Proceeds to be Settled For Outstanding Payables	142,000
Second Closing [Member] | Beijing Origin Seeds Limited [Member]
Subsidiary or Equity Method Investee, Cumulative Proceeds Receivable By Cash	200,000
Subsidiary or Equity Method Investee, Proceeds to be Settled For Outstanding Payables	¥ 150,000
Minimum [Member]
Disposal Group, Including Discontinued Operation, Consideration						¥ 400,000
Maximum [Member]
Disposal Group, Including Discontinued Operation, Consideration						¥ 421,000
Denong [Member]
Equity Method Investment, Ownership Percentage	98.58%
Changchun Origin [Member]
Equity Method Investment, Ownership Percentage	100.00%
Linze Origin [Member]
Equity Method Investment, Ownership Percentage	100.00%

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ADVANCES TO SUPPLIERS (Details) ¥ in Thousands, $ in Thousands	Sep. 30, 2018 CNY (¥)	Sep. 30, 2018 USD ($)	Sep. 30, 2017 CNY (¥)
Prepayments for advertisement	¥ 0		¥ 2,206
Prepayments for testing fee	140		719
Deposits for research and development fee	207		207
Prepayments for professional fee	0		200
Others	841		1,966
Advances to suppliers	¥ 1,188	$ 173	¥ 5,298

XML

INVENTORIES (Details) ¥ in Thousands, $ in Thousands	Sep. 30, 2018 CNY (¥)	Sep. 30, 2018 USD ($)	Sep. 30, 2017 CNY (¥)
Work in progress	¥ 85,035		¥ 40,836
Provision	(5,232)		(18,833)
Inventories	81,947	$ 11,912	23,226
Low value supplies [Member]
Inventory, Gross	2,063		925
Parent seeds [Member]
Inventory, Gross	¥ 81		¥ 298

XML

INVENTORIES (Details Textual) - CNY (¥) ¥ in Thousands	12 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Provision	¥ (5,232)	¥ (18,833)
Provision For Inventories Written Off	¥ 13,601

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OTHER CURRENT ASSETS (Details) ¥ in Thousands, $ in Thousands	Sep. 30, 2018 CNY (¥)	Sep. 30, 2018 USD ($)	Sep. 30, 2017 CNY (¥)
Advances to staff for business use	¥ 119		¥ 1,249
Deposits for rental	7		3
Others	121		74
Other Assets, Current	¥ 247	$ 33	¥ 1,326

XML

LAND USE RIGHTS, NET (Details) ¥ in Thousands, $ in Thousands	Sep. 30, 2018 CNY (¥)	Sep. 30, 2018 USD ($)	Sep. 30, 2017 CNY (¥)
Land use rights	¥ 22,275		¥ 24,757
Accumulated amortization	(5,711)		(5,649)
Land use rights, net	¥ 16,564	$ 2,408	¥ 19,108

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LAND USE RIGHTS, NET (Details Textual) - CNY (¥) ¥ in Thousands	12 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2016
Amortization of Intangible Assets	¥ 5,944	¥ 6,153	¥ 6,637
Use Rights [Member]
Amortization of Intangible Assets	668	701	¥ 701
Assets Pledged As Collateral [Member]
Amortization of Intangible Assets	¥ 2,177	¥ 5,258

XML

PLANT AND EQUIPMENT, NET (Details) ¥ in Thousands, $ in Thousands	Sep. 30, 2018 CNY (¥)	Sep. 30, 2018 USD ($)	Sep. 30, 2017 CNY (¥)
Plant and building	¥ 162,507		¥ 171,799
Machinery and equipment	101,543		92,470
Furniture and office equipment	12,367		12,392
Motor vehicles	3,591		4,777
Total	280,008		281,438
Accumulated depreciation	(85,600)		(79,759)
Accumulated impairment	(25,873)		(25,873)
Construction in progress	4,213		1,511
Plant and equipment, net	¥ 172,748	$ 25,112	¥ 177,317

XML

PLANT AND EQUIPMENT, NET (Details Textual) - CNY (¥) ¥ in Thousands	12 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2016
Buildings and Improvements Gross Collateral To Bank Loan	¥ 35,238	¥ 37,720
Depreciation	¥ 9,840	¥ 13,305	¥ 8,805

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LONG TERM INVESTMENTS (Details) - CNY (¥) ¥ in Thousands	12 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2016
Cost method investment	¥ 18,721	¥ 18,721
Impairment on cost method investment	(2,374)	0	¥ 0
Cost method investment	¥ 16,347	¥ 18,721	¥ 18,721

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LONG TERM INVESTMENTS (Details Textual) ¥ in Thousands, $ in Thousands	12 Months Ended
	Sep. 30, 2018 CNY (¥)	Sep. 30, 2017 CNY (¥)	Sep. 30, 2017 USD ($)	Sep. 30, 2016 CNY (¥)	Sep. 30, 2016 USD ($)	Sep. 30, 2012
Equity Method Investment, Ownership Percentage	49.00%
Cost-method Investments, Other than Temporary Impairment | ¥	¥ 2,374	¥ 0		¥ 0
Jinong [Member]
Equity Method Investment, Ownership Percentage	17.94%					23.00%
Impairment Losses Other Than Temporary Relating To Investments [Member]
Cost-method Investments, Other than Temporary Impairment | $			$ 0		$ 0

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ACQUIRED INTANGIBLE ASSETS, NET (Details) ¥ in Thousands, $ in Thousands	Sep. 30, 2018 CNY (¥)	Sep. 30, 2018 USD ($)	Sep. 30, 2017 CNY (¥)
Acquired Finite Lived Intangible Asset Gross	¥ 80,638		¥ 80,638
Accumulated amortization	(67,806)		(61,862)
Impairment provision	(4,470)		(3,037)
Acquired intangible assets, net	8,362	$ 1,216	15,739
Technology rights for licensed seeds [Member]
Acquired Finite Lived Intangible Asset Gross	75,899		75,899
Others [Member]
Acquired Finite Lived Intangible Asset Gross	¥ 4,739		¥ 4,739

XML

ACQUIRED INTANGIBLE ASSETS, NET (Details 1) ¥ in Thousands	Sep. 30, 2018 CNY (¥)
2019	¥ 2,034
2020	1,058
2021	832
2022	795
2023	782
Total	¥ 5,501

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ACQUIRED INTANGIBLE ASSETS, NET (Details Textual) ¥ in Thousands, $ in Thousands	12 Months Ended
	Sep. 30, 2018 CNY (¥)	Sep. 30, 2018 USD ($)	Sep. 30, 2017 CNY (¥)	Sep. 30, 2016 CNY (¥)
Amortization of Intangible Assets	¥ 5,944		¥ 6,153	¥ 6,637
Impairment of Intangible Assets (Excluding Goodwill)	¥ 1,433	$ 208	¥ 0	¥ 0
Maximum [Member]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life	20 years	20 years
Minimum [Member]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life	3 years	3 years

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OTHER ASSETS (Details) ¥ in Thousands, $ in Thousands	Sep. 30, 2018 CNY (¥)	Sep. 30, 2018 USD ($)	Sep. 30, 2017 CNY (¥)
Prepaid lease	¥ 1,202		¥ 1,196
Guarantee fund for long-term borrowing	0		3,000
Other Assets, Noncurrent, Total	¥ 1,202	$ 175	¥ 4,196

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BORROWINGS (Details) ¥ in Thousands, $ in Thousands		Sep. 30, 2018 CNY (¥)	Sep. 30, 2018 USD ($)	Sep. 30, 2017 CNY (¥)
Short-term Debt [Line Items]
Short-term borrowings		¥ 0	$ 0	¥ 15,000
Long-term borrowings		78,235		92,273
Current portion of long-term borrowings		78,235	$ 11,373	35,504
Non-current portion of long-term borrowings		0		56,769
Bank of Communications [Member]
Short-term Debt [Line Items]
Short-term borrowings		0		15,000
Shanghai Pudong Development Bank [Member]
Short-term Debt [Line Items]
Long-term borrowings		0		20,000
Beijing Agriculture Finance Leasing, LLC. [Member]
Short-term Debt [Line Items]
Long-term borrowings	[1]	¥ 78,235		¥ 72,273

[1] Beijing Origin did not make any principal payments for the borrowing. Beijing Origin entered into negotiations with BAFL regarding modification of payment schedule. As of the date of this report, there is no formed agreements signed regarding modification of payment schedule. As of September 30, 2018, the Company reclassified the borrowing as current liability in consolidated balance sheets result from the default.

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BORROWINGS (Parenthetical) (Details)	12 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2016
Short-term Debt [Line Items]
Debt Instrument, Interest Rate, Stated Percentage	6.00%
Bank of Communications [Member]
Short-term Debt [Line Items]
Debt Instrument, Interest Rate, Stated Percentage		6.41%	5.87%
Debt Instrument, Maturity Date		Nov. 18, 2017	May 18, 2017
Shanghai Pudong Development Bank [Member]
Short-term Debt [Line Items]
Debt Instrument, Interest Rate, Stated Percentage	6.18%
Debt Instrument, Maturity Date	Dec. 08, 2017
Beijing Agriculture Finance Leasing, LLC. [Member]
Short-term Debt [Line Items]
Debt Instrument, Interest Rate, Stated Percentage	6.00%
Debt Instrument, Maturity Date	Dec. 29, 2020

XML

BORROWINGS (Details Textual) - CNY (¥) ¥ in Thousands	12 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2016
Short-term Debt [Line Items]
Interest Expense, Debt	¥ 15,370	¥ 8,760	¥ 7,607

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NOTES PAYABLE (Details Textual) ¥ in Thousands, $ in Thousands		1 Months Ended	12 Months Ended
	Jul. 05, 2017 USD ($) shares	Sep. 30, 2018 USD ($) shares	Sep. 30, 2018 CNY (¥)	Sep. 30, 2018 USD ($)	Sep. 30, 2017 CNY (¥) shares	Sep. 30, 2017 USD ($) shares	Sep. 30, 2016 CNY (¥)	Sep. 30, 2017 USD ($)	Jul. 05, 2017 CNY (¥)	Jul. 05, 2017 USD ($)
Debt Instrument, Face Amount					¥ 10,068			$ 1,517
Debt Instrument, Interest Rate, Stated Percentage			6.00%
Debt Conversion, Converted Instrument, Shares Issued					189,644	189,644
Proceeds from Convertible Debt			¥ 0	$ 0	¥ 8,628	$ 1,300	¥ 0
Convertible Debt, Current | ¥
Debt Conversion, Original Debt, Amount | $		$ 2,388
Convertible Debt [Member]
Debt Instrument, Face Amount									¥ 15,562	$ 2,345
Debt Instrument, Interest Rate, Stated Percentage									8.00%	8.00%
Debt Instrument, Original Issue Discount	13.00%
Debt Conversion, Converted Instrument, Shares Issued	293,087
Debt Instrument,Default Repayment Premium	40.00%
Repayments of Convertible Debt | $	$ 2,000
Convertible Debt, Current | ¥					¥ 8,335
Debt Instrument Convertible Trading Days	15 days
Convertible Debt [Member] | Minimum [Member]
Debt Instrument Premium	115.00%
Convertible Debt [Member] | Maximum [Member]
Debt Instrument Premium	130.00%
Convertible Notes Payable [Member]
Debt Conversion, Converted Instrument, Shares Issued		2,963,220
Debt Instrument, Convertible, Terms of Conversion Feature			The Loan Note is convertible to common stock at any time on or after an event of default as defined in the Loan Note agreement at a conversion price equaled to the lowest trading price of the common stock during the 15 trading days prior to the conversion. The holder’s conversion right commenced January 5, 2018, and continued until the Loan Note was paid in full.	The Loan Note is convertible to common stock at any time on or after an event of default as defined in the Loan Note agreement at a conversion price equaled to the lowest trading price of the common stock during the 15 trading days prior to the conversion. The holder’s conversion right commenced January 5, 2018, and continued until the Loan Note was paid in full.

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OTHER PAYABLES AND ACCRUED EXPENSES (Details) ¥ in Thousands, $ in Thousands	Sep. 30, 2018 CNY (¥)	Sep. 30, 2018 USD ($)	Sep. 30, 2017 CNY (¥)
Payable for purchase of plant and equipment	¥ 470		¥ 69
Payable for purchase of construction-in-progress	7,989		5,346
Professional fee payable	8,578		6,741
Salaries and bonus payable	9,272		8,537
Accrued interest	390		390
Deposits from others	665		652
Payable for labor union, housing fund and education expenses	1,399		488
Deferred government subsidies	7,649		4,782
Others	1,515		4,173
Other Payables and Accrued Expenses Current	¥ 37,927	$ 5,513	¥ 31,178

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OTHER LONG-TERM LIABILITY (Details Textual) ¥ in Thousands, $ in Millions	12 Months Ended
	Sep. 30, 2018 CNY (¥)	Sep. 30, 2018 USD ($)	Sep. 30, 2017 CNY (¥)	Sep. 30, 2017 USD ($)	Sep. 30, 2016 CNY (¥)	Sep. 30, 2011 CNY (¥)
Plant and Equipment [Member]
Subsidiary Received	¥ 3,700	$ 0.5	¥ 4,040	$ 0.6	¥ 8,630	¥ 14,000
Land Use Rights [Member]
Subsidiary Received						¥ 10,900

XML

STOCK-BASED COMPENSATION (Details) - $ / shares		1 Months Ended				12 Months Ended
	Oct. 02, 2017	Jan. 31, 2017	Aug. 31, 2016	May 31, 2016	Apr. 30, 2016	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2016
Options outstanding						0	0
Number of options granted						2,500	0
Options exercised						0	0
Options cancelled/expired						0	0
Options outstanding						2,500	0	0
Options vested and exercisable						2,500	0
Weighted average fair value at the grant date (USD)						$ 7.7
Tranche 7 [Member]
Grant date						Jan. 03, 2012
Options outstanding						0	13,500
Number of options granted						0	0
Options exercised						0	(500)
Options cancelled/expired						0	(13,000)
Options outstanding						0	0	13,500
Options vested and exercisable						0	0
Weighted average fair value at the grant date (USD)						$ 14.5
Tranche 8 [Member]
Grant date						Jan. 02, 2013
Options outstanding						35,500	35,500
Number of options granted						0	0
Options exercised						0	0
Options cancelled/expired						(35,500)	0
Options outstanding						0	35,500	35,500
Options vested and exercisable						0	35,500
Weighted average fair value at the grant date (USD)						$ 7.6
Tranche 9 [Member]
Grant date						Jan. 02, 2014
Options outstanding						34,500	34,500
Number of options granted						0	0
Options exercised						0	0
Options cancelled/expired						0	0
Options outstanding						34,500	34,500	34,500
Options vested and exercisable						34,500	34,500
Weighted average fair value at the grant date (USD)						$ 6.5
Tranche 10 [Member]
Grant date						Jan. 02, 2015
Options outstanding						19,500	19,500
Number of options granted						0	0
Options exercised						0	0
Options cancelled/expired						0	0
Options outstanding						19,500	19,500	19,500
Options vested and exercisable						19,500	19,500
Weighted average fair value at the grant date (USD)						$ 7.5
Tranche 11 [Member]
Grant date						Jan. 04, 2016
Options outstanding						13,500	18,500
Number of options granted						0	0	18,500
Options exercised						0	(5,000)
Options cancelled/expired						0	0
Options outstanding						13,500	13,500	18,500
Options vested and exercisable						13,500	13,500
Weighted average fair value at the grant date (USD)						$ 9.0
Tranche 12 [Member]
Grant date						Apr. 19, 2016
Options outstanding						60,000	60,000
Number of options granted					60,000	0	0
Options exercised						0	0
Options cancelled/expired						0	0
Options outstanding						60,000	60,000	60,000
Options vested and exercisable						60,000	60,000
Weighted average fair value at the grant date (USD)						$ 15.4
Tranche 13 [Member]
Grant date						May 16, 2016
Options outstanding						20,000	20,000
Number of options granted				20,000		0	0
Options exercised						0	0
Options cancelled/expired						0	0
Options outstanding						20,000	20,000	20,000
Options vested and exercisable						20,000	20,000
Weighted average fair value at the grant date (USD)						$ 12.4
Tranche 14 [Member]
Grant date						Aug. 03, 2016
Options outstanding						20,000	20,000
Number of options granted			20,000			0	0
Options exercised						0	0
Options cancelled/expired						0	0
Options outstanding						20,000	20,000	20,000
Options vested and exercisable						20,000	20,000
Weighted average fair value at the grant date (USD)						$ 14.4
Tranche 15 [Member]
Grant date						Jan. 03, 2017
Options outstanding						18,000	0
Number of options granted		18,000				0	18,000
Options exercised						0	0
Options cancelled/expired						0	0
Options outstanding						18,000	18,000	0
Options vested and exercisable						18,000	18,000
Weighted average fair value at the grant date (USD)						$ 4.0
Tranche 16 [Member]
Grant date						Oct. 02, 2017
Number of options granted	2,500
Tranche 17 [Member]
Grant date						Dec. 22, 2017
Options outstanding						0	0
Number of options granted						8,800	0
Options exercised						0	0
Options cancelled/expired						0	0
Options outstanding						8,800	0	0
Options vested and exercisable						8,800	0
Weighted average fair value at the grant date (USD)						$ 4.4
Tranche 18 [Member]
Grant date						Jan. 02, 2018
Options outstanding						0	0
Number of options granted						29,000	0
Options exercised						0	0
Options cancelled/expired						0	0
Options outstanding						29,000	0	0
Options vested and exercisable						29,000	0
Weighted average fair value at the grant date (USD)						$ 5.1
Tranche 19 [Member]
Grant date						Mar. 01, 2018
Options outstanding						0	0
Number of options granted						20,000	0
Options exercised						0	0
Options cancelled/expired						0	0
Options outstanding						20,000	0	0
Options vested and exercisable						20,000	0
Weighted average fair value at the grant date (USD)						$ 5.1

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STOCK-BASED COMPENSATION (Details 1) - $ / shares	1 Months Ended	12 Months Ended
	Jan. 31, 2017	Sep. 30, 2018	Sep. 30, 2007
Exercise price (US$)		$ 16.5
Average risk-free interest rate		1.94%
Expected option life (year)			5 years
Volatility rate		52.40%
Dividend yield		0.00%
Tranche 7 [Member]
Exercise price (US$)		$ 25.5
Average risk-free interest rate		0.40%
Expected option life (year)			3 years
Volatility rate		90.30%
Dividend yield		0.00%
Tranche 8 [Member]
Exercise price (US$)		$ 14.4
Average risk-free interest rate		0.37%
Expected option life (year)			3 years
Volatility rate		86.32%
Dividend yield		0.00%
Tranche 9 [Member]
Exercise price (US$)		$ 12.7
Average risk-free interest rate		0.76%
Expected option life (year)			3 years
Volatility rate		79.20%
Dividend yield		0.00%
Tranche 10 [Member]
Exercise price (US$)		$ 14.8
Average risk-free interest rate		1.07%
Expected option life (year)			3 years
Volatility rate		79.67%
Dividend yield		0.00%
Tranche 11 [Member]
Exercise price (US$)		$ 13.8
Average risk-free interest rate		1.73%
Expected option life (year)			5 years
Volatility rate		80.72%
Dividend yield		0.00%
Tranche 12 [Member]
Exercise price (US$)		$ 20.5
Average risk-free interest rate		1.79%
Expected option life (year)			10 years
Volatility rate		69.27%
Dividend yield		0.00%
Tranche 13 [Member]
Exercise price (US$)		$ 16.5
Average risk-free interest rate		1.75%
Expected option life (year)			10 years
Volatility rate		69.92%
Dividend yield		0.00%
Tranche 14 [Member]
Exercise price (US$)		$ 20.0
Average risk-free interest rate		1.55%
Expected option life (year)			10 years
Volatility rate		65.37%
Dividend yield		0.00%
Tranche 15 [Member]
Exercise price (US$)	$ 20.7	$ 20.7
Average risk-free interest rate		1.94%
Expected option life (year)			5 years
Volatility rate		63.87%
Dividend yield		0.00%
Tranche 17 [Member]
Exercise price (US$)		$ 8.0
Average risk-free interest rate		2.26%
Expected option life (year)		5 days
Volatility rate		63.20%
Dividend yield		0.00%
Tranche 18 [Member]
Exercise price (US$)		$ 9.1
Average risk-free interest rate		2.25%
Expected option life (year)		5 days
Volatility rate		64.60%
Dividend yield		0.00%
Tranche 19 [Member]
Exercise price (US$)		$ 8.2
Average risk-free interest rate		2.58%
Expected option life (year)		5 days
Volatility rate		68.20%
Dividend yield		0.00%

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STOCK-BASED COMPENSATION (Details Textual) $ / shares in Units, ¥ in Thousands							1 Months Ended															12 Months Ended
	Sep. 01, 2018 $ / shares	Jun. 01, 2018 $ / shares	Mar. 01, 2018 $ / shares shares	Jan. 02, 2018 $ / shares shares	Oct. 02, 2017 $ / shares shares	Jan. 02, 2016 CNY (¥)	Mar. 31, 2019	Dec. 28, 2017 USD ($) $ / shares shares	Dec. 22, 2017 $ / shares shares	Jan. 31, 2017 $ / shares shares	Dec. 28, 2016 CNY (¥)	Aug. 31, 2016 shares	May 31, 2016 shares	Apr. 30, 2016 shares	Jan. 31, 2015 $ / shares shares	Dec. 22, 2014 CNY (¥) shares	Jan. 31, 2014 $ / shares shares	Jan. 31, 2013 $ / shares shares	Jan. 31, 2012 $ / shares shares	Jan. 31, 2011 $ / shares shares	Jan. 31, 2010 $ / shares shares	Sep. 30, 2018 CNY (¥) shares	Sep. 30, 2018 USD ($) $ / shares shares	Sep. 30, 2017 CNY (¥) shares	Sep. 30, 2016 CNY (¥) shares	Sep. 30, 2018 USD ($) shares	Sep. 30, 2017 USD ($) shares	Apr. 22, 2010 shares	Nov. 08, 2005 shares
Number of options granted																						2,500	2,500	0
Exercise price (USD) | $ / shares																							$ 16.5
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period								5 days
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term																						4 years 2 months 1 day	4 years 2 months 1 day	4 years 10 months 24 days
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value | $																											$ 265,000
Share-based compensation expense																						¥ 4,313	$ 627,000	¥ 5,404	¥ 8,796
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized, Period for Recognition																						5 months 23 days	5 months 23 days
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period																						22,500	22,500
Stock Issued During Period, Value, Restricted Stock Award, Gross | $																							$ 167,925,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Share-based Awards Other than Options																						¥ 709					$ 0
Board of Directors Chairman [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Plan Modification, Incremental Compensation Cost | ¥						¥ 542					¥ 982					¥ 616
Tranche 9 [Member]
Number of options granted																						0	0	0
Exercise price (USD) | $ / shares																							$ 12.7
Tranche 10 [Member]
Number of options granted																						0	0	0
Exercise price (USD) | $ / shares																							$ 14.8
Tranche 11 [Member]
Number of options granted																						0	0	0	18,500
Exercise price (USD) | $ / shares																							$ 13.8
Tranche 12 [Member]
Number of options granted														60,000								0	0	0
Exercise price (USD) | $ / shares																							$ 20.5
Tranche 13 [Member]
Number of options granted													20,000									0	0	0
Exercise price (USD) | $ / shares																							$ 16.5
Tranche 14 [Member]
Number of options granted												20,000										0	0	0
Exercise price (USD) | $ / shares																							$ 20.0
Tranche 15 [Member]
Number of options granted										18,000												0	0	18,000
Exercise price (USD) | $ / shares										$ 20.7													$ 20.7
Tranche 16 [Member]
Number of options granted					2,500
Exercise price (USD) | $ / shares					$ 16.5
Tranche 17 [Member]
Number of options granted									8,800
Exercise price (USD) | $ / shares									$ 8.0
Tranche 18 [Member]
Number of options granted				29,000
Exercise price (USD) | $ / shares				$ 9.1
Tranche 19 [Member]
Number of options granted			20,000
Exercise price (USD) | $ / shares			$ 8.2
2005 Performance Equity Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized																													150,000
2005 Performance Equity Plan [Member] | Tranche 5 [Member]
Number of options granted																					12,500
Exercise price (USD) | $ / shares																					$ 122.3		20.7
2005 Performance Equity Plan [Member] | Tranche 6 [Member]
Number of options granted																				12,000
Exercise price (USD) | $ / shares																				$ 108.4
2005 Performance Equity Plan [Member] | Tranche 7 [Member]
Number of options granted																			36,500
Exercise price (USD) | $ / shares																			$ 25.5
2005 Performance Equity Plan [Member] | Tranche 8 [Member]
Number of options granted																		36,000
Exercise price (USD) | $ / shares																		$ 14.4
2005 Performance Equity Plan [Member] | Tranche 9 [Member]
Number of options granted																	35,000
Exercise price (USD) | $ / shares																	$ 12.7						$ 8.0
2005 Performance Equity Plan [Member] | Tranche 10 [Member]
Number of options granted															19,500
Exercise price (USD) | $ / shares															$ 14.8
2009 Performance Equity Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized																												150,000
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period								33,000
Stock Issued During Period, Value, Restricted Stock Award, Gross | $								$ 287,100,000
Share Based Compensation Share Based Payment Award Vesting Date Commencement																						Jan. 03, 2018	Jan. 03, 2018
2014 Performance Equity Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized																500,000
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	1 year	1 year	1 year
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized, Stock Options | ¥																						¥ 1,228		¥ 690
Share Price | $ / shares	$ 6.6	$ 7.2	$ 8.6					$ 8.7
2014 Performance Equity Plan [Member] | Vesting Date 1 [Member]
Share Based Compensation Share Based Payment Award Vesting Date Commencement							Mar. 01, 2019
2014 Performance Equity Plan [Member] | Vesting Date 2 [Member]
Share Based Compensation Share Based Payment Award Vesting Date Commencement																						Jun. 01, 2019	Jun. 01, 2019
2014 Performance Equity Plan [Member] | Vesting Date 3 [Member]
Share Based Compensation Share Based Payment Award Vesting Date Commencement																						Sep. 01, 2019	Sep. 01, 2019
Restricted Stock Units (RSUs) [Member]
Share-based compensation expense | ¥																						¥ 2,272		¥ 0	¥ 0
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized, Period for Recognition																						8 months 15 days	8 months 15 days
Before Adjustment [Member] | 2009 Performance Equity Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant																						70,000		70,000		70,000	70,000
Before Adjustment [Member] | 2014 Performance Equity Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant																						211,300		151,000		211,300	151,000
Minimum [Member] | After Adjustment [Member]
Share Based Compensation Arrangement By Share Based Payment Award Expiration Period																						5 years	5 years
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period																						1 year	1 year
Maximum [Member] | After Adjustment [Member]
Share Based Compensation Arrangement By Share Based Payment Award Expiration Period																						10 years	10 years
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period																						5 years	5 years

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TREASURY STOCK (Details Textual) ¥ in Thousands, $ in Millions	12 Months Ended
	Sep. 30, 2018 CNY (¥) shares	Sep. 30, 2017 CNY (¥) shares	Sep. 30, 2014 CNY (¥) shares	Sep. 30, 2013 CNY (¥) shares	Sep. 30, 2007 CNY (¥) shares	Feb. 28, 2013 USD ($)
Stock Repurchased During Period, Shares (in shares) | shares					49,885
Stock Repurchased During Period, Value | ¥	¥ 0		¥ 1,782	¥ 6,286	¥ 29,377
Stock Repurchase Program, Number of Shares Authorized to be Repurchased | shares			16,738	61,139
Stock Repurchase Program, Authorized Amount | $						$ 5
Stock Issued During Period, Shares, Treasury Stock Reissued | shares		50,000
Stock Issued During Period, Value, Treasury Stock Reissued | ¥		¥ 6,115
Treasury Stock [Member]
Stock Repurchased During Period, Value | ¥	¥ 0
Stock Issued During Period, Value, Treasury Stock Reissued | ¥		¥ 14,654
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Granted | shares	12,853

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EQUITY LINE (Details Textual) $ / shares in Units, $ in Thousands	Jul. 05, 2017 USD ($) $ / shares
Equity Method Investment, Quoted Market Value | $	$ 4,500
L2 Capital LLC [Member]
Put Amount Percentage on Outstanding Ordinary Shares	9.99%
Percentage of Average Trading Volume Ordinary Shares	150.00%
Minimium Listed Price of Ordinary Share | $ / shares	$ 25
Percentage of Purchase Price on Lowest Market Price	94.00%

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INCOME TAXES (Details) - CNY (¥) ¥ in Thousands	Sep. 30, 2018	Sep. 30, 2017
Non-current deferred tax assets:
Net operating loss carry forward	¥ 94,750	¥ 39,578
Impairment on inventory	1,822	5,626
Impairment on long-term equity investment	356	0
Others	4,644	(20,252)
Non-current deferred income tax assets	101,572	24,952
Valuation allowances	(101,572)	(24,952)
Net non-current deferred income tax assets	¥ 0	¥ 0

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INCOME TAXES (Details 1)	12 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2016
Statutory rate	25.00%	25.00%	25.00%
Effect of preferential tax treatment	(3.00%)	3.00%	(8.00%)
Effect of different tax jurisdiction	0.00%	0.00%	(6.00%)
Change in valuation allowance	(26.00%)	(27.00%)	(2.00%)
Over provision in prior year	4.00%	(1.00%)	(9.00%)
Effective income tax rate	0.00%	0.00%	0.00%

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INCOME TAXES (Details Textual) ¥ / shares in Units, ¥ in Thousands	1 Months Ended	12 Months Ended
	Jan. 30, 2008	Sep. 30, 2018 CNY (¥)	Sep. 30, 2018 CNY (¥) $ / shares	Sep. 30, 2017 CNY (¥) ¥ / shares	Sep. 30, 2016 CNY (¥) ¥ / shares
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate		25.00%		25.00%	25.00%
Income Tax Holiday Effect On Tax Charges		¥ 0		¥ 4,274	¥ (5,609)
Income Tax Holiday Income Tax Basic Earnings Per Share | (per share)				¥ 0.18	¥ (0.25)
Income Tax Holiday Income Tax Diluted Earnings Per Share | (per share)			$ 0	¥ 0.18	¥ (0.25)
Operating Loss Carryforwards, Limitations on Use		a preferential tax of 2 years exemption and 3 years of half EIT from January 1, 2012 to December 31, 2016
Preferential Tax Rate Applicable Period Description		The open tax years for examinations in China are 5 years.
Preferential Tax Rate		15.00%
Operating Loss CarryForward Term				20 years
Operating Loss Carryforwards		¥ 579,677	$ 579,677
Expire 2018 through 2021 [Member]
Operating Loss Carryforwards		63,506	63,506
Expire 2022 and After [Member]
Operating Loss Carryforwards		¥ 516,171	$ 516,171
Maximum [Member]
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate	33.00%
Minimum [Member]
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate	25.00%
Beijing Origin Seed Limited [Member]
Preferential Tax Rate		25.00%		15.00%	15.00%

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INCOME/(LOSS) PER SHARE (Details) ¥ / shares in Units, ¥ in Thousands, $ in Thousands	12 Months Ended
	Sep. 30, 2018 CNY (¥) ¥ / shares shares	Sep. 30, 2018 USD ($) shares	Sep. 30, 2017 CNY (¥) ¥ / shares shares	Sep. 30, 2016 CNY (¥) ¥ / shares shares
Numerator:
Net loss from continuing operations attributable to Origin Agritech Limited | ¥	¥ (153,663)		¥ (90,433)	¥ (62,264)
Net income (loss) from discontinued operations attributable to Origin Agritech Limited	0	$ 0	14,759	(3,314)
Net loss attributable to Origin Agritech Limited	¥ (153,663)	$ (22,336)	¥ (75,674)	¥ (65,578)
Denominator:
Average common stock outstanding - basic | shares	3,061,979	3,061,979	2,808,293	2,759,834
Dilutive effect of share options | shares	0	0	0	0
Diluted shares | shares	3,061,979	3,061,979	2,808,293	2,759,834
Basic and diluted net income (loss) per share (note 21)
Continuing operations | ¥ / shares	¥ (50.18)		¥ (32.20)	¥ (22.56)
Discontinued operations | ¥ / shares	0		5.25	(1.20)
Earnings Per Share, Basic | ¥ / shares	¥ (50.18)		¥ (26.95)	¥ (23.76)

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EMPLOYEE BENEFIT PLAN AND PROFIT APPROPRIATION (Details Textual) - CNY (¥) ¥ in Thousands	12 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2016
Defined Contribution Plan, Cost Recognized	¥ 4,615	¥ 7,241	¥ 7,875
Percentage Of Entity Registered Capital	50.00%
Statutory Surplus Reserve Fund Annual Appropriation Percentage	10.00%
Statutory Surplus Reserve Fund Appropriations	¥ 20,848	¥ 20,848

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COMMITMENTS AND CONTINGENCIES (Details) - CNY (¥) ¥ in Thousands	12 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Long-term Purchase Commitment, Amount	¥ 0	¥ 2,702
Equipment [Member]
Long-term Purchase Commitment, Amount	¥ 0	¥ 2,702

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COMMITMENTS AND CONTINGENCIES (Details 1) ¥ in Thousands	Sep. 30, 2018 CNY (¥)
2019	¥ 905
2020	548
2021	516
2022	500
2023	422
Thereafter	3,793
Operating Leases, Future Minimum Payments Due	¥ 6,684

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COMMITMENTS AND CONTINGENCIES (Details Textual) - CNY (¥) ¥ in Thousands	12 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2016
Operating Leases, Rent Expense	¥ 3,859	¥ 2,908	¥ 2,314
Linze Origin [Member] | Beijing Origin Seeds Limited [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost	¥ 23,700

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OPERATING RISK (Details Textual)	Sep. 30, 2018
Debt Instrument, Interest Rate, Stated Percentage	6.00%

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SUBSEQUENT EVENTS (Details Textual) - Longhan and Tiger Fund [Member] - Subsequent Event [Member] $ in Thousands	1 Months Ended
	Oct. 16, 2018 USD ($) shares
Stock Issued During Period, Shares, New Issues | shares	1,397,680
Proceeds from Issuance of Common Stock | $	$ 7,743,147

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CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY (Details) ¥ in Thousands, $ in Thousands	Sep. 30, 2018 CNY (¥)	Sep. 30, 2018 USD ($)	Sep. 30, 2017 CNY (¥)	Sep. 30, 2017 USD ($)	Sep. 30, 2016 CNY (¥)	Sep. 30, 2015 CNY (¥)
Current assets (liabilities)
Cash and cash equivalents	¥ (1,990)	$ (289)	¥ (3,245)	$ (472)	¥ (54,509)	¥ (66,025)
Due from inter-companies	(129,506)	(18,826)	(55,940)
Due to related parties	293,732	42,699	11,592
AND EQUITY
Total stockholders' equity	(23,348)	(3,396)	112,799		218,617	290,778
Parent Company [Member]
Current assets (liabilities)
Cash and cash equivalents	47	7	17	$ (2)	¥ (581)	¥ (341)
Other receivables	4	1	3
Due from inter-companies	132,842	19,311	109,321
Due to related parties	(1,634)	(240)	(1,576)
Total current assets (liabilities)	131,259	19,079	107,765
Investment in unconsolidated subsidiaries	(155,970)	(22,673)	4,544
Total assets (liabilities)	(24,711)	(3,594)	112,309
AND EQUITY
Total stockholders' equity	¥ (24,711)	$ (3,594)	¥ 112,309

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CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY (Details 1) ¥ in Thousands, $ in Thousands	12 Months Ended
	Sep. 30, 2018 CNY (¥)	Sep. 30, 2018 USD ($)	Sep. 30, 2017 CNY (¥)	Sep. 30, 2016 CNY (¥)
Revenues	¥ 12,927	$ 1,879	¥ 870	¥ 481
Operating expenses
General and administrative	32,147	4,673	36,094	32,974
Interest expense	(22,787)	(3,312)	(9,006)	(7,607)
Loss before income taxes	(152,790)	(22,209)	(121,841)	(73,038)
Income tax (expense) benefits
Net loss	(152,790)	(22,209)	(106,261)	(76,833)
Other comprehensive loss
Foreign currency translation difference	(3,315)	(482)	(7,644)	(4,124)
Total comprehensive loss	(156,978)	(22,818)	(83,318)	(69,702)
Parent Company [Member]
Revenues	0	0	0	204
Operating expenses
General and administrative	(5,147)	(748)	(3,016)	(16,035)
Loss from operations	(5,147)	(748)	(3,016)	(15,831)
Equity method loss	(148,514)	(21,589)	(72,491)	(49,009)
Interest expense	(2)	0	(167)	(738)
Loss before income taxes	(153,663)	(22,337)	(75,674)	(65,578)
Income tax (expense) benefits
Income tax expense	0	0	0	0
Net loss	(153,663)	(22,337)	(75,674)	(65,578)
Other comprehensive loss
Foreign currency translation difference	(3,315)	(482)	(7,644)	(4,124)
Total comprehensive loss	¥ (156,978)	$ (22,819)	¥ (83,318)	¥ (69,702)

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CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY (Details 2) ¥ in Thousands, $ in Thousands	12 Months Ended
	Sep. 30, 2018 CNY (¥)	Sep. 30, 2018 USD ($)	Sep. 30, 2017 CNY (¥)	Sep. 30, 2016 CNY (¥)
Net cash provided by (used in) operating activities	¥ 10,045	$ 1,457	¥ 120,167	¥ (47,905)
Net cash provided by (used in) financing activities	(35,376)	(5,142)	47,008	(48,816)
Net increase (decrease) in cash and cash equivalents	(2,170)	(320)	43,620	7,392
Cash and cash equivalents, beginning of year	3,245	472	54,509	66,025
Effect of exchange rate changes on cash and cash equivalents	(3,425)	(503)	(7,644)	(4,124)
Cash and cash equivalents, end of the year	1,990	289	3,245	54,509
Parent Company [Member]
Net cash provided by (used in) operating activities	3,345	486	20,456	(20,009)
Net cash provided by (used in) financing activities	0	0	(13,376)	14,881
Net increase (decrease) in cash and cash equivalents	3,345	486	7,080	(5,128)
Cash and cash equivalents, beginning of year	(17)	2	581	341
Effect of exchange rate changes on cash and cash equivalents	(3,315)	(482)	(7,644)	5,368
Cash and cash equivalents, end of the year	¥ (47)	$ (7)	¥ (17)	¥ 581

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CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY (Details Textual) - CNY (¥) ¥ in Thousands	Sep. 30, 2018	Sep. 30, 2017
Amount of Restricted Net Assets for Consolidated and Unconsolidated Subsidiaries	¥ 84,517	¥ 84,517