PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The unaudited financial statements reflect significant revenue growth, a reduced net loss, and major balance sheet changes from recent acquisitions and divestitures [Condensed Consolidated Balance Sheets (unaudited)](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(unaudited)) The balance sheet reflects substantial growth in total assets and liabilities, driven by business acquisitions and the reclassification of discontinued operations Balance Sheet Summary | Metric | March 31, 2024 (Unaudited) | June 30, 2023 | |:---|:---|:---| | **Total Assets** | $101,688,272 | $63,469,139 | | **Total Liabilities** | $54,984,231 | $26,616,093 | | **Total Equity** | $46,704,041 | $36,853,046 | - Current assets held for discontinued operations decreased from **$37,109,046 to $0**, reflecting the reclassification of these segments[7](index=7&type=chunk) - Intangible assets, net, increased significantly from **$12,049,473 to $44,250,977**, and Goodwill increased from **$6,574,743 to $28,015,104**, largely due to recent acquisitions[7](index=7&type=chunk) [Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) (unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20(Loss)%20and%20Comprehensive%20Income%20(Loss)%20(unaudited)) Income statements show substantial revenue growth from continuing operations, though higher expenses increased the operating loss, offset by income from discontinued operations Nine Months Ended March 31, 2024 vs 2023 (Continuing Operations) | Metric | 2024 | 2023 | Change (USD) | Change (%) | |:---|:---|:---|:---|:---| | Revenue | $5,304,159 | $231,513 | $5,072,646 | 2,191.08% | | Gross Income | $602,940 | $11,156 | $591,784 | 5,304.63% | | Operating Expenses | $12,447,244 | $6,120,050 | $6,327,194 | 103.38% | | Net Loss from Continuing Operations | $(12,937,954) | $(6,886,985) | $(6,050,969) | 87.86% | | Net Income (Loss) from Discontinued Operations | $8,855,247 | $(937,831) | $9,793,078 | (1,044.23)% | | Net Loss | $(4,082,707) | $(7,824,816) | $3,742,109 | (47.82)% | | Basic and Diluted Loss per Common Share | $(0.47) | $(4.46) | $3.99 | (89.46)% | Three Months Ended March 31, 2024 vs 2023 (Continuing Operations) | Metric | 2024 | 2023 | Change (USD) | Change (%) | |:---|:---|:---|:---|:---| | Revenue | $1,351,400 | $231,513 | $1,119,887 | 483.73% | | Gross Income | $191,667 | $11,156 | $180,511 | 1,618.06% | | Operating Expenses | $3,417,758 | $2,825,270 | $592,488 | 20.97% | | Net Loss from Continuing Operations | $(4,368,728) | $(2,939,166) | $(1,429,562) | 48.64% | | Net Income (Loss) from Discontinued Operations | $0 | $329,181 | $(329,181) | (100.00)% | | Net Loss | $(4,368,728) | $(2,609,985) | $(1,758,743) | 67.39% | | Basic and Diluted Loss per Common Share | $(0.52) | $(1.30) | $0.78 | (60.00)% | [Condensed Consolidated Statements of Changes in Equity (unaudited)](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Equity%20(unaudited)) Equity increased due to strategic acquisitions and stock issuances, despite the impact of accumulated deficits and the disposal of a subsidiary - Total equity increased from **$36,853,046** at June 30, 2023, to **$46,704,041** at March 31, 2024[13](index=13&type=chunk)[15](index=15&type=chunk) - Key changes include the acquisition of Wintus (**$10,386,685 impact on equity**) and the disposal of Tenet-Jove (**$(4,024,538) impact on equity**)[13](index=13&type=chunk) - Stock issuances contributed **$1,440,000** to equity during the nine months ended March 31, 2024[13](index=13&type=chunk) [Condensed Consolidated Statements of Cash Flows (unaudited)](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(unaudited)) Cash flows show increased cash usage in operations and a significant outflow from investing activities, leading to a net decrease in cash and cash equivalents Cash Flow Summary (Nine Months Ended March 31) | Activity | 2024 | 2023 | |:---|:---|:---| | Net cash used in operating activities | $(3,062,020) | $(2,853,387) | | Net cash provided by (used in) investing activities | $(13,939,717) | $1,013,586 | | Net cash provided by financing activities | $3,184,948 | $2,421,005 | | Net increase (decrease) in cash and cash equivalents | $(13,601,276) | $229,944 | | Cash and cash equivalents - End of period | $565,483 | $15,395,175 | - The significant cash outflow from investing activities in 2024 was primarily due to the disposal of Tenet-Jove (**$13,889,752 used**)[21](index=21&type=chunk) - Financing activities were supported by proceeds from short-term loans (**$15,411,974**) and issuance of common stock (**$2,020,030**)[21](index=21&type=chunk) [Notes to the Condensed Consolidated Financial Statements (unaudited)](index=13&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) These notes detail the company's accounting policies, recent acquisitions, discontinued operations, going concern issues, and breakdowns of financial statement items [NOTE 1 - ORGANIZATION AND NATURE OF OPERATIONS](index=13&type=section&id=NOTE%201%20-%20ORGANIZATION%20AND%20NATURE%20OF%20OPERATIONS) The company is a holding company that has refocused its PRC operations on diagnostics, agricultural products, and healthy meals through recent strategic transactions - Shineco, Inc is a holding company incorporated in Delaware, with primary operations in the People's Republic of China[24](index=24&type=chunk) - The company completed the acquisition of **51% equity interest** in Changzhou Biowin Pharmaceutical Co, Ltd (Biowin) on December 30, 2022, entering the Rapid Diagnostic and Other Products segment[37](index=37&type=chunk) - On May 29, 2023, Life Science HK acquired **71.42% equity interest** in Chongqing Wintus Group (Wintus), entering the Other Agricultural Products segment (silk, silk fabrics, fresh fruit trading)[38](index=38&type=chunk)[39](index=39&type=chunk) - Fuzhou Meida Health Management Co, Ltd operates a health-oriented chain restaurant specializing in healthy meals, forming the 'Healthy meals products' segment[39](index=39&type=chunk) [NOTE 2. GOING CONCERN UNCERTAINTIES](index=15&type=section&id=NOTE%202.%20GOING%20CONCERN%20UNCERTAINTIES) The company faces going concern uncertainties due to recurring losses and negative working capital, with management implementing measures to enhance liquidity - The company had recurring net losses of **US$12.9 million** and **US$6.9 million** from continuing operations for the nine months ended March 31, 2024 and 2023, respectively[40](index=40&type=chunk) - As of March 31, 2024, the company had negative working capital of **US$20.9 million**[40](index=40&type=chunk) - Management's measures to enhance liquidity include sales of common stock, a securities purchase agreement, and expected loan renewals[42](index=42&type=chunk)[43](index=43&type=chunk) [NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=16&type=section&id=NOTE%203%20-%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) Financial statements are prepared under US GAAP, consolidating subsidiaries and VIEs, with key policies for revenue recognition, credit losses, and fair value - The unaudited condensed consolidated financial statements are prepared in conformity with US GAAP and include the Company, its subsidiaries, and Variable Interest Entities (VIEs)[45](index=45&type=chunk)[46](index=46&type=chunk) - The Company adopted Accounting Standards Update 2016-13 (CECL methodology) on July 1, 2023, for measuring credit losses, with no material impact on financial statements as of that date[64](index=64&type=chunk) - Revenue is recognized when performance obligations are satisfied, primarily from sales of products and provision of logistic services[57](index=57&type=chunk)[59](index=59&type=chunk) - The Company's operations are primarily in the PRC, exposing it to political, economic, and legal environment risks, including foreign currency exchange fluctuations[53](index=53&type=chunk) [NOTE 4 – ACCOUNTS RECEIVABLE, NET](index=26&type=section&id=NOTE%204%20%E2%80%93%20ACCOUNTS%20RECEIVABLE,%20NET) Accounts receivable from continuing operations increased significantly, while the allowance for credit losses decreased due to the disposal of VIEs Accounts Receivable, Net (Continuing Operations) | Metric | March 31, 2024 | June 30, 2023 | |:---|:---|:---| | Accounts receivable, net held for continuing operations | $4,676,210 | $34,586 | - The allowance for credit losses decreased from **$8,153,850 to $2,052,321**, primarily due to the disposal of VIEs (**$7,136,817 reduction**)[105](index=105&type=chunk) [NOTE 5 – INVENTORIES, NET](index=27&type=section&id=NOTE%205%20%E2%80%93%20INVENTORIES,%20NET) Inventories from continuing operations increased substantially, while the inventory reserve decreased, with no write-offs for discontinued operations in the current period Inventories, Net (Continuing Operations) | Metric | March 31, 2024 | June 30, 2023 | |:---|:---|:---| | Inventories, net, held for continuing operations | $1,446,334 | $324,406 | - The inventory reserve for continuing operations decreased from **$56,655 to $30,634**[68](index=68&type=chunk)[106](index=106&type=chunk) - No inventory write-offs for discontinued operations occurred in the nine months ended March 31, 2024, compared to **US$668,088** in the prior year[107](index=107&type=chunk) [NOTE 6 – ADVANCES TO SUPPLIERS, NET](index=27&type=section&id=NOTE%206%20%E2%80%93%20ADVANCES%20TO%20SUPPLIERS,%20NET) Advances to suppliers for continuing operations increased significantly, while the allowance for doubtful accounts decreased due to the disposal of VIEs Advances to Suppliers, Net (Continuing Operations) | Metric | March 31, 2024 | June 30, 2023 | |:---|:---|:---| | Advance to supplier, net, held for continuing operations | $12,751,020 | $2,697 | - The allowance for doubtful accounts decreased from **$10,167,448 to $624,892**, largely due to the disposal of VIEs (**$10,241,295 reduction**)[110](index=110&type=chunk) [NOTE 7 – OTHER CURRENT ASSETS, NET](index=28&type=section&id=NOTE%207%20%E2%80%93%20OTHER%20CURRENT%20ASSETS,%20NET) Other current assets for continuing operations decreased, with an increase in loans to third parties offset by a decrease in other receivables Other Current Assets, Net (Continuing Operations) | Metric | March 31, 2024 | June 30, 2023 | |:---|:---|:---| | Other current assets, net, held for continuing operations | $2,560,304 | $2,827,042 | | Loans to third parties | $2,576,064 | $1,481,101 | | Other receivables | $2,440,400 | $2,629,733 | - The allowance for credit losses decreased from **$3,287,793 to $2,503,102**, with a significant reduction from the disposal of VIEs (**$605,786**)[114](index=114&type=chunk) [NOTE 8 - PROPERTY AND EQUIPMENT, NET](index=29&type=section&id=NOTE%208%20-%20PROPERTY%20AND%20EQUIPMENT,%20NET) Property and equipment for continuing operations increased substantially, along with a corresponding rise in depreciation and amortization expenses Property and Equipment, Net (Continuing Operations) | Metric | March 31, 2024 | June 30, 2023 | |:---|:---|:---| | Property and equipment, net held for continuing operations | $6,224,380 | $1,213,116 | Depreciation and Amortization Expense (Continuing Operations) | Period | 2024 | 2023 | |:---|:---|:---| | Nine months ended March 31 | $355,676 | $5,022 | | Three months ended March 31 | $112,487 | $4,737 | - No impairment loss on property and equipment was recognized for continuing or discontinued operations for the nine and three months ended March 31, 2024 and 2023[118](index=118&type=chunk) [NOTE 9 - LAND USE RIGHTS, NET](index=30&type=section&id=NOTE%209%20-%20LAND%20USE%20RIGHTS,%20NET) Land use rights for continuing operations were newly recognized in 2024, resulting in associated amortization expenses for the period Land Use Rights, Net (Continuing Operations) | Metric | March 31, 2024 | June 30, 2023 | |:---|:---|:---| | Land use rights, net, held for continuing operations | $613,133 | $0 | Amortization Expense (Continuing Operations) | Period | 2024 | 2023 | |:---|:---|:---| | Nine months ended March 31 | $14,982 | $0 | | Three months ended March 31 | $5,627 | $0 | [NOTE 10 - LEASES](index=31&type=section&id=NOTE%2010%20-%20LEASES) The company's operating lease assets and liabilities for continuing operations remained stable, while those for discontinued operations were eliminated Operating Lease Assets and Liabilities (Continuing Operations) | Metric | March 31, 2024 | June 30, 2023 | |:---|:---|:---| | ROU lease assets | $110,227 | $132,366 | | Total operating lease liabilities | $139,679 | $131,447 | - Operating lease ROU assets and liabilities for discontinued operations were **$0** as of March 31, 2024, down from **$2,538,037** and **$1,956,325** respectively at June 30, 2023[130](index=130&type=chunk) Rent Expenses (Continuing Operations) | Period | 2024 | 2023 | |:---|:---|:---| | Nine months ended March 31 | $132,035 | $168,952 | | Three months ended March 31 | $45,896 | $36,543 | [NOTE 11 - ACQUISITION](index=32&type=section&id=NOTE%2011%20-%20ACQUISITION) Recent acquisitions, particularly of Wintus, have significantly reshaped the company's business segments and financial structure by adding substantial goodwill and intangible assets - Acquisition of Biowin (January 1, 2023): Total consideration of **US$12,097,000**, resulted in **US$6,574,743 in goodwill** and **US$12,683,656 in intangible assets**[140](index=140&type=chunk)[143](index=143&type=chunk)[144](index=144&type=chunk) - Acquisition of Wintus (July 31, 2023): Consideration included cash, stock, and the transfer of Tenet-Jove, resulting in **US$21,440,360 in goodwill** and **US$36,117,041 in intangible assets**[149](index=149&type=chunk)[151](index=151&type=chunk)[152](index=152&type=chunk) Amortization Expense of Intangible Assets (Continuing Operations) | Period | 2024 | 2023 | |:---|:---|:---| | Nine months ended March 31 | $951,273 (Biowin) / $2,365,819 (Wintus) | $317,091 (Biowin) / $0 (Wintus) | | Three months ended March 31 | $317,091 (Biowin) / $887,183 (Wintus) | $317,091 (Biowin) / $0 (Wintus) | [NOTE 12 - RELATED PARTY TRANSACTIONS](index=36&type=section&id=NOTE%2012%20-%20RELATED%20PARTY%20TRANSACTIONS) The company engages in significant related party transactions, including receivables, payables, sales, and loan guarantees, which have increased with recent business changes Due from Related Parties, Net (Continuing Operations) | Metric | March 31, 2024 | June 30, 2023 | |:---|:---|:---| | Total due from related parties, net held for continuing operations | $448,811 | $0 | Due to Related Parties (Continuing Operations) | Metric | March 31, 2024 | June 30, 2023 | |:---|:---|:---| | Total due to related parties, held for continuing operations | $2,276,248 | $48,046 | - The company made sales of **US$797,506** to a related party for the nine months ended March 31, 2024[168](index=168&type=chunk) - The company pledged property with a net book value of **US$1,045,883** as collateral to guarantee a personal loan of a former chairman[170](index=170&type=chunk) [NOTE 13 – LOANS](index=39&type=section&id=NOTE%2013%20%E2%80%93%20LOANS) The company utilizes various short-term and long-term bank loans, often guaranteed by related parties, resulting in a significant increase in interest expenses Short-term Loans (Continuing Operations) | Lender | March 31, 2024 | Maturity Date | Int. Rate/Year | |:---|:---|:---|:---| | Loan from a third party | $800,000 | 2024/9/29 | 15.0% | | Short-term bank loans | $12,606,523 | Various | 3.45%-4.65% | Long-term Loans (Continuing Operations) | Lender | March 31, 2024 | Maturity Date | Int. Rate/Year | |:---|:---|:---|:---| | Chongqing Rural Commercial Bank | $623,089 | 2024/9/7 | 4.85% | | Bank of Chongqing | $1,100,791 | 2026/7/3 | 4.00% | - Interest expenses from continuing operations increased from **US$17,312** to **US$440,742** for the nine months ended March 31, 2024[180](index=180&type=chunk) - Loans are guaranteed by former CEO, shareholders, their family members, and company subsidiaries, with some properties pledged as collateral[173](index=173&type=chunk)[174](index=174&type=chunk)[178](index=178&type=chunk)[179](index=179&type=chunk) [NOTE 14 - CONVERTIBLE NOTES PAYABLE](index=42&type=section&id=NOTE%2014%20-%20CONVERTIBLE%20NOTES%20PAYABLE) The company has outstanding unsecured convertible promissory notes with an institutional investor, which have undergone extensions and partial conversions into common stock - As of March 31, 2024, the total outstanding convertible notes balance was **US$14,824,553**, with a carrying value of **US$15,076,774**[187](index=187&type=chunk) - For the nine months ended March 31, 2024, **US$612,072** in amortization of debt issuance and other costs was recorded[187](index=187&type=chunk) - Shares totaling **1,500,396** were issued to the investor, equaling principal and interests of **US$9,988,359**, as of March 31, 2024[187](index=187&type=chunk) [NOTE 15 - TAXES](index=43&type=section&id=NOTE%2015%20-%20TAXES) Subsidiaries are subject to various PRC tax rates, with some benefiting from exemptions or reduced rates, while deferred tax liabilities have increased due to acquisitions - Biowin is subject to a reduced corporate income tax rate of **15%** as a High and New Technology Enterprise through December 2025[189](index=189&type=chunk) - Certain Wintus subsidiaries are subject to a reduced effective tax rate of **5%** on taxable income not exceeding RMB3 million until December 31, 2024[189](index=189&type=chunk) Deferred Tax Liability, Net (Continuing Operations) | Metric | March 31, 2024 | June 30, 2023 | |:---|:---|:---| | Deferred tax liability, net, held for continuing operations | $(10,138,018) | $(1,416,592) | | Intangible assets (deferred tax liability) | $(10,542,990) | $(1,810,615) | Taxes Payable (Continuing Operations) | Metric | March 31, 2024 | June 30, 2023 | |:---|:---|:---| | Income tax payable | $1,236,597 | $1,048,188 | | Value added tax payable | $240,403 | $46,451 | | Total tax payable, held for continuing operations | $1,477,832 | $836,014 | [NOTE 16 - STOCKHOLDERS' EQUITY](index=45&type=section&id=NOTE%2016%20-%20STOCKHOLDERS'%20EQUITY) Stockholders' equity was affected by a reverse stock split, various stock issuances for capital raising and acquisitions, and the establishment of a statutory reserve - A **1-for-10 reverse stock split** became effective on February 16, 2024, retroactively restating share and per share data[213](index=213&type=chunk) - As of May 15, 2024, there were **6,445,963 shares** of common stock outstanding, reflecting the reverse stock split[3](index=3&type=chunk) - The company issued **380,500 shares** under the 2023 Equity Incentive Plan in September 2023, valued at **US$540,310**[211](index=211&type=chunk) - In December 2023, **1,200,000 shares** were issued for gross proceeds of **US$1,440,000**[212](index=212&type=chunk)[215](index=215&type=chunk) [NOTE 17 - CONCENTRATIONS AND RISKS](index=48&type=section&id=NOTE%2017%20-%20CONCENTRATIONS%20AND%20RISKS) The company faces significant concentration risks, with nearly all assets and revenue in the PRC and heavy reliance on a few key customers and vendors - Almost **100%** of the company's assets and revenue are located in or derived from the PRC[216](index=216&type=chunk) - For the nine months ended March 31, 2024, three customers accounted for approximately **44%** of total sales from continuing operations[217](index=217&type=chunk) - As of March 31, 2024, three customers accounted for approximately **50%** of accounts receivable from continuing operations[217](index=217&type=chunk) - For the nine months ended March 31, 2024, two vendors accounted for approximately **35%** of total purchases from continuing operations[218](index=218&type=chunk) [NOTE 18 - COMMITMENTS AND CONTINGENCIES](index=48&type=section&id=NOTE%2018%20-%20COMMITMENTS%20AND%20CONTINGENCIES) The company has resolved two legal matters, one through a settlement payment and another by discontinuing a lawsuit, which resulted in a significant waiver - A lawsuit filed by Ms Guiqin Li was settled in January 2023, with the company paying **US$700,645** (approximately RMB 4.8 million)[220](index=220&type=chunk)[221](index=221&type=chunk)[371](index=371&type=chunk)[372](index=372&type=chunk) - A lawsuit against Lei Zhang and Yan Li was discontinued in December 2023, resulting in the waiver of **US$3,024,000** in subscription receivable[222](index=222&type=chunk)[224](index=224&type=chunk)[355](index=355&type=chunk)[357](index=357&type=chunk)[373](index=373&type=chunk)[375](index=375&type=chunk) [NOTE 19 - SEGMENT REPORTING](index=49&type=section&id=NOTE%2019%20-%20SEGMENT%20REPORTING) Operating segments have been redefined following recent transactions, with continuing operations now focused on diagnostics, agricultural products, and healthy meals - Continuing operations segments: Rapid Diagnostic and Other Products (Biowin), Other Agricultural Products (Wintus), and Healthy Meals Products (Fuzhou Meida)[230](index=230&type=chunk)[231](index=231&type=chunk) - Discontinued operations segments: Luobuma products, Other agricultural products (Qingdao Zhihesheng and Guangyuan), and Freight services (Zhisheng Freight)[225](index=225&type=chunk)[226](index=226&type=chunk)[229](index=229&type=chunk) Segment Revenue (Nine Months Ended March 31, 2024) | Segment | Revenue | |:---|:---| | Rapid diagnostic and other products | $441,927 | | Other agricultural products | $4,844,587 | | Healthy meals products | $17,645 | | Luobuma products (Discontinued) | $4,439 | | Total | $5,308,598 | Total Assets by Segment (March 31, 2024) | Segment | Total Assets | |:---|:---| | Other agricultural products | $82,814,678 | | Rapid diagnostic and other products | $18,686,680 | | Healthy meals products | $186,914 | | Total assets, held for continuing operations | $101,688,272 | [NOTE 20 - DISCONTINUED OPERATIONS](index=52&type=section&id=NOTE%2020%20-%20DISCONTINUED%20OPERATIONS) The Tenet-Jove Disposal Group has been reclassified as discontinued operations, significantly impacting the company's financial statements by separating its assets and results - The Tenet-Jove Disposal Group was reclassified as discontinued operations due to the acquisition of Wintus and the transfer of the company's equity interest in Tenet-Jove[239](index=239&type=chunk)[240](index=240&type=chunk) Assets and Liabilities of Discontinued Operations | Metric | March 31, 2024 | June 30, 2023 | |:---|:---|:---| | Total assets of discontinued operation | $0 | $39,684,744 | | Total liabilities of discontinued operation | $0 | $6,798,667 | Operating Results of Discontinued Operations (Nine Months Ended March 31) | Metric | 2024 | 2023 | |:---|:---|:---| | Revenue | $4,439 | $1,536,464 | | Gross Profit (Loss) | $256 | $(311,767) | | Net Income (Loss) from Discontinued Operations | $(49,455) | $(937,831) | | Income on Disposal of Discontinued Operations | $8,904,702 | $0 | | Total Net Income (Loss) from Discontinued Operations | $8,855,247 | $(937,831) | [NOTE 21 - SUBSEQUENT EVENTS](index=53&type=section&id=NOTE%2021%20-%20SUBSEQUENT%20EVENTS) The company evaluated subsequent events through May 15, 2024, and identified no events requiring adjustment to or disclosure in the financial statements - No subsequent events required adjustments to or disclosure in the unaudited condensed consolidated financial statements as of May 15, 2024[244](index=244&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=54&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the financial impact of recent acquisitions and divestitures, revenue and expense trends, liquidity challenges, and critical accounting policies [Forward-Looking Statements](index=54&type=section&id=Forward-Looking%20Statements) This section contains forward-looking statements about future plans and financial projections that are subject to risks and uncertainties - The report contains forward-looking statements about future products, revenue, earnings, capital structure, and business expansions, which are subject to known and unknown risks and events[247](index=247&type=chunk)[248](index=248&type=chunk)[249](index=249&type=chunk) [General Overview](index=55&type=section&id=General%20Overview) The company has reshaped its PRC operations through acquisitions and divestitures to focus on diagnostics, agricultural products, and healthy meals - Shineco, Inc operates through PRC entities and has terminated its VIE structure by divesting Tenet-Jove[253](index=253&type=chunk)[255](index=255&type=chunk) - Current continuing business segments include Rapid Diagnostic and Other Products (Biowin), Other Agricultural Products (Wintus), and Healthy Meals Products (Fuzhou Meida)[256](index=256&type=chunk)[258](index=258&type=chunk)[259](index=259&type=chunk) - Former business segments operated by the Tenet-Jove Disposal Group are reclassified as discontinued operations[260](index=260&type=chunk) [Financing Activities](index=56&type=section&id=Financing%20Activities) The company has raised capital through convertible notes and common stock sales to institutional investors, non-US investors, and employees - The company issued several unsecured convertible promissory notes to Streeterville Capital, LLC, with principal amounts totaling over **US$17 million**[261](index=261&type=chunk)[263](index=263&type=chunk)[264](index=264&type=chunk) - As of March 31, 2024, **1,500,396 common shares** were issued to the investor from convertible note conversions, totaling **US$9,988,359** in principal and interest[264](index=264&type=chunk) - The company sold common stock to non-US investors for gross proceeds of **US$1,758,340** (August 2022), **US$1,440,000** (December 2023), and up to **US$285,714** (March 2024)[265](index=265&type=chunk)[266](index=266&type=chunk)[267](index=267&type=chunk) - Sales of common stock to employees for up to **US$650,000** were approved, with **US$178,332** in subscription receivable outstanding as of March 31, 2024[265](index=265&type=chunk) [Factors Affecting Financial Performance](index=58&type=section&id=Factors%20Affecting%20Financial%20Performance) Financial performance is influenced by product demand, cost control, PRC-related risks, and the lingering, uncertain impact of the COVID-19 pandemic - Increasing demand for products and expansion through new product development, distribution networks, and potential M&A are expected to positively impact financial performance[269](index=269&type=chunk) - Maintaining effective control of costs and expenses, including material supplies and long-term alliances with suppliers, is crucial[270](index=270&type=chunk) - Operations in the PRC are subject to political, economic, legal, and foreign currency exchange risks[271](index=271&type=chunk) - The COVID-19 pandemic caused disruptions in operations, transportation, and supply chains, and its future impact remains highly uncertain[272](index=272&type=chunk) [Critical Accounting Policies and Estimates](index=59&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Financial results rely on significant judgments and estimates, particularly regarding VIE consolidation, credit losses, inventory valuation, and revenue recognition - Critical accounting policies include the consolidation of Variable Interest Entities (VIEs), requiring evaluation to determine the primary beneficiary[275](index=275&type=chunk) - Significant estimates are made for useful lives of assets, recoverability of long-lived assets, expected credit losses (CECL), deferred tax valuation allowances, and inventory reserves[277](index=277&type=chunk) - The company adopted the Current Expected Credit Loss (CECL) methodology on July 1, 2023, for financial instruments[279](index=279&type=chunk)[280](index=280&type=chunk)[281](index=281&type=chunk) - Revenue recognition follows ASC 606, with revenue recognized upon delivery and title transfer or service performance[283](index=283&type=chunk)[285](index=285&type=chunk) [Results of Operations for the Nine Months Ended March 31, 2024 and 2023](index=62&type=section&id=Results%20of%20Operations%20for%20the%20Nine%20Months%20Ended%20March%2031,%202024%20and%202023) Revenue from continuing operations grew substantially due to acquisitions, but higher expenses led to a larger operating loss, offset by income from discontinued operations Key Financial Results (Nine Months Ended March 31) | Metric | 2024 | 2023 | Variance Amount | % Change | |:---|:---|:---|:---|:---| | Revenue | $5,304,159 | $231,513 | $5,072,646 | 2,191.08% | | Gross profit | $602,940 | $11,156 | $591,784 | 5,304.63% | | General and administrative expenses | $12,155,801 | $5,986,324 | $6,169,477 | 103.06% | | Net loss from continuing operations | $(12,937,954) | $(6,886,985) | $(6,050,969) | 87.86% | | Net income (loss) from discontinued operations | $8,855,247 | $(937,831) | $9,793,078 | (1,044.23)% | | Net loss | $(4,082,707) | $(7,824,816) | $3,742,109 | (47.82)% | - Revenue from other agricultural products (Wintus) increased by **$4,844,587 (100%)** and rapid diagnostic products (Biowin) increased by **$210,414 (90.89%)** due to new acquisitions[293](index=293&type=chunk) - General and administrative expenses increased by **$6,169,477 (103.06%)** due to forgiveness of subscription receivable and increased professional fees[304](index=304&type=chunk) - Net income from discontinued operations significantly improved to **$8,855,247** in 2024 from a loss of **$937,831** in 2023, primarily due to income on disposal[311](index=311&type=chunk)[312](index=312&type=chunk) [Results of Operations for the Three Months Ended March 31, 2024 and 2023](index=66&type=section&id=Results%20of%20Operations%20for%20the%20Three%20Months%20Ended%20March%2031,%202024%20and%202023) Quarterly revenue grew significantly from the Wintus acquisition, but higher operating and interest expenses led to an increased net loss Key Financial Results (Three Months Ended March 31) | Metric | 2024 | 2023 | Variance Amount | % Change | |:---|:---|:---|:---|:---| | Revenue | $1,351,400 | $231,513 | $1,119,887 | 483.73% | | Gross profit | $191,667 | $11,156 | $180,511 | 1,618.06% | | General and administrative expenses | $3,304,426 | $2,691,544 | $612,882 | 22.77% | | Net loss from continuing operations | $(4,368,728) | $(2,939,166) | $(1,429,562) | 48.64% | | Net income from discontinued operations | $0 | $329,181 | $(329,181) | (100.00)% | | Net loss | $(4,368,728) | $(2,609,985) | $(1,758,743) | 67.39% | - Revenue from other agricultural products (Wintus) increased by **$1,202,054 (100%)** due to its acquisition, while rapid diagnostic products revenue decreased by **$88,708 (38.32%)**[318](index=318&type=chunk)[319](index=319&type=chunk) - Net other income decreased by **$238,501 (92.59%)** due to prior year's recognition of income on advances and decreased government subsidies[331](index=331&type=chunk) - Interest expenses, net, increased by **$241,200 (136.01%)** due to increased interest on loans from the newly acquired Wintus[332](index=332&type=chunk) [Treasury Policies](index=70&type=section&id=Treasury%20Policies) Treasury policies focus on minimizing interest and currency risks through central monitoring and loan management, while avoiding speculative derivatives - Treasury policies focus on minimizing interest risk through loan re-financing and negotiation, and minimizing currency risk by monitoring foreign currency borrowings[341](index=341&type=chunk) - The company does not engage in derivative contracts for speculative activities[341](index=341&type=chunk) [Liquidity and Capital Resources](index=71&type=section&id=Liquidity%20and%20Capital%20Resources) The company finances operations through various loans and equity sales and believes it has sufficient liquidity for the next 12 months despite negative working capital - Primary funding sources include advances from related parties, short-term and long-term loans, convertible notes, and common stock sales[342](index=342&type=chunk) - As of March 31, 2024, the company had **US$13.4 million** in short-term loans and **US$1.7 million** in long-term loans outstanding, with expectations for renewal[342](index=342&type=chunk) - Working capital decreased by **US$38,503,538 (219.0%)** from June 30, 2023, resulting in a negative working capital of **US$20,925,946**[352](index=352&type=chunk) - Management believes current cash, future cash flows, and access to loans will be sufficient for the next 12 months[350](index=350&type=chunk) [Capital Commitments and Contingencies](index=73&type=section&id=Capital%20Commitments%20and%20Contingencies) The company has resolved recent legal proceedings and reports no other material capital commitments or contingent liabilities as of March 31, 2024 - A lawsuit filed by Ms Guiqin Li was settled for approximately **US$0.7 million**[372](index=372&type=chunk) - A lawsuit against Lei Zhang and Yan Li was discontinued, leading to the waiver of **US$3,024,000** in subscription receivable[357](index=357&type=chunk)[375](index=375&type=chunk) - As of March 31, 2024, there were no other material capital commitments or contingent liabilities[358](index=358&type=chunk) [Off-Balance Sheet Commitments and Arrangements](index=73&type=section&id=Off-Balance%20Sheet%20Commitments%20and%20Arrangements) The company has an off-balance sheet commitment involving a property pledge to guarantee a personal loan for a related party - The company pledged property with a net book value of **US$1,045,883** as collateral to guarantee a personal loan of Mr Yuying Zhang, a related party[358](index=358&type=chunk) - The loan is expected to be repaid, and the pledge released, by May 31, 2024[358](index=358&type=chunk) [Cash Flows](index=74&type=section&id=Cash%20Flows) Cash used in operations increased, investing activities shifted to a significant use of cash, and financing provided cash, resulting in a net decrease in cash Cash Flow Summary (Nine Months Ended March 31) | Activity | 2024 | 2023 | |:---|:---|:---| | Net cash used in operating activities | $(3,062,020) | $(2,853,387) | | Net cash provided by (used in) investing activities | $(13,939,717) | $1,013,586 | | Net cash provided by financing activities | $3,184,948 | $2,421,005 | | Net increase (decrease) in cash and cash equivalents | $(13,601,276) | $229,944 | | Cash and cash equivalents, end of the period | $565,483 | $15,395,175 | - Net cash used in investing activities in 2024 was primarily due to the disposal of Tenet-Jove (**$13.9 million**) and payments for loans to third parties (**$1.5 million**)[364](index=364&type=chunk) - Net cash provided by financing activities in 2024 was driven by proceeds from common stock issuance (**$2.0 million**) and short-term loans (**$15.4 million**)[365](index=365&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=75&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, the company is not required to provide disclosures about market risk - The company is not required to provide quantitative and qualitative disclosures about market risk as it is a smaller reporting company[367](index=367&type=chunk) [Item 4. Controls and Procedures](index=75&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls were not effective due to material weaknesses in accounting personnel and segregation of duties - Disclosure controls and procedures were **not effective** at the reasonable assurance level as of March 31, 2024[368](index=368&type=chunk) - Material weaknesses identified include a lack of full-time U.S. GAAP personnel and a lack of segregation of duties for accounting personnel[368](index=368&type=chunk) - Remediation steps include recruiting qualified professionals, engaging an outside consulting firm, and improving internal approval processes[369](index=369&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=76&type=section&id=Item%201.%20Legal%20Proceedings) The company has concluded two material legal proceedings, one via settlement and the other via discontinuation, resulting in a significant receivable waiver - A lawsuit filed by Ms Guiqin Li was settled in January 2023 for **US$700,645** (approximately RMB 4.8 million)[371](index=371&type=chunk)[372](index=372&type=chunk) - A lawsuit against Lei Zhang and Yan Li was discontinued in December 2023, leading to the waiver of **US$3,024,000** in subscription receivable[373](index=373&type=chunk)[375](index=375&type=chunk) [Item 1A. Risk Factors](index=76&type=section&id=Item%201A.%20Risk%20Factors) As a smaller reporting company, the company is not required to provide risk factor disclosures in this report - The company is not required to provide risk factor information as it is a smaller reporting company[376](index=376&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=76&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities or use of proceeds to report for the period - No unregistered sales of equity securities and use of proceeds to report[376](index=376&type=chunk) [Item 3. Defaults Upon Senior Securities](index=76&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities to report for the period - No defaults upon senior securities to report[376](index=376&type=chunk) [Item 4. Mine Safety Disclosures](index=76&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Mine safety disclosures are not applicable to the company's business operations - Mine safety disclosures are not applicable[376](index=376&type=chunk) [Item 5. Other Information](index=76&type=section&id=Item%205.%20Other%20Information) There is no other information to report in this section for the period - No other information to report[376](index=376&type=chunk) [Item 6. Exhibits](index=77&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including organizational documents, agreements, incentive plans, and certifications - The exhibits include the Certificate of Incorporation, Amended and Restated Bylaws, Specimen Common Stock Certificate, Employment Agreements, Securities Purchase Agreements, 2024 Equity Incentive Plan, and various certifications[377](index=377&type=chunk) SIGNATURES [SIGNATURES](index=78&type=section&id=SIGNATURES) The report is duly signed by the Chief Executive Officer and Chief Financial Officer on behalf of the company as of May 15, 2024 - The report is signed by Jennifer Zhan, Chief Executive Officer, and Sai (Sam) Wang, Chief Financial Officer, on May 15, 2024[380](index=380&type=chunk)

BEIJING, May 1, 2024 /PRNewswire/ -- Shineco, Inc. ("Shineco" or the "Company"; NASDAQ: SISI), a provider of technologically advanced healthcare products and services, announced today that its subsidiaries Fuzhou Medashan Biotechnology Co., Ltd. and Kaifeng Yixi Biotechnology Co., Ltd. have innovatively invented a new natural active water-soluble product extracted from soybean gum. Pure physical extraction technology of natural active phospholipids - Large column chromatography polar ultrafiltration membran ...

Core Points - Shineco, Inc. has regained compliance with Nasdaq Listing Rule 5550(a)(2) after its common stock closed at a bid price of at least $1.00 per share for 15 consecutive business days from February 16, 2024, to March 8, 2024 [1] Company Overview - Shineco, Inc. focuses on providing safe, efficient, and high-quality health and medical products and services, aiming to improve the quality of life [2] - The company has developed 33 vitro diagnostic reagents and related medical devices and also produces and sells healthy and nutritious foods [2]

Core Viewpoint - Shineco, Inc. has announced a reverse stock split at a ratio of 1-for-10 to comply with Nasdaq's minimum bid price requirement of $1.00 for continued listing on The Nasdaq Capital Market [1][2]. Company Actions - The reverse stock split will take effect on February 16, 2024, with shares trading on a split-adjusted basis under the existing symbol "SISI" [1]. - Each stockholder's percentage ownership and voting power will remain largely unchanged post-split, with minor adjustments for fractional shares [2]. Operational Details - Transhare Corporation will act as the transfer and exchange agent for the reverse stock split, and registered shareholders will not need to take any action to receive their new shares [3]. - Stockholders holding shares in brokerage accounts will have their positions automatically adjusted without requiring any action [3]. Company Overview - Shineco, Inc. focuses on providing advanced healthcare products and services, aiming to improve quality of life through safe and efficient health solutions [4]. - The company has developed 33 vitro diagnostic reagents and related medical devices, in addition to producing and selling healthy foods [4].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission File Number: 001-37776 SHINECO, INC. (Exact name of registrant as specified in its charter) | --- | --- | --- | |----------------------- ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission File Number: 001-37776 SHINECO, INC. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of in ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended June 30, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to _________ Commission File Number: 001-37776 SHINECO, INC. | --- | --- | --- | --- | --- | |---------------------------------------------------------------------------- ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Delaware 52-2175898 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) Title of each Class Trading Symbol(s) Name of each exchange on which registered Common Stock, par value $0.001 per share SISI The Nasdaq Stock Market LLC FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 OR ☐ TRANSITION REPO ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Title of each Class Trading Symbol(s) Name of each exchange on which registered Common Stock, par value $0.001 per share SISI The Nasdaq Stock Market LLC Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth company ☐ FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2022 OR ☐ TRANSITI ...

PART I. FINANCIAL INFORMATION [ITEM 1. FINANCIAL STATEMENTS](index=4&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of income, comprehensive income, changes in equity, and cash flows, along with detailed notes [Condensed Consolidated Balance Sheets (unaudited)](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(unaudited)) Balance Sheet Highlights | Metric | Sep 30, 2022 (Unaudited) | Jun 30, 2022 | | :---------------------------- | :----------------------- | :----------- | | Cash and cash equivalents | $24,238,173 | $15,165,231 | | Total Current Assets | $53,785,997 | $59,735,425 | | Total Assets | $57,420,167 | $63,826,017 | | Total Current Liabilities | $20,371,268 | $29,040,302 | | Total Liabilities | $21,691,301 | $30,513,129 | | Total Equity | $35,728,866 | $33,312,888 | [Condensed Consolidated Statements of Income and Comprehensive Income (unaudited)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20and%20Comprehensive%20Income%20(unaudited)) Income and Comprehensive Income Highlights (Three Months Ended September 30) | Metric | 2022 (Unaudited) | 2021 (Unaudited) | Change (YoY) | | :------------------------------------------------ | :--------------- | :--------------- | :----------- | | Revenue | $535,698 | $629,758 | -$94,060 (-14.94%) | | Cost of Revenue | $626,575 | $1,359,303 | -$732,728 (-53.90%) | | Gross Loss | $(90,877) | $(729,545) | +$638,668 (-87.54%) | | Operating Expenses | $1,899,544 | $9,722,549 | -$7,823,005 (-80.46%) | | Loss from Operations | $(1,990,421) | $(10,452,094) | +$8,461,673 (-80.96%) | | Net Loss from Continuing Operations | $(2,442,320) | $(11,108,221) | +$8,665,901 (-78.01%) | | Net Loss from Discontinued Operations | $0 | $(3,135,237) | +$3,135,237 (-100.00%) | | Net Loss | $(2,442,320) | $(14,243,458) | +$11,801,138 (-82.85%) | | Net Loss Attributable to Shineco, Inc. | $(2,439,722) | $(14,238,332) | +$11,798,610 (-82.86%) | | Basic and Diluted Loss per Common Share | $(0.17) | $(1.71) | +$1.54 (-90.06%) | | Comprehensive Loss Attributable to Shineco, Inc. | $(4,744,406) | $(14,258,967) | +$9,514,561 (-66.73%) | [Condensed Consolidated Statements of Changes in Equity (unaudited)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Equity%20(unaudited)) Equity Changes (Three Months Ended September 30, 2022) | Equity Component | Balance at June 30, 2022 | Stock Issuance | Restricted Shares Issued for Management | Net Loss for the Period | Foreign Currency Translation Gain (Loss) | Balance at September 30, 2022 | | :------------------------------------ | :----------------------- | :------------- | :------------------------------------ | :---------------------- | :--------------------------------------- | :---------------------------- | | Common Stock (Shares) | 10,983,863 | 4,276,183 | 600,000 | - | - | 16,397,356 | | Common Stock (Amount) | $10,984 | $4,276 | $600 | - | - | $16,397 | | Additional Paid-in Capital | $52,998,924 | $6,754,064 | $611,400 | - | - | $60,891,487 | | Accumulated Deficit | $(18,372,023) | - | - | $(2,439,722) | - | $(20,811,745) | | Accumulated Other Comprehensive Loss | $(2,100,756) | - | - | - | $(2,304,684) | $(4,405,440) | | Total Equity | $33,312,888 | - | - | - | - | $35,728,866 | [Condensed Consolidated Statements of Cash Flows (unaudited)](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(unaudited)) Cash Flow Highlights (Three Months Ended September 30) | Cash Flow Activity | 2022 (Unaudited) | 2021 (Unaudited) | | :------------------------------------------------ | :--------------- | :--------------- | | Net cash used in operating activities | $(2,109,145) | $(5,264,781) | | Net cash provided by (used in) investing activities | $11,083,120 | $(25,954,544) | | Net cash provided by financing activities | $921,047 | $20,436,888 | | Effect of exchange rate change on cash and cash equivalents | $(822,080) | $(11,884) | | Net increase (decrease) in cash and cash equivalents | $9,072,942 | $(10,794,321) | | Cash and cash equivalents - End of the period | $24,238,173 | $18,230,073 | [Notes to the Condensed Consolidated Financial Statements (unaudited)](index=10&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) Provides detailed explanations and breakdowns of the figures presented in the financial statements, covering the company's organization, significant accounting policies, financial instrument details, and specific transactions, offering crucial context for understanding the financial health and performance [NOTE 1 - ORGANIZATION AND NATURE OF OPERATIONS](index=10&type=section&id=NOTE%201%20-%20ORGANIZATION%20AND%20NATURE%20OF%20OPERATIONS) - Shineco, Inc. is a holding company incorporated in Delaware, conducting most operations through VIEs in the PRC[19](index=19&type=chunk) - The company's business segments include manufacturing and selling Bluish Dogbane products, planting and distributing green agricultural produce, and providing domestic and international logistic services[29](index=29&type=chunk) - Ankang Longevity Group, which manufactured traditional Chinese medicinal herbal products, has been reclassified as discontinued operations[29](index=29&type=chunk) [NOTE 2. GOING CONCERN UNCERTAINTIES](index=12&type=section&id=NOTE%202.%20GOING%20CONCERN%20UNCERTAINTIES) - The Company had recurring **net losses of US$2,442,320 (2022)** and **US$14,243,458 (2021)** and continuing cash outflow from operating activities, raising substantial doubt about its ability to continue as a going concern[31](index=31&type=chunk) - Management has taken measures to enhance liquidity, including a securities purchase agreement for up to **US$1,758,340 (US$1.0 million received)** and holding approximately **US$24.2 million in cash and cash equivalents** as of September 30, 2022[32](index=32&type=chunk) [NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=12&type=section&id=NOTE%203%20-%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This section outlines the Company's key accounting principles, including consolidation, revenue recognition, asset valuation, and financial instrument fair value measurements [Basis of Presentation and Principles of Consolidation](index=12&type=section&id=Basis%20of%20Presentation%20and%20Principles%20of%20Consolidation) - Financial statements are prepared in conformity with US GAAP for interim financial information[34](index=34&type=chunk) - The statements consolidate the Company, its subsidiaries, and VIEs, with all intercompany accounts and transactions eliminated[35](index=35&type=chunk) [Consolidation of Variable Interest Entities](index=13&type=section&id=Consolidation%20of%20Variable%20Interest%20Entities) - The Company consolidates VIEs where it is the primary beneficiary, absorbing a majority of risks and entitled to a majority of residual returns[36](index=36&type=chunk) VIEs Financial Information (September 30, 2022 vs. June 30, 2022) | Metric | Sep 30, 2022 | Jun 30, 2022 | | :-------------------------- | :----------- | :----------- | | Total assets | $33,936,245 | $35,935,994 | | Total liabilities | $(4,398,252) | $(5,719,289) | | Net assets | $29,537,993 | $30,216,705 | VIEs Income Information (Three Months Ended September 30) | Metric | 2022 | 2021 | | :-------------------------- | :------- | :----------- | | Net sales | $530,124 | $616,250 | | Gross loss | $(96,245) | $(601,215) | | Income (loss) from operations | $387,905 | $(7,751,663) | | Net income (loss) | $399,732 | $(7,743,264) | [Non-controlling Interests](index=14&type=section&id=Non-controlling%20Interests) - Non-controlling interests are reported in the equity section of the balance sheet and their attributable net income/loss is reported separately in the consolidated statements of loss and comprehensive loss[41](index=41&type=chunk) [Risks and Uncertainties](index=14&type=section&id=Risks%20and%20Uncertainties) - Operations in the PRC are subject to political, economic, legal, and foreign currency exchange risks[42](index=42&type=chunk) - Contractual arrangements with VIEs, controlled by the same majority shareholders, pose risks if agreements are challenged or terminated[43](index=43&type=chunk) [Use of Estimates](index=14&type=section&id=Use%20of%20Estimates) - Significant estimates include useful lives of property and equipment, intangible assets, recoverability of long-lived assets, and valuation of accounts receivable, advances to suppliers, deferred taxes, and inventory reserves[44](index=44&type=chunk) [Revenue Recognition](index=15&type=section&id=Revenue%20Recognition) - Revenue is recognized following ASC 606's five-step model, including identifying contracts, performance obligations, transaction price, allocation, and satisfaction of obligations[48](index=48&type=chunk) - The Company acts as a principal for product sales and an agent for freight services, recognizing gross or net amounts accordingly[48](index=48&type=chunk) [Cash and Cash Equivalents](index=15&type=section&id=Cash%20and%20Cash%20Equivalents) - Cash and cash equivalents consist of cash on hand and deposits with original maturities of three months or less, primarily in PRC banks[49](index=49&type=chunk) - As of September 30, 2022, and June 30, 2022, the Company had no cash equivalents[49](index=49&type=chunk) [Accounts Receivable, Net](index=16&type=section&id=Accounts%20Receivable,%20Net) Accounts Receivable, Net | Metric | Sep 30, 2022 | Jun 30, 2022 | | :---------------------------- | :----------- | :----------- | | Accounts receivable | $9,167,155 | $9,138,790 | | Less: allowance for doubtful accounts | $(7,205,783) | $(7,317,236) | | Accounts receivable, net | $1,961,372 | $1,821,554 | Movement of Allowance for Doubtful Accounts | Metric | Sep 30, 2022 | Jun 30, 2022 | | :-------------------------------- | :----------- | :----------- | | Beginning balance | $7,317,236 | $13,481,021 | | Charge to expense | $327,925 | $1,632,670 | | Foreign currency translation adjustments | $(439,378) | $(272,345) | | Ending balance | $7,205,783 | $7,317,236 | [Inventories, Net](index=16&type=section&id=Inventories,%20Net) Inventories, Net | Metric | Sep 30, 2022 | Jun 30, 2022 | | :-------------------------- | :----------- | :----------- | | Raw materials | $60,555 | $67,467 | | Work-in-process | $18,046,891 | $18,709,325 | | Finished goods | $1,122,368 | $1,191,275 | | Less: inventory reserve | $(1,173,594) | $(1,249,543) | | Total inventories, net | $18,056,220 | $18,718,524 | - Inventory write-offs due to natural disaster (damage and death of yew trees) amounted to **US$241,754** for the three months ended September 30, 2022, and **US$492,987** for the same period in 2021[85](index=85&type=chunk) [Advances to Suppliers, Net](index=16&type=section&id=Advances%20to%20Suppliers,%20Net) Advances to Suppliers, Net | Metric | Sep 30, 2022 | Jun 30, 2022 | | :---------------------------- | :----------- | :----------- | | Advances to suppliers | $11,904,432 | $13,548,178 | | Less: allowance for doubtful accounts | $(11,904,432) | $(13,544,627) | | Advance to suppliers, net | $0 | $3,551 | Movement of Allowance for Doubtful Accounts (Advances to Suppliers) | Metric | Sep 30, 2022 | Jun 30, 2022 | | :-------------------------------- | :----------- | :----------- | | Beginning balance | $13,544,627 | $13,320,307 | | Charge to (reversal of) expense | $(882,854) | $4,938,064 | | Foreign currency translation adjustments | $(757,341) | $(503,337) | | Ending balance | $11,904,432 | $13,544,627 | [Business Acquisitions](index=16&type=section&id=Business%20Acquisitions) - Business acquisitions are accounted for under the acquisition method, recognizing identifiable assets and liabilities at fair value[54](index=54&type=chunk) - Excess purchase price over net assets is recorded as goodwill, or a bargain purchase gain if the fair value of net assets exceeds the purchase price[54](index=54&type=chunk) [Goodwill](index=17&type=section&id=Goodwill) - Goodwill is tested for impairment at least annually by comparing the fair value of a reporting unit to its carrying amount[56](index=56&type=chunk) - Fair value is determined using discounted cash flow methodology, corroborated by a market approach[56](index=56&type=chunk) [Leases](index=17&type=section&id=Leases) - The Company adopted ASU 2016-02 "Leases" on July 1, 2019, recognizing ROU assets and lease liabilities for operating leases[57](index=57&type=chunk) - The Company elected the "package of practical expedients" and the short-term lease exemption[57](index=57&type=chunk) [Property and Equipment, Net](index=17&type=section&id=Property%20and%20Equipment,%20Net) - Property and equipment are stated at cost, less accumulated depreciation and amortization, with depreciation on a straight-line basis[58](index=58&type=chunk) Estimated Useful Lives of Property and Equipment | Asset Category | Estimated Useful Lives | | :---------------------------- | :--------------------- | | Buildings | 20-50 years | | Machinery equipment | 5-10 years | | Motor vehicles | 5-10 years | | Office equipment | 5-10 years | | Farmland leasehold improvements | 12-18 years | | Leasehold improvement | Lesser of useful life and lease term | [Long-lived Assets](index=18&type=section&id=Long-lived%20Assets) - Long-lived assets are reviewed for impairment when circumstances require, and written down to fair value if undiscounted future cash flows are insufficient to recover the carrying amount[60](index=60&type=chunk) - No impairment of long-lived assets was recognized for the three months ended September 30, 2022 and 2021[60](index=60&type=chunk) [Fair Value of Financial Instruments](index=18&type=section&id=Fair%20Value%20of%20Financial%20Instruments) - Fair value measurements are classified into Level 1, Level 2, and Level 3 based on the observability of inputs[61](index=61&type=chunk)[62](index=62&type=chunk) - The carrying value of current financial instruments approximates their fair values due to their short-term nature[62](index=62&type=chunk) [Income Taxes](index=18&type=section&id=Income%20Taxes) - Deferred tax assets and liabilities are recognized for temporary differences using enacted tax rates, with a valuation allowance established if necessary[63](index=63&type=chunk) - The Company's policy is to indefinitely reinvest undistributed earnings of non-U.S. subsidiaries, thus no deferred taxes are provided for them[64](index=64&type=chunk) - The U.S. corporate tax rate decreased from **35% to 21%** due to the "Tax Cuts and Jobs Act" (2017), impacting the Company's tax liability[67](index=67&type=chunk) [Value-Added Tax](index=19&type=section&id=Value-Added%20Tax) - Sales revenue is net of VAT, which has decreased from **17% to 13%** in the PRC since May 1, 2018[68](index=68&type=chunk) - No penalties for late or deficient VAT were assessed during the three months ended September 30, 2022 and 2021[146](index=146&type=chunk) [Foreign Currency Translation](index=19&type=section&id=Foreign%20Currency%20Translation) - Financial reporting is in USD; subsidiaries and VIEs use RMB as functional currency[69](index=69&type=chunk) - Assets and liabilities are translated at balance sheet date rates, income and cash flows at average rates, and equity at historical rates[70](index=70&type=chunk) Exchange Rates | Period | RMB to USD Exchange Rate | | :-------------------------------- | :----------------------- | | September 30, 2022 (Balance Sheet) | 0.1406 | | June 30, 2022 (Balance Sheet) | 0.1493 | | Three Months Ended Sep 30, 2022 (Average) | 0.1461 | | Three Months Ended Sep 30, 2021 (Average) | 0.1545 | [Convertible Notes Payable](index=19&type=section&id=Convertible%20Notes%20Payable) - Embedded beneficial conversion features in convertible instruments are recognized separately, with proceeds allocated to additional paid-in capital[72](index=72&type=chunk) - Issuance costs are allocated proportionally to the debt host and conversion feature, and convertible notes are carried at amortized cost[72](index=72&type=chunk) [Comprehensive Loss](index=20&type=section&id=Comprehensive%20Loss) - Comprehensive loss consists of net loss and other comprehensive income (loss), including foreign currency translation gains or losses[73](index=73&type=chunk) [Equity Investment](index=20&type=section&id=Equity%20Investment) - Investments with significant influence (**20-50% ownership**) are accounted for using the equity method[74](index=74&type=chunk) [Loss per Share](index=20&type=section&id=Loss%20per%20Share) - EPS is computed in accordance with ASC 260, presenting both basic and diluted EPS[75](index=75&type=chunk) Loss per Share Reconciliation (Three Months Ended September 30) | Metric | 2022 | 2021 | | :-------------------------------------------------------------------------------- | :------- | :----------- | | Net loss from continuing operations attributable to Shineco | $(2,439,722) | $(11,103,095) | | Net loss from discontinued operations attributable to Shineco | $0 | $(3,135,237) | | Net loss attributable to Shineco | $(2,439,722) | $(14,238,332) | | Weighted average shares outstanding - basic and diluted | 14,649,132 | 8,314,996 | | Net loss from continuing operations per share of common share Basic and diluted | $(0.17) | $(1.33) | | Net loss from discontinued operations per share of common share Basic and diluted | $0 | $(0.38) | | Net loss per share of common share Basic and diluted | $(0.17) | $(1.71) | [New Accounting Pronouncements](index=21&type=section&id=New%20Accounting%20Pronouncements) - Adopted ASU No. 2019-12 (Income Taxes) on July 1, 2021, with no material impact[78](index=78&type=chunk) - Currently evaluating ASU No. 2020-04 (Reference Rate Reform) for potential impacts on financial condition, results of operations, cash flows, and disclosures[79](index=79&type=chunk) [NOTE 4 – ACCOUNTS RECEIVABLE, NET](index=21&type=section&id=NOTE%204%20%E2%80%93%20ACCOUNTS%20RECEIVABLE,%20NET) Accounts Receivable, Net | Metric | Sep 30, 2022 | Jun 30, 2022 | | :---------------------------- | :----------- | :----------- | | Accounts receivable | $9,167,155 | $9,138,790 | | Less: allowance for doubtful accounts | $(7,205,783) | $(7,317,236) | | Accounts receivable, net | $1,961,372 | $1,821,554 | Movement of Allowance for Doubtful Accounts | Metric | Sep 30, 2022 | Jun 30, 2022 | | :-------------------------------- | :----------- | :----------- | | Beginning balance | $7,317,236 | $13,481,021 | | Charge to expense | $327,925 | $1,632,670 | | Less: cessation of subsidiaries and disposal of VIE | $0 | $(7,524,110) | | Foreign currency translation adjustments | $(439,378) | $(272,345) | | Ending balance | $7,205,783 | $7,317,236 | [NOTE 5 – INVENTORIES, NET](index=22&type=section&id=NOTE%205%20%E2%80%93%20INVENTORIES,%20NET) Inventories, Net | Metric | Sep 30, 2022 | Jun 30, 2022 | | :-------------------------- | :----------- | :----------- | | Raw materials | $60,555 | $67,467 | | Work-in-process | $18,046,891 | $18,709,325 | | Finished goods | $1,122,368 | $1,191,275 | | Less: inventory reserve | $(1,173,594) | $(1,249,543) | | Total inventories, net | $18,056,220 | $18,718,524 | - Inventory write-offs due to natural disaster (damage and death of yew trees from COVID-19) amounted to **US$241,754** for the three months ended September 30, 2022, and **US$492,987** for the same period in 2021[85](index=85&type=chunk) [NOTE 6 – ADVANCES TO SUPPLIERS, NET](index=22&type=section&id=NOTE%206%20%E2%80%93%20ADVANCES%20TO%20SUPPLIERS,%20NET) Advances to Suppliers, Net | Metric | Sep 30, 2022 | Jun 30, 2022 | | :---------------------------- | :----------- | :----------- | | Advances to suppliers | $11,904,432 | $13,548,178 | | Less: allowance for doubtful accounts | $(11,904,432) | $(13,544,627) | | Advance to suppliers, net | $0 | $3,551 | Movement of Allowance for Doubtful Accounts (Advances to Suppliers) | Metric | Sep 30, 2022 | Jun 30, 2022 | | :-------------------------------- | :----------- | :----------- | | Beginning balance | $13,544,627 | $13,320,307 | | Charge to (reversal of) expense | $(882,854) | $4,938,064 | | Foreign currency translation adjustments | $(757,341) | $(503,337) | | Ending balance | $11,904,432 | $13,544,627 | [NOTE 7 – OTHER CURRENT ASSETS](index=23&type=section&id=NOTE%207%20%E2%80%93%20OTHER%20CURRENT%20ASSETS) Other Current Assets, Net | Metric | Sep 30, 2022 | Jun 30, 2022 | | :---------------------------- | :----------- | :----------- | | Loan to third parties | $2,373,854 | $16,345,717 | | Other receivables | $2,205,091 | $3,246,293 | | Short-term deposit | $1,066,520 | $164,261 | | Prepaid expenses | $14,897 | $20,872 | | Subtotal | $5,660,362 | $19,777,143 | | Less: allowance for doubtful accounts | $2,404,614 | $2,545,565 | | Total other current assets, net | $3,255,748 | $17,231,578 | - Loans to third parties are mainly for short-term funding to business partners or employees, bearing interest or no interest, with terms of no more than one year, and are expected to be paid in full by June 2023[90](index=90&type=chunk) [NOTE 8 - PROPERTY AND EQUIPMENT, NET](index=24&type=section&id=NOTE%208%20-%20PROPERTY%20AND%20EQUIPMENT,%20NET) Property and Equipment, Net | Metric | Sep 30, 2022 | Jun 30, 2022 | | :---------------------------------------- | :----------- | :----------- | | Buildings | $1,702,641 | $1,808,172 | | Machinery and equipment | $25,755 | $27,351 | | Motor vehicles | $130,960 | $139,077 | | Office equipment | $160,857 | $178,271 | | Leasehold improvement | $175,440 | $186,314 | | Farmland leasehold improvements | $2,956,484 | $3,139,729 | | Subtotal | $5,152,137 | $5,478,914 | | Less: accumulated depreciation and amortization | $(3,213,660) | $(3,388,640) | | Less: impairment for property and equipment | $(673,084) | $(714,802) | | Total property and equipment, net | $1,265,393 | $1,375,472 | - Depreciation and amortization expense was **US$30,966** for the three months ended September 30, 2022, compared to **US$81,473** for the same period in 2021[95](index=95&type=chunk) - Farmland leasehold improvements were fully impaired as of June 30, 2022, due to the continuous impact from the COVID-19 pandemic, making farmlands unlikely to generate enough future profit and cash flow[96](index=96&type=chunk) [NOTE 9 - DISTRIBUTION RIGHTS](index=25&type=section&id=NOTE%209%20-%20DISTRIBUTION%20RIGHTS) - Distribution rights for Daiso 100-yen shops products were acquired through Tianjin Tajite and determined to have an indefinite life[98](index=98&type=chunk) - A full impairment loss on distribution rights was recorded during the year ended June 30, 2022, due to unfavorable China Customs policy and COVID-19 impact preventing revenue generation[98](index=98&type=chunk)[119](index=119&type=chunk) [NOTE 10 - INVESTMENTS](index=25&type=section&id=NOTE%2010%20-%20INVESTMENTS) - The Company recorded a **loss of US$6,304** from its **32% equity investment** in Shanghai Gaojing Private Fund Management for the three months ended September 30, 2022, a decrease from **US$23,734** in 2021[100](index=100&type=chunk)[241](index=241&type=chunk) - No loss was recorded from the **20% equity investment** in Yushe Pharmaceutical for the three months ended September 30, 2022, as the investment was fully impaired subsequently[99](index=99&type=chunk)[240](index=240&type=chunk) - The Company has agreements to acquire **51% of XPYK** and to jointly manufacture nuclear medical imaging devices with WJM, but neither project has started as of the report date[101](index=101&type=chunk)[102](index=102&type=chunk) Total Investments | Metric | Sep 30, 2022 | Jun 30, 2022 | | :----------------------- | :----------- | :----------- | | Gaojing Private Fund | $611,142 | $617,446 | | Total investments | $611,142 | $617,446 | [NOTE 11 - LEASES](index=26&type=section&id=NOTE%2011%20-%20LEASES) Operating Lease Related Assets and Liabilities | Metric | Sep 30, 2022 | Jun 30, 2022 | | :-------------------------------- | :----------- | :----------- | | ROU lease assets | $1,749,663 | $2,088,149 | | Operating lease liabilities – current | $586,553 | $959,909 | | Operating lease liabilities – non-current | $873,173 | $1,025,967 | | Total operating lease liabilities | $1,459,726 | $1,985,876 | - Rent expenses totaled **US$214,440** for the three months ended September 30, 2022, a decrease from **US$230,548** in 2021[113](index=113&type=chunk) - An impairment loss of **US$2,268,344** for ROU lease assets was recorded in the year ended June 30, 2022, due to the COVID-19 pandemic's impact on the profitability of leased farmlands[114](index=114&type=chunk) [NOTE 12 - ACQUISITION](index=28&type=section&id=NOTE%2012%20-%20ACQUISITION) - The Company acquired **51% of Tianjin Tajite** in 2017 for approximately **US$2.1 million**, gaining distribution rights for Daiso 100-yen shops products[116](index=116&type=chunk) - A full impairment loss on Tianjin Tajite's goodwill was recorded in June 2018 due to lower than expected revenue and profit, and an impairment loss on distribution rights was fully recorded in FY2022 due to unfavorable China Customs policy and COVID-19[118](index=118&type=chunk)[119](index=119&type=chunk) - In 2021, the Company acquired Guangyuan by transferring its rights in Ankang Longevity, aiming to enter the market of planting fast-growing bamboo willows and scenic greening trees[121](index=121&type=chunk)[122](index=122&type=chunk) Guangyuan Net Assets Acquired (July 5, 2021) | Metric | Amount | | :------------------------------------------ | :----------- | | Due from related party | $108,296 | | Inventory | $18,115,423 | | Other current assets | $224,522 | | Right of use assets | $1,127,130 | | Long-term investments and other non-current assets | $166,107 | | Other payables and other current assets | $(2,503,607) | | Operating lease liabilities | $(1,013,492) | | Total purchase price for acquisition, net of cash | $16,224,379 | [NOTE 13 - RELATED PARTY TRANSACTIONS](index=30&type=section&id=NOTE%2013%20-%20RELATED%20PARTY%20TRANSACTIONS) Due from Related Parties | Related Party | Sep 30, 2022 | Jun 30, 2022 | | :--------------------------------------------------- | :----------- | :----------- | | Zhao Min | $1,327 | $1,410 | | Shanghai Gaojing Private Fund Management | $404,902 | $429,998 | | Zhongjian Yijia Health Technology (Qingdao) Co., Ltd. | $1,431,710 | $1,719,568 | | Zhongjian (Qingdao) International Logistics Development Co., Ltd. | $4,436,545 | $4,644,011 | | Total due from related parties | $6,274,484 | $6,794,987 | - Loans to Zhongjian Yijia Health Technology (Qingdao) Co., Ltd. and Zhongjian (Qingdao) International Logistics Development Co., Ltd. bear **6.0% annual interest**, with extensions granted for repayment[128](index=128&type=chunk)[129](index=129&type=chunk) Due to Related Parties | Related Party | Sep 30, 2022 | Jun 30, 2022 | | :--------------------------- | :----------- | :----------- | | Wu Yang | $0 | $95,630 | | Wang Sai Zhou Guocong | $120,081 | $96,081 | | Lin Baolin | $1,968 | $0 | | Zhao Min | $431,238 | $562,528 | | Zhou Shunfang | $1,925,234 | $2,044,561 | | Total due to related parties | $2,480,548 | $2,798,800 | - Payables to related parties are unsecured, non-interest bearing, and due on demand, mainly from principal stockholders or their relatives[131](index=131&type=chunk) [NOTE 14 - CONVERTIBLE NOTES PAYABLE](index=31&type=section&id=NOTE%2014%20-%20CONVERTIBLE%20NOTES%20PAYABLE) - The Company issued multiple unsecured convertible promissory notes to Streeterville Capital, LLC, with a **6% annual interest rate**[134](index=134&type=chunk)[135](index=135&type=chunk)[137](index=137&type=chunk)[138](index=138&type=chunk) - Maturity dates for some notes were extended to **June 15, 2023**, and **August 18, 2023**[134](index=134&type=chunk)[137](index=137&type=chunk) - As of September 30, 2022, **2,374,465 common shares** were issued for **$7,892,638** in principal and interest, with a remaining convertible note payable balance of **$14,283,239**[139](index=139&type=chunk) - Amortization of debt issuance costs decreased from **$458,978 (2021)** to **$154,403 (2022)** for the three months ended September 30[139](index=139&type=chunk)[242](index=242&type=chunk) [NOTE 15 - TAXES](index=32&type=section&id=NOTE%2015%20-%20TAXES) - Shineco is subject to US income tax (**21%**), while its PRC operating entities are subject to **25% tax**, with exemptions for agricultural enterprises[140](index=140&type=chunk) Deferred Tax Assets | Metric | Sep 30, 2022 | Jun 30, 2022 | | :---------------------------- | :----------- | :----------- | | Allowance for doubtful accounts | $1,190,068 | $1,252,245 | | Inventory reserve | $292,503 | $311,439 | | Net operating loss carry-forwards | $922,505 | $979,682 | | Total | $2,405,076 | $2,543,366 | | Valuation allowance | $(2,405,076) | $(2,543,366) | | Total deferred tax assets | $0 | $0 | - PRC VAT rates decreased from **17% to 13%** between May 2018 and April 2019[145](index=145&type=chunk) Taxes Payable | Metric | Sep 30, 2022 | Jun 30, 2022 | | :---------------------------------------- | :----------- | :----------- | | Income tax payable | $978,305 | $992,780 | | Value added tax payable | $32,880 | $34,925 | | Business tax and other taxes payable | $4,810 | $3,375 | | Total tax payable | $1,015,995 | $1,031,080 | | Less: income tax payable - current portion | $(569,135) | $(584,220) | | Income tax payable - noncurrent portion | $446,860 | $446,860 | [NOTE 16 - STOCKHOLDERS' EQUITY](index=34&type=section&id=NOTE%2016%20-%20STOCKHOLDERS'%20EQUITY) - The Company completed its IPO on September 28, 2016, raising **US$7.7 million** gross proceeds[149](index=149&type=chunk) - A **1-for-9 reverse stock split** was approved in July 2020, effective August 2020, retroactively restating shares and per share data[153](index=153&type=chunk) - The Company issued **600,000 restricted shares** for management under the 2022 Equity Incentive Plan, valued at **US$612,000**, which vested immediately on July 27, 2022[157](index=157&type=chunk) - The Company entered into a securities purchase agreement on August 11, 2022, to sell up to **1,921,683 shares** for gross proceeds of up to **US$1,758,340**, with **US$1.0 million** received and the remainder expected by December 31, 2022[159](index=159&type=chunk) [NOTE 17 - CONCENTRATIONS AND RISKS](index=36&type=section&id=NOTE%2017%20-%20CONCENTRATIONS%20AND%20RISKS) - Almost **100%** of the Company's assets and revenues are located in and derived from the PRC[160](index=160&type=chunk) - Four customers accounted for approximately **80% of total sales** for the three months ended September 30, 2022[160](index=160&type=chunk) - One vendor accounted for approximately **94% of total purchases** for the three months ended September 30, 2022 and 2021[161](index=161&type=chunk) [NOTE 18 - COMMITMENTS AND CONTINGENCIES](index=36&type=section&id=NOTE%2018%20-%20COMMITMENTS%20AND%20CONTINGENCIES) - The Company accrued **US$829,969** for a lawsuit by Mrs. Guiqin Li in China regarding stock losses, with an appeal pending[163](index=163&type=chunk) - The Company is suing Lei Zhang and Yan Li in New York for **$9,088,125** for unpaid restricted shares, with a trial scheduled for September 18, 2023[165](index=165&type=chunk)[168](index=168&type=chunk) - As of September 30, 2022, the subscription receivable for unpaid shares from Lei Zhang and Yan Li amounted to **US$3,024,000**[168](index=168&type=chunk) [NOTE 19 - SEGMENT REPORTING](index=37&type=section&id=NOTE%2019%20-%20SEGMENT%20REPORTING) - The Company has three continuing operating segments: Luobuma products, other agricultural products (green and organic produce, yew trees, bamboo willows), and freight services[169](index=169&type=chunk)[171](index=171&type=chunk)[172](index=172&type=chunk) - The Herbal products segment (Ankang Longevity Group) has been reclassified as discontinued operations[170](index=170&type=chunk) Segment Revenue (Three Months Ended September 30) | Segment | 2022 Revenue | 2022 % of Total | 2021 Revenue | 2021 % of Total | Variance Amount | % Change | | :---------------------- | :----------- | :-------------- | :----------- | :-------------- | :-------------- | :--------- | | Luobuma products | $5,574 | 1.04% | $13,508 | 2.14% | $(7,934) | (58.74)% | | Other agricultural products | $428,596 | 80.01% | $452,387 | 71.84% | $(23,791) | (5.26)% | | Freight services | $101,528 | 18.95% | $163,863 | 26.02% | $(62,335) | (38.04)% | | Total | $535,698 | 100.00% | $629,758 | 100.00% | $(94,060) | (14.94)% | Segment Gross Profit (Loss) (Three Months Ended September 30) | Segment | 2022 Gross Profit (Loss) | 2022 Gross Profit (Loss) % | 2021 Gross Profit (Loss) | 2021 Gross Profit (Loss) % | Variance Amount | % Change | | :---------------------- | :----------------------- | :------------------------- | :----------------------- | :------------------------- | :-------------- | :--------- | | Luobuma products | $5,368 | (5.91)% | $(128,330) | 17.59% | $133,698 | (104.18)% | | Other agricultural products | $(120,346) | 132.43% | $(615,867) | 84.42% | $495,521 | (80.46)% | | Freight services | $24,101 | (26.52)% | $14,652 | (2.01)% | $9,449 | 64.49% | | Total | $(90,877) | 100.00% | $(729,545) | 100.00% | $638,668 | (87.54)% | Total Assets by Segment | Segment | Sep 30, 2022 | Jun 30, 2022 | | :---------------------- | :----------- | :----------- | | Luobuma products | $9,388,729 | $10,982,562 | | Other agricultural products | $43,159,007 | $46,488,334 | | Freight services | $4,872,431 | $6,355,121 | | Total assets | $57,420,167 | $63,826,017 | [NOTE 20 - DISCONTINUED OPERATIONS](index=39&type=section&id=NOTE%2020%20-%20DISCONTINUED%20OPERATIONS) - The Company disposed of Ankang Longevity Group on July 5, 2021, reclassifying its operations as discontinued[178](index=178&type=chunk)[180](index=180&type=chunk) - A loss on disposal of discontinued operations of **US$3,135,237** was recorded for the three months ended September 30, 2021[180](index=180&type=chunk) [NOTE 21 - SUBSEQUENT EVENTS](index=40&type=section&id=NOTE%2021%20-%20SUBSEQUENT%20EVENTS) - On October 21, 2022, Life Science agreed to acquire **51% of Changzhou Biowin Pharmaceutical Co., Ltd.** for **US$9 million cash** and **3,260,000 common shares**[181](index=181&type=chunk) - No other subsequent events required adjustments or disclosure as of November 14, 2022[182](index=182&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS](index=41&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITIONS%20AND%20RESULTS%20OF%20OPERATIONS) This section provides management's perspective on the Company's financial condition and results of operations for the three months ended September 30, 2022, compared to 2021, covering revenue, expenses, liquidity, and capital resources, highlighting the impact of business strategy changes, COVID-19, and legal proceedings [Forward-Looking Statements](index=41&type=section&id=Forward-Looking%20Statements) - The report contains forward-looking statements regarding future products, financial projections, and market conditions, subject to known and unknown risks and uncertainties[185](index=185&type=chunk)[186](index=186&type=chunk) - The Company undertakes no obligation to update forward-looking statements to reflect events or circumstances after their making[187](index=187&type=chunk) [General Overview](index=42&type=section&id=General%20Overview) - Shineco, Inc. is a Delaware holding company operating primarily through PRC VIEs, providing health and well-being focused plant-based products[190](index=190&type=chunk) - Business segments include Luobuma products, green and organic agricultural produce (yew trees, bamboo willows), and domestic/international freight forwarding services[194](index=194&type=chunk)[195](index=195&type=chunk)[196](index=196&type=chunk) - The traditional Chinese herbal medicine segment (Ankang Longevity Group) was disposed of in July 2021 and reclassified as discontinued operations[192](index=192&type=chunk) [Financing Activities](index=43&type=section&id=Financing%20Activities) - The Company issued multiple unsecured convertible promissory notes to Streeterville Capital, LLC, with **6% annual interest**, extending some maturity dates to 2023[197](index=197&type=chunk)[198](index=198&type=chunk)[199](index=199&type=chunk) - As of September 30, 2022, **$7,472,638 of notes** were fully converted into **1,946,766 common shares**, and another **$420,000** was converted into **427,699 shares**[198](index=198&type=chunk)[199](index=199&type=chunk) - The Company raised **$5.0 million** gross proceeds from a stock purchase agreement in July 2022 and is selling up to **$1.76 million** in shares from an August 2022 agreement, with **$1.0 million** received to date[201](index=201&type=chunk)[202](index=202&type=chunk) [Factors Affecting Financial Performance](index=44&type=section&id=Factors%20Affecting%20Financial%20Performance) - Increasing demand for agricultural products is expected to positively impact financial performance, with plans for new products, distribution expansion, and potential M&A[203](index=203&type=chunk) - Effective cost control is a focus, achieved by maintaining adequate material supplies at competitive prices, establishing long-term supplier alliances, and optimizing quality management and procurement[204](index=204&type=chunk) - Operations in the PRC are subject to significant political, economic, and legal risks, including changes in governmental policies and foreign currency exchange[205](index=205&type=chunk) [COVID-19 Impact](index=45&type=section&id=COVID-19%20Impact) - COVID-19 caused significant disruptions, including office closures, transportation issues, and delays in sales, order fulfillment, and payment collection[206](index=206&type=chunk)[207](index=207&type=chunk) - The resurgence of COVID-19 in Beijing in April 2022 negatively affected business, but the impact is currently considered temporary, with future extent highly uncertain[207](index=207&type=chunk) [Critical Accounting Policies and Estimates](index=45&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - Critical accounting policies involve significant judgments and estimates, including consolidation of VIEs, useful lives of assets, and recoverability of long-lived assets[208](index=208&type=chunk)[209](index=209&type=chunk)[211](index=211&type=chunk) - Key estimates also include the valuation of accounts receivable, advances to suppliers, deferred taxes, and inventory reserves[211](index=211&type=chunk)[212](index=212&type=chunk)[213](index=213&type=chunk) - Revenue recognition follows ASC 606, with no material changes upon adoption, and fair value measurements adhere to ASC 820's hierarchy[217](index=217&type=chunk)[218](index=218&type=chunk) [Results of Operations for the Three Months Ended September 30, 2022 and 2021](index=48&type=section&id=Results%20of%20Operations%20for%20the%20Three%20Months%20Ended%20September%2030,%202022%20and%202021) The Company experienced a significant reduction in net loss for the three months ended September 30, 2022, compared to 2021, primarily due to decreased operating expenses and the absence of discontinued operations, with revenue declining across all segments, but gross loss improving due to lower cost of revenue Results of Operations Summary (Three Months Ended September 30) | Metric | 2022 | 2021 | Variance Amount | % | | :------------------------------------------------ | :----------- | :----------- | :-------------- | :-------- | | Revenue | $535,698 | $629,758 | $(94,060) | (14.94)% | | Cost of revenue | $626,575 | $1,359,303 | $(732,728) | (53.90)% | | Gross loss | $(90,877) | $(729,545) | $638,668 | (87.54)% | | Operating expenses | $1,899,544 | $9,722,549 | $(7,823,005) | (80.46)% | | Loss from operations | $(1,990,421) | $(10,452,094) | $8,461,673 | (80.96)% | | Net loss from continuing operations | $(2,442,320) | $(11,108,221) | $8,665,901 | (78.01)% | | Net loss from discontinued operations | $0 | $(3,135,237) | $3,135,237 | (100.00)% | | Net loss | $(2,442,320) | $(14,243,458) | $11,801,138 | (82.85)% | [Revenue](index=48&type=section&id=Revenue) Revenue by Segment (Three Months Ended September 30) | Segment | 2022 Revenue | 2021 Revenue | Variance Amount | % Change | | :---------------------- | :----------- | :----------- | :-------------- | :--------- | | Luobuma products | $5,574 | $13,508 | $(7,934) | (58.74)% | | Other agricultural products | $428,596 | $452,387 | $(23,791) | (5.26)% | | Freight services | $101,528 | $163,863 | $(62,335) | (38.04)% | | Total Amount | $535,698 | $629,758 | $(94,060) | (14.94)% | - Revenue from Luobuma products decreased by **58.74%** due to no new product launches and reduced investment in e-commerce[225](index=225&type=chunk) - Revenue from other agricultural products decreased by **5.26%** due to a strategic shift from selling unmatured yew trees to cultivating matured ones for Taxol extraction[226](index=226&type=chunk) - Revenue from freight services decreased by **38.04%** due to outsourcing and recognizing revenue on a net basis as an agent[227](index=227&type=chunk) [Cost of Revenue and Related Tax](index=49&type=section&id=Cost%20of%20Revenue%20and%20Related%20Tax) Cost of Revenue by Segment (Three Months Ended September 30) | Segment | 2022 Cost of Revenue | 2021 Cost of Revenue | Variance Amount | % Change | | :--------------------------------------- | :------------------- | :------------------- | :-------------- | :--------- | | Luobuma products | $206 | $141,838 | $(141,632) | (99.85)% | | Other agricultural products | $548,942 | $1,068,254 | $(519,312) | (48.61)% | | Freight services | $77,427 | $147,956 | $(70,529) | (47.67)% | | Business and sales related tax | $0 | $1,255 | $(1,255) | (100.00)% | | Total Amount | $626,575 | $1,359,303 | $(732,728) | (53.90)% | - Cost of revenue for Luobuma products decreased by **99.85%** due to a decreased allowance for slow-moving inventories[229](index=229&type=chunk) - Cost of revenue for other agricultural products decreased by **48.61%** due to less stock written off, despite continued COVID-19 impact on yew trees[230](index=230&type=chunk) - Cost of revenue for freight services decreased by **47.67%** due to outsourcing, leading to the Company acting as an agent[230](index=230&type=chunk) [Gross Loss](index=50&type=section&id=Gross%20Loss) Gross Loss by Segment (Three Months Ended September 30) | Segment | 2022 Gross Loss | 2021 Gross Loss | Variance Amount | % Change | | :---------------------- | :-------------- | :-------------- | :-------------- | :--------- | | Luobuma products | $5,368 | $(128,330) | $133,698 | (104.18)% | | Other agricultural products | $(120,346) | $(615,867) | $495,521 | (80.46)% | | Freight services | $24,101 | $14,652 | $9,449 | 64.49% | | Total Amount | $(90,877) | $(729,545) | $638,668 | (87.54)% | - Gross loss from Luobuma product sales decreased by **104.18%** due to a decrease in allowance for slow-moving inventories[233](index=233&type=chunk) - Gross loss from other agricultural products decreased by **80.46%** due to less stock written off and fewer price discounts[234](index=234&type=chunk) - Gross income from freight services increased by **64.49%** due to improved operating efficiency from outsourcing[234](index=234&type=chunk) [Expenses](index=50&type=section&id=Expenses) Operating Expenses (Three Months Ended September 30) | Expense Category | 2022 | 2021 | Variance Amount | % Change | | :-------------------------------- | :----------- | :----------- | :-------------- | :--------- | | General and administrative expenses | $1,886,443 | $8,573,656 | $(6,687,213) | (78.00)% | | Selling expenses | $13,101 | $8,342 | $4,759 | 57.05% | | Impairment loss of distribution rights | $0 | $1,140,551 | $(1,140,551) | (100.00)% | | Total Amount | $1,899,544 | $9,722,549 | $(7,823,005) | (80.46)% | [General and Administrative Expenses](index=50&type=section&id=General%20and%20Administrative%20Expenses) - General and administrative expenses decreased by **78.00%** to **US$1,886,443**, primarily due to a significant decrease in bad debt expense[237](index=237&type=chunk) - The decrease was partially offset by increased intermediary fees for intended acquisitions and increased stock compensation expenses[237](index=237&type=chunk) [Impairment Loss of Distribution Rights](index=51&type=section&id=Impairment%20Loss%20of%20Distribution%20Rights) - No impairment loss of distribution rights was recorded for the three months ended September 30, 2022, compared to **US$1,140,551** in the same period of 2021[239](index=239&type=chunk) - The prior year's impairment was due to the inability to generate revenue from distribution rights due to unfavorable China Customs policy and COVID-19 impact[239](index=239&type=chunk) [Loss from Equity Method Investments](index=51&type=section&id=Loss%20from%20Equity%20Method%20Investments) - Loss from equity method investments decreased from **US$27,920 (2021)** to **US$6,304 (2022)**[240](index=240&type=chunk)[241](index=241&type=chunk) - The decrease is attributed to the full impairment of Yushe Pharmaceutical investment in the prior year and lower net loss from Shanghai Gaojing Private Fund Management in the current period[240](index=240&type=chunk)[241](index=241&type=chunk) [Amortization of Debt Issuance Costs](index=51&type=section&id=Amortization%20of%20Debt%20Issuance%20Costs) - Amortization of debt issuance costs decreased by **66.36%** to **US$154,403**, from **US$458,978** in the prior year[242](index=242&type=chunk) - The decrease is due to two of the four convertible note agreements being fully converted[242](index=242&type=chunk) [Interest Expenses, Net](index=51&type=section&id=Interest%20Expenses,%20Net) - Net interest expenses increased by **79.75%** to **US$305,927**, from **US$170,199** in the prior year[243](index=243&type=chunk) - The increase was primarily due to higher interest expenses on loans from third parties and convertible notes, partially offset by interest income from loans to third and related parties[243](index=243&type=chunk) [Net Loss from Continuing Operations](index=51&type=section&id=Net%20Loss%20from%20Continuing%20Operations) - Net loss from continuing operations decreased by **78.01%** to **US$2,442,320**, from **US$11,108,221** in the prior year[244](index=244&type=chunk) - The decrease was primarily due to reduced general and administrative expenses, impairment loss of distribution rights, and amortization of debt issuance costs[244](index=244&type=chunk) [Net Loss from Discontinued Operations](index=52&type=section&id=Net%20Loss%20from%20Discontinued%20Operations) - No net loss from discontinued operations was recorded for the three months ended September 30, 2022, compared to **US$3,135,237** in the same period of 2021[246](index=246&type=chunk) - This is due to the disposal of Ankang Longevity Group on July 5, 2021, and its reclassification as discontinued operations[246](index=246&type=chunk) [Net Loss](index=52&type=section&id=Net%20Loss) - Total net loss decreased by **82.85%** to **US$2,442,320**, from **US$14,243,458** in the prior year[247](index=247&type=chunk) - The decrease was primarily due to reduced net loss from continuing operations and the absence of net loss from discontinued operations[247](index=247&type=chunk) [Comprehensive Loss](index=52&type=section&id=Comprehensive%20Loss) - Comprehensive loss attributable to Shineco, Inc. decreased by **66.73%** to **US$4,744,406**, from **US$14,258,967** in the prior year[248](index=248&type=chunk) - The decrease in comprehensive loss was primarily due to the overall decrease in net loss[248](index=248&type=chunk) [Treasury Policies](index=52&type=section&id=Treasury%20Policies) - Treasury policies aim to minimize interest and currency risks through central review and monitoring[249](index=249&type=chunk) - Interest risk is managed through loan re-financing and negotiation, while currency risk is managed by monitoring foreign currency borrowings[249](index=249&type=chunk)[250](index=250&type=chunk) - As of September 30, 2022, the Company did not engage in any foreign currency borrowings or loan contracts, except for the convertible note[250](index=250&type=chunk) [Liquidity and Capital Resources](index=53&type=section&id=Liquidity%20and%20Capital%20Resources) - The Company finances operations primarily through advances from related parties, convertible notes, and common stock sales[252](index=252&type=chunk) - Management believes current cash, future operations cash flows, and access to loans will provide sufficient liquidity for at least the next 12 months[259](index=259&type=chunk) - As of September 30, 2022, the Company had **$24,238,173** in cash and cash equivalents[7](index=7&type=chunk) [Working Capital](index=54&type=section&id=Working%20Capital) Working Capital | Metric | Sep 30, 2022 | Jun 30, 2022 | | :------------------ | :----------- | :----------- | | Current Assets | $53,785,997 | $59,735,425 | | Current Liabilities | $20,371,268 | $29,040,302 | | Working Capital | $33,414,729 | $30,695,123 | - Working capital increased by **US$2,719,606 (8.9%)** due to an increase in cash and cash equivalents and a decrease in other payables and accrued expenses[261](index=261&type=chunk) [Capital Commitments and Contingencies](index=54&type=section&id=Capital%20Commitments%20and%20Contingencies) - The Company accrued **US$829,969** for a lawsuit by Mrs. Guiqin Li in China regarding stock losses[263](index=263&type=chunk) - The Company is seeking **US$9,088,125** in damages from Lei Zhang and Yan Li for unpaid restricted shares, with a trial scheduled for September 18, 2023[265](index=265&type=chunk)[268](index=268&type=chunk) - As of September 30, 2022, the subscription receivable for unpaid shares from Lei Zhang and Yan Li amounted to **US$3,024,000**[268](index=268&type=chunk) [Off-Balance Sheet Commitments and Arrangements](index=55&type=section&id=Off-Balance%20Sheet%20Commitments%20and%20Arrangements) - The Company has no financial guarantees or other commitments to guarantee third-party payment obligations[268](index=268&type=chunk) - No derivative contracts indexed to common stock are classified as stockholders' equity or unreflected in financial statements[268](index=268&type=chunk) [Cash Flows](index=55&type=section&id=Cash%20Flows) For Q3 2022, net cash used in operating activities was $2.1 million, net cash provided by investing activities was $11.1 million (primarily from loan repayments), and net cash provided by financing activities was $0.9 million (from stock issuance, offset by related party repayments), with overall cash and cash equivalents increasing by $9.1 million Net Cash Flows (Three Months Ended September 30) | Cash Flow Activity | 2022 | 2021 | | :------------------------------------------------ | :----------- | :----------- | | Net cash used in operating activities | $(2,109,145) | $(5,264,781) | | Net cash provided by (used in) investing activities | $11,083,120 | $(25,954,544) | | Net cash provided by financing activities | $921,047 | $20,436,888 | | Effect of exchange rate changes on cash and cash equivalents | $(822,080) | $(11,884) | | Net increase (decrease) in cash and cash equivalents | $9,072,942 | $(10,794,321) | | Cash and cash equivalents, end of the period | $24,238,173 | $18,230,073 | [Operating Activities](index=56&type=section&id=Operating%20Activities) - Net cash used in operating activities was **US$2.1 million** in Q3 2022, an improvement from **US$5.3 million** in Q3 2021[271](index=271&type=chunk)[272](index=272&type=chunk) - Key factors for Q3 2022 included a net loss of **US$2.4 million**, net recovery of bad debt expenses of **US$0.6 million**, and restricted shares issued for management of **US$0.6 million**[271](index=271&type=chunk) [Investing Activities](index=56&type=section&id=Investing%20Activities) - Net cash provided by investing activities was **US$11.1 million** in Q3 2022, a significant increase from **US$26.0 million** used in Q3 2021[273](index=273&type=chunk) - The primary driver for Q3 2022 was **US$11.0 million** in repayments of loans to third parties[273](index=273&type=chunk) [Financing Activities](index=56&type=section&id=Financing%20Activities) - Net cash provided by financing activities was **US$0.9 million** in Q3 2022, a decrease from **US$20.4 million** in Q3 2021[274](index=274&type=chunk) - Q3 2022 financing activities included **US$1.0 million** from common stock issuance, partially offset by **US$0.1 million** in repayments of advances from related parties[274](index=274&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=57&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) As a smaller reporting company, Shineco, Inc. is not required to provide quantitative and qualitative disclosures about market risk - As a smaller reporting company, Shineco, Inc. is exempt from providing quantitative and qualitative disclosures about market risk[276](index=276&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=57&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls and procedures were not effective as of September 30, 2022, due to a lack of full-time U.S. GAAP personnel and insufficient segregation of duties, with remedial actions including recruiting qualified professionals, engaging external consultants, improving communication, and obtaining proper approvals for significant transactions, and no material changes in internal control over financial reporting occurred during the quarter [Evaluation of Controls and Procedures](index=57&type=section&id=Evaluation%20of%20Controls%20and%20Procedures) - Disclosure controls and procedures were not effective as of September 30, 2022, due to a lack of full-time U.S. GAAP personnel and insufficient segregation of duties[277](index=277&type=chunk) - Remedial actions include recruiting qualified professionals, engaging an outside consulting firm, improving communication, and obtaining proper approvals for significant transactions[278](index=278&type=chunk) [Changes in Internal Control over Financial Reporting](index=57&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) - No material changes in internal control over financial reporting occurred during the fiscal quarter ended September 30, 2022[279](index=279&type=chunk) PART II. OTHER INFORMATION [ITEM 1. LEGAL PROCEEDINGS](index=58&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The Company is involved in two significant legal proceedings: a lawsuit in China by Mrs. Guiqin Li for stock losses, with $829,969 accrued, and a lawsuit in New York against Lei Zhang and Yan Li for $9,088,125 in unpaid restricted shares, with a trial scheduled for September 18, 2023 - The Company is involved in a lawsuit in China by Mrs. Guiqin Li, with **US$829,969** accrued as of September 30, 2022[282](index=282&type=chunk) - The Company filed a lawsuit in New York against Lei Zhang and Yan Li, seeking **US$9,088,125** for unpaid restricted shares, with a trial scheduled for September 18, 2023[283](index=283&type=chunk)[286](index=286&type=chunk) - As of September 30, 2022, the subscription receivable for unpaid shares from Lei Zhang and Yan Li amounted to **US$3,024,000**[286](index=286&type=chunk) [ITEM 1A. RISK FACTORS](index=58&type=section&id=ITEM%201A.%20RISK%20FACTORS) As a smaller reporting company, Shineco, Inc. is not required to provide the information regarding risk factors - As a smaller reporting company, Shineco, Inc. is exempt from providing risk factor disclosures[287](index=287&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=58&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) Disclosures related to unregistered sales of equity securities and use of proceeds are incorporated by reference from Note 17, "Stockholders' Equity," in Part I, Item 1 - Information on unregistered sales of equity securities and use of proceeds is incorporated by reference from Note 17, "Stockholders' Equity"[287](index=287&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=58&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) The Company reported no defaults upon senior securities - The Company reported no defaults upon senior securities[287](index=287&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=59&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to the Company - This item is not applicable to the Company[288](index=288&type=chunk) [ITEM 5. OTHER INFORMATION](index=59&type=section&id=ITEM%205.%20OTHER%20INFORMATION) The Company reported no other information required under this item - The Company reported no other information required under this item[288](index=288&type=chunk) [ITEM 6. EXHIBITS](index=59&type=section&id=ITEM%206.%20EXHIBITS) This section lists all exhibits filed with the Form 10-Q, including organizational documents, incentive plans, securities purchase agreements, certifications, and XBRL-related documents - The exhibits include Certificate of Incorporation, Bylaws, Stock Incentive Plans (2016, 2022), Securities Purchase Agreements, and various certifications (CEO, CFO)[289](index=289&type=chunk) - XBRL instance, schema, calculation, definition, and label linkbase documents are also included[289](index=289&type=chunk) SIGNATURES - The report was signed on November 14, 2022, by Jennifer Zhan (CEO) and Sai (Sam) Wang (CFO)[292](index=292&type=chunk)